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The main suspect wanted in connection with a brazen daylight robbery of more than US$10 million (Dh36.7m) from Syrian International Bank for Trade and Finance (IBTF) has been held for questioning in Egypt. In January, $3.4m in cash, €4.75m (Dh22.8m) and 33m Syrian pounds (Dh1.7m) was allegedly stolen from the vault of the IBTF in Damascus. The bank learnt that the suspect fled Damascus to Egypt immediately after allegedly committing the crime. The suspect was arrested last month, upon the discovery by Cairo authorities that his passport was fraudulent. The bank has hired a lawyer to expedite the extradition of the suspect from Egypt.

The Economic Committee at the Shura Council is set to accept the $50m development loan from the IDB to encourage the growth of small and medium sized enterprises (SMEs), with $320,000 set aside for logistical aid and worker training programs. Repayment will begin three years after the grace period for withdrawal. Ghadi Wali, secretary general of Egypt’s Social Fund for Development (SFD), said that the SFD will employ a number of international experts in order to review the potential outcome and effects of the IDB loan. She said that the SFD’s goal would be to distinguish between real losses and those suffered as a result of Egypt’s depreciating currency.

Since the IMF deal might fail, Plan B could be the issuance of US$-denominated sukuk certificates to local Banks in turn for EGPC rights in upcoming oil/gas fields. This will be akin to monetizing production sharing rights owned by EGPC. This alternative will still require aggressive reduction in energy subsidies to ensure repayment of sukuk liabilities as they come due. The two prerequisites of Plan B success are 1) stability in the movement of FC customer deposits and 2) execution of energy sector reforms . Both actors ultimately hinge on political reconciliation.

Egypt-based investment bank EFG Hermes has said its merger deal with Qatari investment company QInvest is to lapse on May 3, unless it receives long-awaited approval from Egyptian regulators. If EFG does not receive a 'no objection' from the Egyptian Financial Supervisory Authority in the coming days, it will be difficult to implement the joint venture agreement. A spokesman for the authority said the deal was still being studied and that a decision would be announced at the right time, declining to give any details or time frame.

President Mohamed Morsi has referred a controversial draft law on Islamic sukuk bonds to Al-Azhar for approval. The Shura Council approved the sukuk bond law last week, stating that it would not refer the bill to Al-Azhar for approval and sending it direct to president Morsi. The law allows the state and its related entities to issue Sharia-compliant debt both locally and internationally. The Ministry of Finance expects the first sukuk issue to take place within a couple of months and to yield $1 billion by June.

The takeover of EFG-Hermes Holding SAE (HRHO), Egypt’s biggest investment bank, by Qatar’s QInvest LLC is mired in delays almost a year after the transaction was agreed. The deal is set to expire on May 4 unless it receives a so- called no objection from Egypt’s regulator on the transfer of its assets to Qatar. The terms of the deal include a four Egyptian pound per share dividend once it is complete. However, EFG-Hermes’s co-chief executives are defendents on charges of illicit gains. Therefore, it is expected that the deal will not go through before the lawsuit is finalized.

Panelists at the 2nd Annual PPP Investment Summit called the new sukuk law ‘quantum leap’ towards introducing Sharia-compliant products to the Egyptian market. It was confirmed at the Summit that seventeen upcoming Public Private Partnership (PPP) projects will be financed using sukuk. The Ministry of Finance is considering using sukuk to finance a number of PPP projects including silos projects, developing roads, and the Ain Shams -10th of Ramadan city train line in order to link the industrial sites along the way. However, panelists explained that infrastructure projects require more than one method of financing and that there are various Islamic financing methods available.

The Shura Council approved the sukuk draft law during its general session on Monday. The final draft law consists of the council’s economic and financial committee proposal, the government’s proposal and the Shura Council’s joint committee proposal. The Shura Council modified 13 articles in the draft law. The final report from the committee mentioned that there are some items that have been further developed and modified. Its adjudication will be enforceable and binding on administrative authorities after approval by the Egyptian Cabinet.

The Egyptian government has signed a $250m leasing agreement with the Islamic Development Bank (IDB) to purchase equipment for a power plant to generate electricity in South Helwan. The deal will be finalised after presidential approval. The Minister of Planning Ashraf ElAraby signed the agreement in mid-January with the IDB president Ahmed Mohamed Ali. The project aims to meet the growing demand for energy in Egypt.

The Arab Contractors (AC) has won a $30mln contract for the extension and modernization of the Abidjan International Airport cargo facilities in the Ivory Coast. The project is funded by the Islamic Development Bank and aims to create a commercial zone next to the airport, with a lodging area, hangars, a convention centre, a duty-free zone, office buildings, warehouses, exhibition halls, a shopping centre and housing for flying staff. Moreover, the Egyptian contractors will also have to refurbish the apron, renovate access roads and increase the terminal’s capacity from 11’000sqm to 26’000sqm.

The Egyptian government reportedly plans to raise up to $1bn by June through sukuk sales, with one for domestic investors and one for foreign investors. The cabinet has finished a draft law to pave the way for the issuance, which would be debated in parliament this week. The Egyptian sukuk is expected to trade with a yield of 6 to 6.5 per cent, however, the market conditions between now and the eventual issuance could change significantly. Moreover, any issuance in unlikely prior to the settlement of a deal with the IMF on the stalled $4.8bn loan package. Negotiations with the IMF will re-open in early March.

The Cabinet, under Prime Minister Hisham Qandil, stressed that the now-debated Sukuk is not an alternative to the other financing tools. The final blueprint of the Sukuk bill will be presented to the Cabinet next Wednesday 27/2/2013 after taking into consideration all remarks made by al-Azhar, the Central Bank of Egypt and investment associations. If approved, it will be referred to the Shura Council for endorsement on the same day. On the other hand, The Cabinet reviewed the security situation and urged protesters in Tahrir Square to allow the flow of traffic for the sake of citizens.

The new Egyptian Sukuk law will be approved on Wednesday by the cabinet before being referred to the Shura Council on the same day. It is fully Sharia-compliant, and it will have a special Sharia committee to oversee its implementation, said Ahmed El-Najjar, member of the economic committee at the Freedom and Justice Party (FJP) and advisor to the minister of finance. The sukuk revenues will be used to bridge the budget deficit gap in an indirect way. However, they will not be used as an alternative to regular debt instruments, but will, rather, function more within a complimentary capacity.

There has been growing interest recently among conventional banks in Egypt who own licences to provide Sharia-compliant services, to restructure their branches which offer such services. Banque Misr, National Bank of Egypt (NBE) and The Principal Bank for Development and Agricultural Credit (PBDAC) are among the traditional banks that offer Sharia-compliant services. Meanwhile, Islamic banks themselves are preparing to apply their new investment plans. Financing for small and medium sized enterprises (SMEs) has also seen a spike in interest so far this year, with conventional banks aiming to strike agreements with the Social Fund for Development (SFD) in order to increase their presence within the SME segment.

Leaders within the takaful insurance industry have predicted continued high rates of growth within the sector ranging between 15% to 20% over the next several years. This has enabled the sector to secure high profits as demand increases for financial services in Egypt’s banking industry. However, takaful insurance companies also suffer from many of the same problems plaguing commercial insurance companies, such as an overall decrease in the amount of salaries and wages, in addition to other factors associated with the general slowdown of Egypt’s economy. Since 2003, five takaful property insurance companies and three takaful life insurance companies have been established. These companies combined have come to represent nearly 30% of the Egyptian insurance market.

Egypt's Principal Bank for Development and Agricultural Credit (PBDAC) is expanding its Islamic finance activities. The bank which has 18 branches offering Islamic finance, plans to open further six branches offering Islamic services in 2013. Furthermore, PBDAC is launching Shari’ah-compliant retail banking this month with a portfolio of EGP 50 million ($7.5 million) that can be raised to EGP 100 million next June based on demand, according to Abdel Rahman Al Kafrawi, head of Islamic transactions at PBDAC. The new Islamic services will reportedly cover areas including purchases of durable goods and agricultural equipment, the setting up of clinics and medical laboratories, and the financing of education fees.

The economic committee of the Shura Council prepared a draft law for sukuk, which differs from the Ministry of Finance’s current project regarding sukuk. According to Saeed Aref, a member of the council’s economic committee, the draft law grants foreigners the right to invest in sukuk usufruct for a maximum duration of 40 years, saying there will be no maximum percentage of ownership. Al-Azhar will be consulted to see the compatibility of the law with Sharia before the end of dialogue sessions, he added.

Egypt's Principal Bank for Development and Agricultural Credit (PBDAC) is launching sharia-compliant retail banking services this month to meet increasing demand in rural areas. According to Abdel Rahman Al Kafrawi, head of Islamic transactions at PBDAC, the bank will offer retail finance at 18 Islamic branches through murabaha and musharaka structures. The new Islamic services cover areas including purchases of durable goods and agricultural equipment, the setting up of clinics and medical laboratories, and the financing of education fees. PBDAC launches its new services with a portfolio of 50 million pounds ($7.5 million), that can be raised to 100 million next June based on demand.

Egypt’s Islamist government is making preparations for the country’s first sovereign sukuk after the cabinet of ministers approved the new draft sukuk bill on January 16. The new finance minister, El-Morsi Hegazy, reportedly plans the law might ultimately raise an additional $10 billion for the sovereign. Investors, however, do not yet sound convinced, since there might be another revolution to come. Nevertheless, Egypt has considerable potential as an Islamic finance market.

North Africa is moving towards the development of the Islamic financial industry as a response to the protests in several countries of the Arab world. Although there are some difficulties to overcome like low banking penetration and limited development of retail banking in general, there ist still potential for growth and progress. However, until a more stable political environment is provided, Shari'ah-compliant banking will be a niche market in North Africa.