With the evolving economic landscape and encouraging investment climate, corporate governance compliance becomes instrumental for Egyptian businesses. “The world’s economic and geopolitical maps are being redrawn, urging multinationals to actively seek investment destinations that offer not just cost efficiency, but also trust, transparency, and regulatory clarity,” said Ghada Hammouda, chief sustainability and marketing officer at Qalaa Holdings and chair of the Sustainability Committee at the Arab Federation of Capital Markets.

“Egypt is now positioned as a competitive investment destination with clear targets to attract relocating industries, supply chains, and value chains,” she added.

Notably, the concept of governance was largely adopted after the Egyptian Institute of Directors issued the first corporate governance code in 2005, inspired by the OECD’s 1999 guidelines. “The Egyptian code primarily aimed to govern the relationships among shareholders, management, the board, the company, and investors,” said Mohamed Farid, chairman of the Financial Regulatory Authority (FRA).

“Without governance and without having clear segregation between the role of shareholders and management, you will never be able to reach the point of feeling comfortable with the performance of companies,” he said.

In July,  AmCham’s Corporate Impact and Sustainability Committee convened a session to explore the shifting landscape of corporate governance, underscoring its critical role in advancing sustainability, transparency, and private sector resilience. The discussion highlighted the pressing need for regulatory modernization, cultural transformation, and strategic alignment with global standards.

Why now?

The importance of governance stems from it being a real catalyst for transforming companies’ operations on the ground. According to Diligent, a software-as-a-service provider, “Corporate governance is important because it lays a foundation for the organization’s approach to every other business activity. The governance framework directs and controls everything within the organization, from enterprise risk management (ERM) strategy and cybersecurity to environmental, social, and governance (ESG) issues.”

Corporate governance compliance plays a key role in boosting investor confidence and ensuring sustainability. “Strong governance enhances investor confidence, ensures compliance with international standards, and unlocks access to development finance and climate-aligned capital,” Hammouda emphasized during the session. 

According to Sherifa Sherif, executive director of the National Institute for Governance and Sustainable Development (NIGSD), governance also “builds and maintains citizen trust by promoting ethical leadership, inclusive participation, accountable decision-making and responsiveness to citizens’ needs.”

Corporate governance also enhances women’s representation on boards of directors. According to Farid, Decrees 107 and 108 (2021) issued by the FRA mandate female representation on boards of directors in Egypt, specifically for non-banking financial companies and companies listed on the Egyptian Exchange (EGX).

Standing out

For companies to remain competitive while proactively managing risks, Farid highlighted the need to rely on data. “The data component is becoming of paramount importance and a prerequisite for being able to sustain or withstand any changes that are happening.” He explained that “Whatever you cannot measure, you cannot manage.”

Another key element is accelerating the pace of digital transformation. At the FRA level, Farid noted, it allows for e-identification, electronic Know Your Customer (e-KYC), a digital process for verifying customer identityelectronic Know Your Customer, a digital method for verifying customer identities (, ),and e-contracts. “Technology bypasses the relevant costs incurred by companies in reaching insurance policyholders and potential investors,” Farid said.

However, he said digital transformation requires a hefty investment in IT infrastructure. “Technology is all about the scalable infrastructure behind it, where companies understand that there has to be a plan for expansion if needed.” 

Another major component is cybersecurity to protect data. “We have a law that stipulates and dictates the protection of data and personal information,” he said. “Every single person or entity with significant databases must deal with cybersecurity reports and penetration tests.”

Regulating the unregulated

Hani Sarie-Eldin, founder and managing partner of Sarie Eldin & Partners Legal Advisors and chairman of the Financial, Economic and Investment Affairs Committee at the Egyptian Senate, noted that despite significant efforts by government bodies in the regulated market, challenges persist with non-regulated companies. 

He emphasized the urgent need for reforms in several areas — most notably, the modernization of the Companies Act. Sarie-Eldin said, “Fiduciary duties of directors remain weak and enforcement mechanisms are outdated.”

He advocates for extending the regulatory framework to large non-listed companies, especially those with minority shareholders, saying,  “If you look at the U.K. Companies Act of 2006, for example, you’ll find almost 77 articles or sections directed only to the governance of closed companies and non-listed companies. So that’s important.”

Sarie-Eldin emphasized that the major challenge lies in the fact that, even among listed companies, governance is still approached merely as a compliance box to be checked. “Culturally, governance is still seen as a regulatory framework, not as part of business success or a long-term policy,” he said. “Among non-listed companies, there is a clear cultural resistance, as they often don’t see the value of governance.”

Capacity building

Another major challenge is the lack of internal capacity and skills. “While companies may have good internal auditors and risk managers, when it comes to governance, they often lack the necessary tools, management, and leadership,” Sarie-Eldin said. “There is no clear ownership of governance. You may find scattered efforts here and there, but not a unified or accountable structure. This needs to be addressed.”

Sarie-Eldin also cited the need to consider the role of non-governmental organizations in providing training and raising awareness about governance. 

He added that one of the most pressing concerns is the lack of monitoring and feedback. “Current reporting systems do not include governance-related feedback. Boards typically review policies only once a year, and there is little to no input from frontline staff or stakeholders.” To address this issue, Sarie Eldin emphasized the importance of conducting regular audits or internal evaluations to ensure effective governance implementation.

Supporting Sarie-Eldin’s concerns, Sherif noted there’s a mindset and cultural gap when it comes to governance. She explained that weak audit systems, both internal and external, continue to pose challenges across the public and private sectors. Reporting mechanisms remain inadequate, and transparency is still a work in progress.

Companies also encounter a significant skills gap, she said. “The necessary expertise and know-how are often lacking. The government, private sector, and civil society are all stakeholders in the same ecosystem and must recognize these challenges and work together to address them,” said Sherif. “We are on the right track, and with continued effort, collaboration, and commitment, we can build a more resilient, competitive, and well-governed market.”

ESG+

During the session, Ahmed El Guindy, managing partner of Tanmiya Capital Ventures, emphasized the importance of ESG in elevating investment processes. “If a company is seeking financing today, ESG is not optional — it’s a requirement. And if you want to elevate your position, especially with asset managers like us, it’s not just ESG — it’s ESGI, where the ‘I’ stands for impact,” El Guindy said. 

From the equity side, he said, the market today encompasses three to five local institutional investors and about 10 regional ones. “In my view, only the local investors have the capacity to work closely with companies to help them build their ESG policies.”

Without that support, companies won’t be able to attract capital. He noted that “regional funds often lack the manpower or patience needed on the ground to help target companies develop these frameworks.”

El Guindy said there is an alarming gap between regulations in the public and private markets,  noting that regulation must be the driver of reform, and the accelerated progress seen in the public market should be mirrored in the private sector.

To address this gap, regulation alone is not enough, El Guindy added. Financial incentives are also essential to encourage meaningful adoption and bridge the gap between compliance and real transformation.

While there are programs offering benefits to companies that comply with ESG standards, these initiatives are largely driven by international financial institutions. In contrast, the local institutional capital has yet to fully link capital deployment to regulatory adherence.

Although international financial institutions play a vital role, “deploying an estimated $2 billion to $3 billion annually, the potential and scale of local institutional capital is significantly larger, ranging from 10 to 100 times that amount,” El Guindy noted. 

Governance-driven capital

Reem El Saady, deputy head of Egypt at the European Bank for Reconstruction and Development (EBRD), emphasized that governance isn’t just a principle being advocated externally; rather, “it’s something we live internally. We are transparent, digitally transformed, and deeply committed to sustainability. For example, we measure our carbon emissions annually and work to maintain and reduce them.” 

In Egypt, governance remains a challenge for businesses — particularly in sectors targeted by the EBRD for investment, such as energy, transport, real estate, food, and agribusiness. 

For many Egyptian businesses, El Saady said, “governance is not yet embedded in their DNA. Often, they adopt governance practices only when seeking investment or when forced by regulation, which is a good starting point.” 

Sustainability and governance are especially challenging for smaller businesses, ”unless these efforts are monetized,” she added. These businesses are focused on daily survival, and unless governance or green practices directly affect their bottom line, they struggle to prioritize them, El Saady highlighted.

Implementation challenges 

Despite having a good regulatory framework, El Saady noted, the problem stems from penalties related to those regulations. “Having more penalties related to regulations can sometimes lead to what we call greenwashing or governance washing.” An example of this could be appointing a woman to the board just to meet a requirement, not because of genuine inclusion or strategy. 

To ensure the actual implementation of rules and regulations, El Saady stressed that the EBRD dedicates a lot of capacity building at all levels, starting with training courses, and bringing in international and local consultants to boost the implementation of green governance.

El Saady highlighted EBRD support for government institutions to improve governance, citing the Suez Canal Economic Zone, where the bank helped streamline and digitize processes to enhance transparency and decision-making. 

On the sustainability front, on July 9, the EBRD signed off on Egypt’s first sustainability-linked loan, a $100 million facility with Banque Misr. It targets low-income housing and women-owned businesses.

While governance is constantly evolving, Sherif noted that within public and corporate settings, governance serves as a tool and enabler, explaining that corporate governance is a mechanism to build effective and efficient institutions, combat corruption, ensure transparency and accountability, and uphold the rule of law.

In Egypt, Sherif said, “We have a solid legislative foundation: investment laws, company laws, listing criteria for stock exchange participation, and more.” These are all tools that support the implementation of corporate governance in Egypt. However, “what we’re lacking is enforcement and consistent implementation.”

This article first appeared in August’s print edition of Business Monthly.