During opening the Seventh International Tontine (Takaful) Summit

Al-Morsey Hegazy: Egypt is moving towards recovery from the economic and financial crisis

The Choice of Cairo to host the summit is a confidence testimony of international business community in Egyptian economy prospects

We discuss Sukuk offering to finance establishing several major public projects immediately after the issuance of law

Islamic financing mechanisms will not be a substitute for the commercial financing instruments, but they are complementary

Al-Morsey Hegazy , Minister of Finance , assured that Egypt is moving towards recovery from the economic and financial crisis has been suffered before the January 25^th revolution, pointing that the Ministry of Finance managed to partially control the increasing budget deficit.

He said that Egypt almost concluded the amendment of the social- economic reform program, to invite the International Monetary Fund's mission (IMF) to visit Egypt sooner in order to complete the consultations on the program targeting not to obtain the loan estimated at $ 4.8 billion, but to recover international community’s trust, thus contributing in return of external and internal investment flows for the Egyptian economy

He added that the program targets two main axes:   first, the financial sustainability through investment projects interest to provide job opportunities, second, social dimension as we are keen not to affect the rights of the low-income groups.

He explained that the government is eager to deepen financial sector through introducing new financial mechanisms such: Sukuk and expanding Takaful insurance programs to allow more freedom for customers whether savers or investors to choose the financing instruments suit their needs. He confirmed that the trend of such financial instruments will not be substitute for the other financing instruments provided by commercial insurance companies and banks, both of them are complementary & support each other and play main role in mobilizing domestic savings and direct it to finance development projects.

The above mentioned was during opening the seventh session of the International Takaful Summit, held in Cairo  in presence of Ashraf El-Sharkawy, the chairman of Non-Banking Financial Supervisory Authority , Abd EL-Raouf Kotb,  the chairman of Insurance Federation of Egypt ,Dr Mohammed Moaet,  deputy to the Minister of Finance, Serag EL-Hady,  secretary-general of the International Islamic Insurance Federation and Takaful companies, Dr. Metaib Al-Roky ,CEO of Weqaya Institution organizing the summit, as well as  senior officials of insurance industry from 25 countries all over the world.

The Minister said that Egypt always enjoys trust of international business community, evidenced by hosting many international events and conferences during past two years, the prominent of which is the insurance sector’s 2 events: firstly, the twenty-second annual conference of Afro-Asian Insurance and Re-insurance Federation, in which  more than 700 persons from 52 countries participated, secondly: the International Takaful Summit, which has chosen Cairo to held its first meeting  outside London, after successive six meetings held in the British capital.

In an unmistakable message, the global insurance industry supports Egypt despite the current conditions, confirming international business community's trust in the Egyptian economy prospects and the promising growth and prosperity through next few years.

He added that the Egyptian insurance market includes 29 insurance companies with an Egyptian, Arabic and foreign investments among them Saudi, Emirates, Qatari, Sudanese, English and German investments operate in Egypt many years ago. The number of Takaful insurance industry companies have been doubled from 4 companies in 2008 to 8 companies currently, as there is a massive annual growth in the premiums of Takaful insurance programs and the size of its paid compensations, leading to a leap in the premiums' average that have been attained by Takaful insurance companies, compared to total premiums of Egyptian market estimated at 0.8 % in 2008 of total premiums reaching to 10.2 % in 2012, currently amounts LE. 619 million.

He also explained that the total compensations paid by Takaful insurance companies increased from LE.130 million in 2008, an average of 1.5 % of total compensations incurred by the Egyptian insurance sector to reach LE. 472.9 million in 2012, an average 6 % of total compensations incurred by the Egyptian insurance market estimated at LE. 7. 884 billion.

The Minister also said that the size of Egypt's Takaful insurance premiums is too small in comparing with that of the external world estimated at $ 12 billion in 2012, notwithstanding this amount indicating to the prospects of such Takaful insurance industry in both Egypt & Islamic world and even the external world, and this industry’s expected growth during the coming years.

He confirmed too that the Takaful insurance industry in Egypt is promising, especially with the introduction of financing Sukuk in the Egyptian market, we wish to initiate the first offer of government Sukuk this year, immediately after the issuance of Sukuk law. He indicated that the ministerial legislative committee finished revising the law draft, as it will be presented to the cabinet soon in order to be formally submitted to the Shura Council for issuance.

The Minister mentioned also that the Ministry of Finance in cooperation with a number of other ministers are discussing the set up of many major projects that may be financed by offering Sukuk, such as the project of establishing new silos, another for setting up petroleum products warehouses, enabling the government to purchase large quantities of our needs of petroleum products at law world prices, which contribute in improving the provision of such products ecnomically.

As for the International Summit for Takaful Insurance, the Minister invited the participating experts for studying ways to remove obstacles and problems facing this important financial industry, noting that the Egyptian government is ready to support any proposals or recommendations of the summit and will formally adopt them in various international Forums.

Regarding the Egyptian market situation, the Minister said that he is ready to support any proposals, legislative or procedural adjustments ,which the Egyptian insurance market need, to strengthen its role in the national economy and support the development efforts to increase contribution of insurance industry in general, and of Takaful insurance in particular in the Egyptian GDP growth.

Dr. Ashraf El Sharkawy – The Chairman of Non-banking Financial Supervisory Authority confirmed that the Egyptian insurance industry experiences accelerated growth in the recent years, although they are affected by events taking place in Egypt, since the 25^th January revolution, but it made a high Percentage growth rate in insurance premiums and also for the amount of compensation incurred, as the disbursed compensation in 2012 reached LE. 4.5 billion, a growth rate of 47 % in 2011, demonstrating the size of burdens , which endured by insurance industry to protect establishments and individuals and to support the Egyptian Economy.

He also said that FSA ( Financial Supervisory Authority) spares no effort in supporting the Non-banking financial activities and remove any obstacles hindering them, expecting growth in insurance industry during the coming years, leading to raise its contribution in GDP, which is currently less than the prospective.

He added that the Financial Supervisory Authority expects to get recommendations and contributions of the participating Experts from 25 countries, seeking their help in development of work regulations and systems of Takaful insurance industry in Egypt, which will result in the best protection of document holders’ rights.

Abd El-Raouf Kotb, Chairman of Insurance Federation of Egypt, mentioned that Takaful Insurance has been entered in Egypt in 2003, i.e. less than 10 years, however it achieved accelerated leaps, whereas 8 companies are working now in this industry and acquiring 10 % of the Egyptian Insurance Market, assuring that the Egyptian Insurance Industry Market is promising, in all branches; property, life, Takaful and commercial Insurance.

Also, he said that choosing Cairo by conference organizers in order to hold its seventh session proved the position achieved by Takaful Insurance Industry in Egypt during the first decade, in addition to Egypt location which links between Arab and African markets, and the existence of Al-Azhar, all the previous factors are motivating for more growth of Islamic Financing instruments.

Dr. Metaib Al Rawqy, CEO of Saudi Weqaya Takaful Insurance Institution, confirmed that Egypt is the symbol of the Arab World, so that we were keen to choose Cairo in order to hold the first conference of International Summit for Takaful outside the United Kingdom.  

He said that the performance of Takaful Insurance Industry during the last years witnessed a rapid growth due to the integration of innovation in this industry strategy to expand the scope of products and services complaying with provisions of Islamic Law (Sharia).

He confirmed that Saudi Arabia is obligated to develop Takaful Insurance Industry and its growth in Arab and also International markets, mentioning that Saudi market achieved a growth of 12% in Takaful Insurance installments last year and this growth amounted to 20.8   billion Saudi Riyals, increasing Saudi citizen’s spending rate on insurance to 720 Saudi riyals annually.

Dr. Mohamed Moeit, deputy to Minister of Finance for Social Insurance and Pensions, said that Takaful Insurance market in the world currently witnesses a rising growth, as the first company for Takaful Insurance has been established in 1979 in Sudan and today Takaful Insurance companies are about 180 companies in addition to 11 companies for Takaful Reinsurance, all these companies are working in accordance with rules of Islamic Law in 32 countries, and such growth provides many opportunities and challenges to Takaful Insurance and Traditional Insurance Market for providing and developing the available products in a World where insurance is a must for all, especially life insurance which is considered one of the used instruments to attract long-term savings.

He added that Insurance Sector is one of the main pillars of capital market and therefore developing Takaful Industry and Islamic Financing are a must for its great effect on economy growth and on attracting new investments for enhancing growth, this requires developing this industry throughout providing experiences and necessary resources for that and developing the organizing legal framework.