An approximated sum of 1 billion Egyptian pounds (USD 57 Mn) has been set up for Egypt’s fintech startups, as per a fund from the North African country’s government via the Central Bank of Egypt (CBE).
CBE, who says the fund will bolster research into the fintech space and assist early-stage enterprises focused on digital finance, announced the prospective initiative at the Arab African Forum in Aswan, Egypt; a panel that discussed the impact of financial technology and innovation in Africa.
Respite For Fintechs
Deputy Governor of the CBE Hussein Ayman said the bank strives to ensure and maintain the development of the financial technology unit. Financial inclusion in Egypt has been up for debate for obviously pressing reasons, prominent among them being the deployment of digital finance. A Mckinsey report says that financial inclusion based on such implementation could add about USD 3 Tn to the GDP of emerging economies by 2025, resulting in about 6 percent of the GDP. The report also says that the same development will create jobs for 95 million people while widening access to financial services.
Egyptian fintechs have long been advocated for, based on e-finance adoption, especially as it regards a cashless society. According to Ibram Sarhan, Egypts’ chairperson for e-finance, developing a cashless society on the country will not only help in the development of an individual; but as well help in the production of a progressive society, as Egyptians can enjoy both social and personal benefits. The use of e-payment systems and financial inclusion will have a positive reflection in Egypt’s economy and society, helping to promote fairness among citizens on the backs of the availability of centralized databases that all store each’s information.
While Egypt shoulders the largest population in the Middle East and North Africa (MENA) region, just about 14 percent of the adult population has a bank account, that’s according to a World Bank Global Index. The African nation also boasts of one of the most significant mobile telecom markets in Africa, with effective competition and a penetration rate of about 105 percent. With these numbers come great responsibilities, even as fintechs in the country face funding problems and struggle with the capacity to create partnerships with banks and reaching those in the unbanked sector.
September last year, the Egyptian Ministry of Investment and International Cooperation partnered with EFG Hermes and the UNDP to launch a new startup incubator christened as Fekretak Sherketak. The initiative aims to catalyze Egypt’s growing entrepreneurial scene through a four-month acceleration and mentorship program. Startups (fintechs included) deemed qualified will get up to USD 28,300 in seed funding for an equity stake of four to eight percent Last June, CBE Governor Tarek Amer and the chairperson for the Egyptian Financial Supervisory Authority (EFSA) Sherif Samy signed an agreement to enhance cooperation between both parties to promote financial inclusion in the country.
Last July, a partnership including the World Bank Group, International Telecommunication Union and the Committee on Payment and Markets Infrastructures led to the launch of the Financial Inclusion Global Initiative, aimed to foster research in digital finance and accelerate financial inclusion in developing countries. Pilot countries picked included Egypt, China, and Mexico, with the North African country being analyzed by the World Bank Group to have the potential of bringing more than 44 million adults into the formal financial sector.
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