Egyptian businesses face mounting cash-flow pressure as disputed social insurance assessments and prolonged certification procedures delay payments for completed government contracts. Although the government has extended a temporary mechanism allowing payments without prior insurance clearance, suppliers report that some public-sector offices continue to demand certificates, leaving invoices unsettled and exposing small and medium-sized enterprises to rising financing and operating costs.
Disputed Insurance Coverage Raises Business Costs
Egypt’s social insurance system has long required employers to insure their regular employees through payroll contributions.
Egypt’s Social Insurance and Pensions Law No. 148 of 2019 and its 2021 executive regulations provide specialised insurance arrangements for workers in construction, contracting, loading and unloading, quarrying and salt extraction, including those engaged in temporary or irregular employment. The provisions aim to ensure social insurance protection for these workers, with employer contributions for covered operations calculated using prescribed wage ratios linked to contract values.
Under Article 206 of the executive regulations, entities awarding covered contracting operations must ensure that the contractor provides a certificate confirming settlement of the relevant social insurance contributions before releasing contractual payments. The requirement applies within the specified contracting framework and should not be interpreted as automatically imposing additional insurance liabilities on every commercial invoice.
Article 214(3), however, conditionally excludes transactions limited to supplying goods from the relevant contract-workers’ insurance contribution regime, provided the workers involved are insured through the ordinary system. The exclusion does not automatically remove notification and documentation obligations preserved under Articles 203 and 206. This distinction raises questions over additional assessments and clearance procedures applied to transactions that may qualify for exclusion.
Small and medium-sized enterprises supplying goods and services to public institutions report being required to obtain insurance clearance certificates from offices in the governorates where contracts are executed, including for transactions potentially exempt from additional contract-related contributions. For example, a Cairo-based supplier serving a public institution in Alexandria may be required to send an insured representative to the Alexandria insurance office rather than obtaining clearance in Cairo, even for invoices worth just EGP 1,000–10,000.
Such requirements can impose disproportionate costs on smaller transactions, as travel, staff time and administrative expenses erode already limited profit margins. For businesses serving public institutions across multiple governorates, repeated clearance procedures increase operating costs, delay invoice settlements and tie up working capital. These additional burdens may ultimately be reflected in higher prices charged to government purchasers.
Digital Reform and Payment Delays
The National Organization for Social Insurance (NOSI) launched its new digital system on 29 March 2026, following the migration of records from older databases. The reform aimed to streamline procedures, improve electronic verification and reduce reliance on geographically separate insurance offices.
However, the transition encountered processing delays and administrative congestion. To prevent disruption to government payments, the Finance Ministry issued Circular No. 36/2026 in April, authorising public entities to release eligible contractor and supplier payments after provisionally deducting 5% of invoice values for transfer to NOSI, subject to final reconciliation, without awaiting insurance clearance certificates.
On 5 May, NOSI acknowledged the system’s initial difficulties, while denying a complete shutdown and reporting improved performance since 23 April. The authority disclosed that it had received 1,052,289 service requests between 24 February and 4 May, but completed only 420,649 (40%), leaving 631,640 requests outstanding (60%). Separately, it reported issuing 1,037,740 insurance records. NOSI announced plans to clear the backlog within a month and subsequently reduce processing times for new applications to 24 hours.
The temporary deduction mechanism subsequently drew objections. On 9 June, the Egyptian Federation for Construction and Building Contractors argued that the uniform 5% withholding exceeded the labour-related assessment ratios applicable to many contracts. It cited typical rates of 1.8%–2.7% for contracting operations and approximately 0.3% for supply contracts, calling for deductions to reflect actual liabilities.
Administrative problems persisted into August, when NOSI and the federation agreed measures to process a separate backlog involving approximately 12,000 contracts. Later that month, the government extended the provisional 5% deduction arrangement until 31 December 2026, reflecting continuing difficulties in processing insurance clearances and releasing payments.
Payment Delays Intensify SME Liquidity Pressures
Despite the government’s extension of the provisional 5% deduction mechanism, affected businesses report that some public-sector payment offices continue to insist on insurance clearance certificates before settling invoices, rather than applying the authorised alternative. Where certificate applications remain unresolved, suppliers describe a procedural deadlock: payments are withheld while the documentation required for settlement remains delayed. The extent of this practice across government institutions has not been independently established.
Businesses also report individual invoices worth millions of pounds awaiting insurance clearance, although neither the aggregate value of delayed payments nor the number of affected companies has been independently verified. These accounts point to a potentially wider problem extending beyond the low-value transactions faced by smaller suppliers.
For SMEs that finance procurement, imports, payroll and deliveries in advance, delayed settlements tie up working capital, increase financing costs and restrict their ability to accept new orders. Even the provisional 5% withholding can impose a disproportionate burden where the final insurance liability is substantially lower or the transaction qualifies for exclusion.
Resolving the disruption requires coordinated action by NOSI, the Finance Ministry and government purchasing authorities. Priorities include applying statutory exclusions to eligible transactions, ensuring proportionate assessments, enabling reliable electronic clearance across governorates and enforcing the alternative settlement procedures already authorised.
The immediate priority is to clear outstanding invoices and ensure consistent application of insurance obligations. Without reliable digital processing and timely government payments, administrative inefficiencies risk raising procurement costs, eroding SME liquidity, operational resilience and investment capacity, and disrupting the flow of liquidity across the domestic economy.
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