The Egyptian Islamic Finance Association plans to submit a suggestion to the next People’s Assembly (Lower Parliament House) concerning writing a new section about Islamic banking in the Egyptian Banking law no.88 of 2003, in collaboration with the Freedom and Justice Party, Muslim Brotherhood’s political arm, and Al Nour Party, led by Salafists, said Ahmed El Naggar, economic researcher and Islamic investment and finance expert at the Association.
Such suggestion was earlier submitted to the last parliament, but it was not discussed as it was dissolved, he added.
The international sukuk (Islamic bond) market has largely improved and grown largely in the last ten years as many Muslim and non-Muslim countries have issued many kinds of sukuk.
Al Naggar explained how sukuk can boost the Egyptian economy as the country’s investment rates have witnessed a decline for many reasons such as the economy’s inability to achieve more savings.
The ratio of gross domestic savings (GDS) to gross domestic product (GDP) did not exceed 17% in best cases, while it reached 10% in FY 2011/2012. The economic and social development plan for FY 2012/2013 has set a target of 11% for ratio of GDS to GDP.
In addition, the low GDS has affected negatively investment rates as the savings deficit reached EGP 77 billion, accounting for 5% of GDP in FY 2011/2012. Therefore, Egypt shall work on attracting foreign resources and finding other instruments to finance such deficit, El Naggar stressed.
Sukuk is a new financial instrument which is based on Islamic sharia law. Sukuk constitutes partial ownership in a debt (Sukuk Murabaha), asset (Sukuk Al Ijara), project (Sukuk Al Istisna’a), business (Sukuk Al Musharaka), or investment (Sukuk Al Istithmar).
