Expert Warns: Lack of Crowdfunding Laws in Egypt Worsens "Al-Mostareh" Scam

As interest in alternative financing grows, crowdfunding in Egypt stands out as an area still struggling with the absence of a clear legislative framework. This situation impacts the market and limits the development of technology-driven investment models. In this context, entrepreneur Mohamed Aboul Naga Nagati shared that he has been working for about six years to develop a legal crowdfunding model that allows individuals to invest in companies through regulated digital platforms. However, the lack of specific legislative regulation remains the main obstacle preventing the launch of this model so far. Nagati explained that efforts over the past years included meetings and participation in economic forums, along with presenting ideas that were incorporated into various initiatives since 2020. Yet, the current regulatory framework is still limited to traditional investment tools, without allowing direct company funding through digital platforms. He pointed out that this legislative void has contributed to the emergence of unregulated entities that attract savings with unrealistically high returns. This has led to the expansion of what's known as the "Al-Mostareh" phenomenon in recent years, increasing the risks of losing trust in informal investment tools. He added that some of these models have successfully attracted significant investments without sufficient oversight, posing a direct challenge to market stability and the protection of small investors, especially given the low financial literacy among a wide segment of individuals. Nagati affirmed his commitment to operating within a regulated legal framework, explaining that he prefers to postpone the launch of any crowdfunding platform until a clear legislative environment is available that ensures transparency and investor protection, rather than engaging in informal models that could carry high risks. His vision, as he clarified, is to direct funding towards productive companies within the real economy, contributing to job creation and providing tangible services, rather than focusing on short-term or unproductive investments. He concluded by stating that the Egyptian market possesses strong potential for adopting crowdfunding models, both in terms of demand and technological infrastructure. However, a clear regulatory framework remains the crucial factor to transform this sector into a safe and sustainable financing tool that supports economic growth.