Enhancing the NILEX Growth in Egypt: A Study of the Relevant Laws and Regulations

Abstract

Access to finance for Egyptian companies through the stock market is hampered by the inadequate institutional, regulatory and legal frameworks.  The paper discusses how the NILEX can serve as an alternative to bank lending which can be more attractive to issuers, and how the Egyptian institutions involved in the implementation of policies relating to SMEs can cooperate, not only to encourage firms to be listed on the SMEs exchange, but also to develop simple project ideas into success stories. It studies the capital markets laws and legislation and presents the pitfalls in the regulations and supervision processes that have resulted in a limited number of IPOs, a narrow investors’ base, unmatured equity culture, poor quality of companies, weak supervision and illiquidity. Finally, the paper explains how the NILEX can be rescued by tailoring the appropriate regulations and legislations and illustrates how the careful design of such regulations can be intended to meet only its very particular needs.