A digital answer to lack of accounts

By Heba Saleh

Egypt is a country where cash remains king and electronic payments account for a tiny proportion of all transactions. But Ashraf Sabry, founder and chief executive officer of Fawry, the country’s oldest and biggest electronic payments company, has ambitious plans that would see Egypt’s mostly unbanked population of 94m people carry out a broad range of financial transactions on their mobile phones.

Tapping his mobile, he says: “We want to move everything here, to the phone, so you can pay everything through a single digital device.”

Launched in 2010, Fawry has already transformed bill payment for millions of Egyptians. Its bright yellow and blue logo is now displayed at 65,000 corner shops, pharmacies and stationers around the country, which form a network of collection points where customers can pay their bills for a range of services and utilities. All payments can be made in the same place, sparing customers the need to stand in several lines each month.

Mr Sabry says that Fawry’s services are tailored to meet the needs of the large majority of Egyptians who have no bank accounts. Only 32 per cent of the population have accounts according to the Central Bank. He adds that a large proportion of account holders are civil servants who use their debit cards once a month to withdraw their salaries in cash to make payments.

Cash on delivery is the preferred method of payment of Egyptians who shop online, he says. At the root of Mr Sabry’s optimism is a combination of demographics, low banking penetration and a high rate of mobile phone ownership. He argues that with Egypt’s population expanding at about 2 per cent or 2m people a year, demand will increase for all services, including those offered by the government, creating more opportunities for digital solutions.

Already, he points out, traffic in Cairo is heavily congested and the government is reducing the size of the bureaucracy as it grapples with its fiscal deficit.

“Going digital will be mandatory, there is no other solution,” says Mr Sabry. “The government would need to double the physical infrastructure but who will pay to cope with the growth? Going digital will reduce traffic and limit corruption by state employees.”

He cites the example of annual renewal of car licences by the traffic department – a service Fawry now provides under an agreement with the government. Car owners apply online or by phone, pay the fees electronically or at a collection point and have the licence delivered to their address. Mr Sabry complains that one issue that needs to be resolved in relation to state services is that Fawry’s fee is paid by the customer alone.

“The payment system in Egypt does not have an incentive model because the government does not pay . . . the processors of electronic payments. The existing law does not allow it,” he says. “This is a concept that will have to change.”

Some 4m people already use the company’s mobile wallet services. Fawry payments are also offered on the screens of about 7,500 ATMs and on its own internet portal. Airline bookings, donations to charities and university fees can be paid on the platform. Revenue is generated by a convenience fee levied on bill payers and a collection fee paid by billing companies. Shops earn a cut from the fees and, to encourage them to offer the service, Fawry makes available loans to pay their suppliers.

“Telecom companies represent 40 per cent of our billing clients and the rest is government services, clubs, trade unions and even banks, for which we collect credit card payments,” he says. “But what we are doing now is bringing everything to the mobile so there would be a banking application that allows you to buy a book or an electronic cinema ticket from your phone.”

Apart from vastly expanding the range of services it offers over the past five years, the company has quadrupled both its network of collection points and the number of daily transactions it performs, which has now reached 1.6m. Fawry’s shareholders are mostly private equity firms, with Helios Investment Partners, an Africa-focused investment firm, the largest investor with a 41 per cent stake.

MENA Long Term Value Fund, a joint venture between the Wellcome Trust and EFG Hermes, the Cairo-based regional investment bank, is next with a 26 per cent stake, while the IFC, the private sector arm of the World Bank owns 5 per cent.

“We are processing E£22bn ($113.2m) annually in payments and we have been growing at least 30 per cent per year since we started,” says Mr Sabry. “We are also really young and the opportunities are much more than what we have achieved.”

Published on Feb 16,2018 [ Vol 18 ,No 929]



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