How Do I Get Paid (Methods of Payment)

U.S. exporters to Egypt typically rely on letters of credit from Egyptian buyers, arranged by the latter through Egyptian banks, confirmed irrevocably by an American bank.

How Does the Banking System Operate

According to the Central Bank of Egypt (CBE), the Egyptian banking system currently consists of 39 banks, split between commercial and non-commercial, public and private sector banks.

In practice, the vast majority of these banks operate as commercial banks, although there are a few specialized banks (such as for agriculture and real estate).  National Bank of Egypt is a large public sector bank, as is Bank Misr, and Banque du Caire.  All banks in Egypt are subject to supervision by the CBE. However, the Arab International Bank and the National Investment Bank are exempted due to special provisions in law and treaty. According to CBE officials, a third bank, Nasr Social Bank, is currently in the process of gaining exemption from CBE supervision.

Egypt has also been acting aggressively to promote bank consolidation. A new banking law passed in 2003 (Law 88 of 2003) and Presidential Decree (No. 64 for 2005) issuing the statute of the CBE raised the minimum capital requirements for banks sharply (from LE 100 million to LE 500 million for domestic banks and from $10 million to $50 million for branches of foreign banks).  The new regulations have forced a major consolidation of the banking system, as many smaller banks have not been able to meet the new capital requirements.  The banks that did not meet the new threshold are undertaking procedures to merge with larger institutions or exit the market. 

Citibank is the only American bank operating in the Egyptian market as a full service bank.  J.P. Morgan Chase, Bank of New York, and First Union National Bank have only representative offices. 
 

Foreign-Exchange Controls

In January 2003 a more flexible exchange rate policy was implemented and subsequently there was a 25-30% depreciation of the pound against the dollar. Through a greater diversification of the foreign reserve currencies, this new policy has managed not only to escape losses of US$ 950 million, but also to realize investment revenues of US$ 1 billion during the reporting year 2006/2007.

A new profit repatriation system was announced by the CBE in June 2002 whereby sub- custodian banks are required to open two accounts for foreign investors (global custodians), a foreign currency account and a local currency account, which will be exclusively maintained for stock exchange transactions only.  The two accounts will serve as a channel through which foreign investors can process their sale, purchase, dividend collection and profit repatriation transactions using the official exchange rates.

U.S. Banks and Local Correspondent Banks

Citibank
Mr. Nuhad Saliba, Vice President & Country Corporate Officer
4 Ahmed Pasha St., Garden City, Cairo
Tel: +20 (2) 2795-1873/4/6 Fax: +20 (2) 2795-7743

Bank of Alexandria
Mr. Mahmoud Abdel Latif, Chairman
49 Kasr El Nil St., Down Town, Cairo
Tel: +20 (2) 2391-9686, +20 (2) 2391-3495 Fax: +20 (2) 2391-9805
 
Bank of New York (rep. Office)
Mr. Tarek El Refaie, Chief Representative
9 Abdel Moneim Riad St., Dokki, Cairo
Tel: +20 (2) 3336-5818  Fax: +20 (2) 3336-5816
 
Bank Misr
Mr. Mohamed Barakat, Chairman
151 Mohamed Farid St., Cairo
Tel: +20 (2) 2391-2263, +20 (2) 2391-4974  Fax: +20 (2) 2391-9779
 
National Bank of Egypt
Dr. Hussein Abdel Aziz Hussein, Chairman
Cairo Plaza Bldg., 1187 Corniche El Nil, Cairo
Tel: +20 (2) 2574-9101 Fax: +20 (2) 2574-8910
 
Arab International Bank
Dr. Atef Ebeid, Chairman
35 Abdel Khalek Tharwat St., Downtown, Cairo
Tel: +20 (2) 2391-6391, +20 (2) 2391-8021  Fax: +20 (2) 2391-6233

BNP Paribas
Mr. John Tomozeau, Chairman
3 Latin America St., Garden City, Cairo
Tel: +20 (2) 2794-8323/4/5  Fax: +20 (2) 2794-0619
 
Cairo Barclays Bank
Mr. Omar Elsayeh, Managing Director
12 El Sheikh Youssef Sq., Garden City, Cairo
Tel: +20 (2) 2366-2600 Fax: +20 (2) 2366-2810/11
 
Commercial International Bank (CIB)
Mr. Hisham Ezz Al Arab, Chairman
Nile Tower Bldg., 4th Fl., 21/23 Charles Degol St., Giza
Tel: +20 (2) 3572-20690  Fax: +20 (2) 3568-3844
 
National United Bank
Mr. James Gold, Managing Director
1113 Corniche El Nil, Cairo
Tel: +20 (2) 2575-3492  Fax: +20 (2) 2576-2851
 
HSBC
Mr. Abdel Salam El Anwar, Deputy Chairman, and Managing Director
3 Aboul Feda St., Zamalek, Cairo
Tel: +20 (2) 2736-7425  Fax: +20 (2) 2736-4010

Project Financing

OBTAINING FINANCING

The emerging securities market, donor-assistance credit lines such as bilateral aid, EU credits for the private sector, and the Social Fund for Development, offer alternatives to financing from banks.  Also, a new system, which began operating on July 6, 2004, allows 13 financial institutions listed with the Ministry of Finance, including banks and bond dealers, to underwrite primary issues of government securities and activate trading in the secondary market through sale, purchase, and repurchase agreement of government securities based on a multiple-price auction system. 

In 1992, the Egyptian stock market was reactivated by the GOE in order to allow alternative financing to private and public firms.  The total volume of trading from January-September 2006 was 6.3 billion shares, with a trading value of LE 213.4 billion.  The volume of trading on January 25, 2005 was 12,723,260 million shares, with a trading value of LE 354 million. 

EGYPTIAN FINANCIAL AND INSURANCE MECHANISMS
 
The local banking system in Egypt is the main source of finance for Egyptian exports.  Export financing is usually short-term and is intended to cover the exporter's working capital during the production period.  The period of financing ranges from between three to four months to as much as one year.  Banks normally do not finance long-term export contracts unless guaranteed by an export guarantee company.  The exporter may use loans to finance imported inputs or locally produced ones.  Banks prefer to lend exporters the same currency they will receive in payment for its exports to reduce foreign exchange risk.
 
Banks may finance from 40% to 80% of the value of an export order, based on the form of a contract, shipping documents, insurance documents, or a letter of credit (L/C), and the credibility of the exporter.  If the exporter is not well known in the market and does not have a proven track record, banks will request that the importer open an L/C to reduce their risk. 

Egypt has one export guarantee company, the Export Credit Guarantee Company of Egypt (ECGC), established by the Export Development Bank of Egypt, National Investment Bank, Misr Insurance Company, Al Shark Insurance Company, and Egyptian National Insurance Company. ECGC started operation in October 1993.  It provides guarantees against importer's risk or political risk to Egyptian or foreign exporters who export products that are totally or partially produced in Egypt.  "Importer's risk" is defined as the importer's inability to pay for the exported goods or his/her refusal to receive the shipping documents of exported goods, although the exporter fulfilled all obligations.  ECGC's guarantee also covers political risk (non-commercial), which includes the following:  cancellation of the importer's license by his/her country's authorities; refusal of entry of goods by the importer's government; denial of permission to transit a country's territory; seizure or confiscation of exported goods by the importer's country or the transit country; insolvency of a public-owned importer; or military actions or civil disturbances that affect the importer's assets.  The guarantee, on the other hand, does not cover foreign exchange risk and risks pertaining to the nature of the goods.
 
Whenever ECGC receives a request for guarantee, it investigates the importer thoroughly.  Based on the importer's financial status and estimated country risk, ECGC decides on a coverage limit and informs the exporter.  The guarantee can reach up to 80% of the importer's outstanding debt.  ECGC receives 0.5-2% premium depending on the importer's country and the product exported.  The exporter can then sell the guarantee to his/her bank.

THE WORLD BANK GROUP

The World Bank Group is a multilateral lending agency consisting of four closely related institutions:  the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA).  The World Bank provides loans to developing countries to help reduce poverty and to finance investments that contribute to economic growth.  Because Egypt is now a middle-income developing country, it is no longer eligible for loans from the World Bank's "soft" financing arm, the International Development Association, but it is still eligible for regular World Bank (IBRD) loans.
 
The International Finance Corporation (IFC) is an affiliate of the World Bank that provides project financing for private investment in developing countries.  IFC offers long-term loans and equity investments, as well as other financing services.  IFC will generally invest up to 25% of the total project cost.  In addition to project finance, IFC also provides legal and technical assistance to private enterprises.  Unlike the IBRD and
IDA, the IFC does not require government guarantees.  Egypt is one of the largest users of IFC funds in the world.  U.S. companies seeking direct investment funds should contact the IFC directly.

For further information and assistance contact the U.S. Commerce Department's Commercial Service Liaison Staff, Office of the U.S. Executive Director, The World Bank, 1818 H Street NW, Washington DC 20433, USA.  Tel: 202-473-1000, Fax: 202 477-6391.  Website: www.worldbank.org

USAID PROGRAMS

BACKGROUND AND OVERVIEW OF USAID IN EGYPT

The United States Agency for International Development (USAID) began its on-going program in Egypt in 1976 during a period when Egypt was facing extreme economic and political challenges.  After 1979, following the Camp David Accord, Egypt became one of the United States’ largest economic assistance program partners in the world. 

PROCUREMENT OPPORTUNITIES

There are two main sources of information about procurement opportunities related to USAID programs in Egypt:

- Fed Biz Opps website, (http://www.fedbizopps.gov/) in which all USAID direct and USAID-financed Egyptian Government procurement is advertised;

- USAID’s on-line website (http://www.usaid.gov).  This on-line service also has background on the AID program and its relevance to U.S. interests at home and abroad.

Most commodity procurement is done under subcontract or by Egyptian Government arrangements, rather than directly by USAID.

Web Resources

Export-Import Bank of the United States: http://www.exim.gov
OPIC: http://www.opic.gov
Trade and Development Agency: http://www.tda.gov/
SBA's Office of International Trade: http://www.sba.gov/oit/
USDA Commodity Credit Corporation: http://www.fsa.usda.gov/ccc/default.htm
U.S. Agency for International Development: http://www.usaid.gov
African Export-Import Bank:  www.afreximbank.com