Egypt is this month implementing a law requiring that most payments to government, and most salaries and fees out paid by public and private bodies, be made electronically. The move is intended to eliminate the use of cash for such transactions in a push to improve efficiency, promote the shift to digital finance, bring greater transparency to transactions, and block opportunities for corruption.
The North African country’s parliament voted for the E-Payments Act in March. The law does not affect payments below 500 Egyptian pounds (US$29), for which cash will still be allowed.
Government institutions and private companies will now be obliged to use electronic payment to pay employees, contractors and service providers, according to English-language site Ahram Online.
In a supporting initiative, a national e-payment card entitled Meeza (‘merit’ in Arabic) is being promoted by the Central Bank of Egypt. The Ministry of Finance announced in September 2018 that Meeza cards would be able to handle all government payments. Meeza cards can be recharged through banks or ATMs, Ahram has reported.
Meanwhile, Egypt’s Ministry of Finance has installed 7,000 point-of-sale (POS) terminals at locations including governmental offices, universities and registration offices, according to website Egyptian Streets.
In respect of the E-Payments Act Bosna Fahmy, Professor of Economics at the University of Cairo and member of the Egyptian parliament’s economics committee, told Al-Monitor: “The E-Payments Act will help the government fight corruption among employees who could sometimes ask for bribes from people to provide quicker services or to help them with tax evasion. The act achieves that by preventing taxpayers from directly dealing with any employee. Instead, they make their payments through the e-payments system.”
The inclusion challenge
Representative of parliament’s economic committee Amru al-Jawhari told Al-Monitor that “the e-payment system will improve financial inclusion as it will push each citizen or company, no matter how small it is, to set up a bank account through which it would perform its electronic transactions and dues. This would increase banks’ revenues, and by doing so it will increase banks’ abilities to support new investments across sectors and grant loans to small- and medium-sized businesses.”
Concerns have been raised about compliance from the unbanked and people unable to use the internet in a country whose total population is estimated at just under 100 million. Egypt’s Central Bank has estimated that just 32% of citizens have bank accounts, according to the Financial Times.
But Mohamed Badraoui, member of the Egyptian parliament’s economic committee, reportedly told a press conference on the 9 March that people living in regions with security situations, such as the Sinai Peninsula, and isolated rural areas that have no internet coverage would be excluded.
Although the law applies initially to any payment exceeding 500 Egyptian pounds, the government is working on applying the law on all payments by 2022, according to reports.