In recent years, Egypt has put financial inclusion and the fintech sector at the forefront of its priorities. The Central Bank of Egypt (CBE), along with private and public banks, have participated in multiple global and regional initiatives ameliorate the environment for financial inclusion.
In 2017, bank account penetration stood at 33 percent in Egypt, according to the CBE, and the number of issued debit cards amounted to 17.6 million. With a population of almost 100 million, the numbers are considered low. A big step towards eliminating cash and banking a major part of the population was the government’s memorandum of understanding (MoU) with global payments technology provider Visa to “enable digital payment of government subsidies to 22 million Egyptian families,” according to AlexBank, as well as the establishment of the National Council for Payments.
At the governmental level, the vision seems clear: cash transactions need to decrease and the population needs to be banked. Evidently, the private sector is heading in the same direction. The fintech sector in Egypt has generally been gaining ground – not only within the banking sector, but amongst startups as well. Finding solutions to issues in the financial sector via technology has become a major attraction, paving the way for financial inclusion and facilitating payments across borders.
With opportunities looming across the country, global industry-focused startup accelerator Startupbootcamp (SBC) recently partnered up with fintech-focused venture capital Pride Capital to launch a new fintech accelerator. Bringing together the global expertise and track-record of SBC and Pride Capital’s network of mentors and subject matter expertise, SBC Pride FinTech Cairo aims to introduce a new vision for the acceleration of financial inclusion in Egypt.
On the sidelines of RiseUp Summit 2018, Business Forward sat with the CEO of Startupbootcamp MENA Todd O’Brien and Startupbootcamp FinTech Cairo Managing Director Ahmed Elsherif to understand the challenges of financial inclusion in Egypt, what SBC Pride FinTech Cairo is planning to change and what makes it stand out amongst other accelerators.
Would you describe financial inclusion as overhyped or underhyped?
Elsherif: I would not say it is overhyped or underhyped. I would say it is underserved; that is the best way to put it. I believe that this is an underserved angle to our economy. I also believe our economy at this point of time is ready to make a leap into financial inclusion because going cashless does not only mean making things easier; it also provides some form of double bottom line. I think this double bottom line extends to people who are underserved and the fractions of society that are underprivileged and helps you access more untapped markets, which in a way elevates the economic performance of Egypt as a whole. And lastly, it can play a very pivotal role in fighting corruption and tackling red tape challenges as well.
Why is financial inclusion becoming important to policymakers and regulators?
O’Brien: Given the fact that there is such a “cash society” and there are a lot of people who are missing out on things like savings and retirement around financial services, it is super important for policymakers to help push these creative technologies around financial inclusion so that it is not just [exclusive] to a certain number of people in the region. If the policymakers can be a part of the solution, then it will really help. Right now, it is a little bit more difficult to actually get some of these products off the ground with licensing and regulations and that is truly understandable because you want to make sure that people are not doing something they should not be doing with all these things. It is understandable but it needs to be a joint effort and this is why we think it is so important to work with the government entities here. In partnership with Pride Capital, we will be continuing to work with the CBE and all the different banks to make sure that these policies are happening.
Could banks alone, or startups alone, drive a new wave of financial inclusion?
O’Brien: The wave needs technology creators and entrepreneurs to make it quicker. The process is too slow and the banks are already working with the creative people. So yes, the banks “are working on it”. But they are working on it along with the startups. A lot of startups already are getting a lot of ideas from them. So, I think it has to be a collaboration; you cannot have one without the other.
Where is Egypt standing in terms of financial inclusion?
O’Brien: It is just beginning. It is behind; years too late. But at least it is happening now.
Elsherif: Egypt has been chosen as one of three pilot countries for the financial inclusion global initiative undertaken by the World Bank. I think this happened because of two major reasons: We have a widely unbanked and underserved population and our infrastructure is very weak. Egypt actually has a relatively tech-literate society, but when it comes to financial literacy, it is very low.
What value does SBC Pride FinTech Cairo add to the market?
Elsherif: What is different about Startupbootcamp, which does not exist in any of the accelerators within the Egyptian entrepreneurship ecosystem, is the global footprint. For starters, Startupbootcamp has a lot of global experience running accelerator programs across different cultures, different ecosystems, with different needs and different economic profiles. The second part is that it is industry-focused. SBC also brings with it a deep industry experience with different networks. We do not only run accelerator programs independently; we always bring industry-focused partners. Pride Capital has a solid track record in the financial services and technology industries amongst its founders, and a wide industry-focused local network of mentors and experts.
What is your long-term plan?
Elsherif: We are not here for a hit-and-run and we are not here to make a quick success story. I believe that the Egyptian market possesses a very good advantage: it is a good market for testing and it is full of challenges.
O’Brien: We are not just setting up a one- or two-year operation. For the next 10 years, we will be looking at how financial inclusion will actually shape this city and this country. And this is the vision: to have impact, to provide jobs and to see entrepreneurs and companies grow and thrive.