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The legislation amends the public procurement law to mandate that state entities settle invoices from small and medium enterprises within 45 days, down from the previous 120 days in some cases. EnterpriseAM’s First in line report highlighted how the change is expected to benefit thousands of vendors that rely on government work. Business leaders have long complained that delayed payments have forced many SMEs to take on expensive bank loans or even close their operations.
Central Bank of Egypt statistics indicate that SMEs represent 99 percent of the country’s registered companies and contribute around 40 percent to the national GDP. The new rule is part of a series of reforms aimed at improving the business environment, according to a government statement. International financial institutions have repeatedly urged Cairo to address late payments as a barrier to private sector growth.
In an interview with EnterpriseAM, the head of the Federation of Egyptian Industries said the measure will help stabilize supply chains that have been disrupted by cash flow problems. He called for similar priorities to be extended to subcontractors in large projects. The federation plans to monitor the implementation closely over the next six months.
World Bank data shows that in the Middle East and North Africa region, government payment delays average more than 100 days, contributing to higher business failure rates. Egypt’s move aligns with similar reforms in neighboring countries that have seen improvements in SME survival rates following the introduction of prompt payment rules. The legislation includes provisions for interest on late payments to further incentivize compliance.
The Ministry of Finance has allocated additional funds to ensure agencies can meet the new deadlines without disrupting other budgetary commitments. Officials stated that training programs will be rolled out for procurement officers to facilitate the transition. The program is backed by the International Monetary Fund as part of its ongoing support for Egyptian economic reforms.
The law also establishes a dedicated complaints mechanism for businesses facing delays, EnterpriseAM reported. The changes take effect immediately for all new contracts and will be phased in for existing ones over the coming quarter. The Ministry of Planning and Economic Development has been tasked with evaluating the impact of the legislation after its first year of implementation.
