Egypt : The Fintech Gamble

In Egypt, fintechs are gaining momentum and could well end up revolutionizing the banking system.

Since free-trade financial zones such as the Abu Dhabi Global Market and the Dubai Financial Center began promoting the growth of regional fintechs, the banking sector has taken a real turn for the better. The fintech boom goes beyond Middle Eastern borders. Young, dynamic and resilient, Africa has become one of these new hotbeds.

In 2022, the continent attracted more than 1,100 investors, an increase of 29% on the previous year. Nigeria, Kenya, Sudan... Among the leading countries to adopt this new model, Egypt is betting on financial innovation. Under what conditions are these new companies entering the Egyptian market, and what influence do they exert on the country ?

Renovating Egypt's banking sector — fintech MNT- Halan heals the country's socio-economic wounds

Egypt's economic crisis may have thrown off its clocks, but it's no big deal. As the third-largest economy in the Arab world, Cairo is determined to hold on to this title. A study by The Economist shows that the EGX30 stock market (equivalent to the CAC 40) rose by 12% in value between December 2022 and March 2023. A correlation can quickly be established between this upward trend and a fintech market that continues to flourish.

The fintech sector is said to have already raised $736 million in the Nile country by 2022, with MNT-Halan the first company in the running, voted by Forbes as the 10th best-funded start-up in the Middle East. Valued at over a billion dollars, the young start-up has become Africa's new unicorn, following in the footsteps of Fawry and Hollydesk. Following in the footsteps of its two big sisters specializing in expense management, MNT-Halan is in turn helping to modernize the banking system.

The dematerialized platform facilitates electronic payments thanks to Neuron software, which uses AI to anticipate the behavior of its thousands of users. It's important to understand that the platform's vocation is twofold  — to initiate a transition towards digitalization and to respond to a major societal problem —financial insecurity. In a country where 70% of the population is unbanked, digital finance could become the remedy for precariousness. By embracing the field of fintech, Egyptian entrepreneurship seems to be healing the country's wounds, be they on a macro or micro economic scale.

Financial start-ups, regulated and supported by the State

Perceived as a driving force for technological, social and economic development, the technological finance sector is favored by many public and private players. According to Redseer, a quarter of all commercial pacts in the Arab world are related to the cloud finance sector. But the transition to digitization is not self-evident, and requires a solid regulatory framework.

At a time when the country's consumers are timidly beginning to turn to online payments, the Egyptian government is striving to secure this new practice while making it simpler and more accessible. To this end, the Central Bank is enforcing legislation allowing users to carry out instant transactions from their cell phones, and government measures are overseeing technological innovation in order to minimize risks.

Another notable example is the recent FRA law, which regulates financial start-ups by imposing a temporary patent on them, before allowing them to integrate into the ecosystem. According to Noha Shaker, founder of the Egyptian fintech association and vice-president of the African fintech network, this ecosystem is currently in the midst of an expansion phase. From government to private investors, even universities are now starting up programs on the subject.

Egypt — the MENA region's next technology hub?

The rise of Egyptian fintechs is a significant indicator of the government's evolution towards the technological revolution. In 2023, more confident and up to date with the latest innovations in finance, the Minister of Finance plans to issue $500 million worth of green bonds to support sustainable infrastructure projects while creating jobs.

Is Egypt the next technology hub in the Middle East and North Africa ? Although the World Bank currently ranks the Nile country just behind the United Arab Emirates, the strengthening of its legal framework, combined with the growth of fintech investors, suggests that this ascent is not over.

Sources :  

https://www.economist.com/economic-and-financial-indicators/2023/03/09/economic-data-commodities-and markets

https://www.forbes.com/sites/afshinmolavi/2023/02/15/middle-east-tech-startups-are-a-hot-emerging market/?sh=22abf83943c5

https://www.lesechos.fr/start-up/deals/mnt-halan-la-premiere-licorne-egyptienne-1905472 https://fintechmagazine.com/articles/top-10-fintech-trade-associations-globally

https://thefintechtimes.com/fintech-in-egypt-101-middle-east-and-africa/

https://www.thenationalnews.com/business/2021/11/28/generation-start-up-mnt-halan-rides-egypts-fintech wave/

https://www.thenationalnews.com/business/2021/08/30/fintech-investment-leads-growth-in-menas-digital economy/

https://www.wearetech.africa/home-fr-fr/fils/tech-stars/en-3-ans-mounir-nakhla-et-ahmed-mohsen-ont-fait-d une-solution-de-covoiturage-une-fintech-a-succes

https://egyptindependent.com/egypt-third-strongest-economy-in-arab-world-forbes/ https://www.afrik21.africa/egypte-letat-emettra-une-obligation-verte-de-500-m-pour-des-projets-ecolos en-2023/

https://www.wearetech.africa/fr/fils/breves/breves-simple/egypte-la-fintech-hollydesk-a-reussi-un-tour-de table-de-1-million-pour-accelerer-sa-croissance

https://egyptianstreets.com/2023/02/25/the-arab-women-making-noise-in-the-fintech-and-blockchain industry/