Earlier this week, governor of the Central Bank of Egypt (CBE) Tarek Amer said that Egypt’s economic development depends on 1% of the population – namely the business community.
If proper financial penetration was implemented in Egypt using fintech, economic growth levels will double from the current 5.5%, he suggested.
Given the importance of financial inclusion, digital banking and fintech, the CBE has been rigorously launching initiatives and passing regulations to spur and advance the financial industry while “banking the unbanked”.
“The nature of the financial industry is changing very quickly which concerns us as regulators,” Amer highlighted. However, the need to adapt to different business models that protect capital and support rising entrepreneurs in the fintech field is still there.
“The culture needs to be shifted. We need to bring in more young talents and minds for innovative solutions,” the governor announced.
So what has happened on Egypt’s fintech front in the past years and what future plans do the CBE and the government have to further develop the industry?
Setting a fintech culture
The government is seeking to nurture a “tech culture” among Egyptians in order to pave the way for more fintech solutions and projects.
“Setting a permanent culture of electronic payment will lead to the acceptance of technology among Egyptians,” chairman and managing director of the financial operating technological company E-Finance Ibrahim Sarhan explained.
Electronic payment also gives the government a chance to own a thorough database of individuals that were never registered in the financial sector before, he added.
What was the government’s plan so far?
Egyptian authorities had attempted to launch electronic payment services 10 years ago, according to Sarhan; however, they lacked the now-available technological advancements and approaches.
“These attempts came into effect only three years ago, when electronic payment cards were widely promoted, establishing a safe platform that connects citizens with the government,” Sarhan elaborates. This only came after thoroughly studying the Egyptian consumer’s behavior in dealing with electronic services.
Current projects, initiatives and incentives
As part of its current financial inclusion efforts, the CBE launched 500,000 national e-payment cards, called Meeza, since December 2018, aiming to issue 20 million cards by 2021. Meeza-holders are provided with the same services offered by Mastercard and Visa, allowing Egyptians to deposit, receive and transfer money locally and internationally.
In his keynote speech at Seamless North Africa 2019, CBE sub-governor for payment systems and business technology Ayman Hussein said that the government and the central bank are working hand-in-hand to establish a cashless economy through establishing 16,000 point-of-sale(POS) machines nationwide.
“The CBE also granted seven banks a license to accept non-cash payments through a QR code amid efforts to issue a non-cash payment law by the end of 2019,” Hussein explained.
The central bank also launched the Fintech Fund with a total capital of LE1 billion, along with a Fintech Hub and Fintech Sandbox to connect stakeholders and entrepreneurs in the field.
With the aim of accelerating financial inclusion, E-finance established the Ma’ashy (My Pension) mobile app through which retired citizens can easily access their pensions and pay their bills instead of standing in long queues at pension offices. “Around 37% of 8 million retired people were affected of that conventional method of obtaining their monthly pensions,” Sarhan elaborated.
Other ways to boost the fintech sector in Egypt include relying on e-commerce, since young Egyptians are more likely to rely on cashless transactions when buying items or services online, Sarhan confirmed.
During Seamless North Africa 2019, the CBE signed a memorandum of understanding (MoU) with a number of financial authorities – including the Financial Regulatory Authority and Egyptian Money Laundering and Terrorist Financing Combating Unit – to create a suitable legislative environment for fintech.
It also signed an MoU with the Ministry of Social Solidarity to support a social safety network through the automation of payments.
In a leap towards the digital age, a number of Egyptian banks– including Banque du Caire, the National Bank of Egypt and the National Bank of Kuwait – started introducing e-wallets and digital branches to their customers.