??? Egypt's fintech rising

Egypt's fintech scene is booming. This surge in innovative collaborations and investments is reshaping the nation's economy and redefining its future potential.

Let's explore the factors behind this remarkable development.

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Now let’s dive in.

?? Egypt’s fintech rising

The Background

• In 2017, Egypt was home to 32 fintech companies. By 2022, this number had surged to 177.

• A Central Bank of Egypt report suggests this growth is driven by rising demand for fintech solutions and increased venture investment.

• Egypt's strong regional relationships with Gulf countries have shaped its fintech landscape, with most Egyptian fintechs maintaining offices in UAE and Saudi Arabia.

• Local "bank" capital and private equity funds have played a significant role in investing in Egyptian fintech companies.

• The Egyptian government has launched initiatives to support digital payments and formalize the economy, including a pilot program to digitize remittances.

Today’s State of Affairs

• The majority of Egyptian fintech companies are headquartered in Egypt, specifically in Cairo and Giza.

• VC and angel investments make up a significant share of fintech investments, but private equity recently surpassed these, accounting for 55% of fintech investments in 2022.

• Egypt's fintech firms have been expanding into Gulf countries due to a significant customer base in these markets.

• The Central Bank of Egypt has launched a program to digitize remittances, with 80% of remittances sent to Egypt benefiting women.

• Egyptian fintech companies and payment providers facilitated 11 billion digital transactions worth an estimated $18 billion in 2022.

• Despite regulatory support, fintech companies still face speed bumps, indicating a need for more government action.

• More than half of Egyptian startups (58%) partnered with another fintech. Additionally, 115 fintechs or 65% work with banks in some capacity.

• The Central Bank of Egypt is actively encouraging digital payments to support the formal economy.

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What’s Next?

• The trend of private equity investments surpassing venture capital in the fintech sector needs further monitoring to understand its implications.

• Banks are evolving their approach towards fintech, transitioning from direct investments to acting as limited partners.

• There are 317 partnership discussions ongoing between banks and fintech companies, showing potential for increased collaboration in the future.

• Continued regulatory reforms and the deepening of bank partnerships could shape the future of fintech in Egypt beyond the obvious focus on payments.

• As fintech continues to boom in Egypt, there could be a greater push towards digitising other sectors, potentially leading to the formalisation of a larger portion of the informal economy.

• With the increasing trend of digitising remittances, more incentives may be rolled out to encourage the use of formal banking channels for remittances.

• The fintech landscape in Egypt will continue to expand, especially in Gulf countries where Egyptian fintech firms already have a significant customer base.

What challenges and opportunities do you see for fintech in Egypt?

?? Fintech & Payments

? In a bid to foster innovation and strengthen cross-border regulations, the Central Banks of Nigeria and Egypt have signed a fintech collaboration agreement.

? HyperPay, the leading payment services provider in the MENA region, has recently acquired Sanad Cash, a Saudi fintech start-up.

? Prime Minister Narendra Modi and Sri Lanka President Ranil Wickremesinghe signed an agreement to launch UPI in Sri Lanka, boosting fintech connectivity.

? actyv.ai, an AI-powered enterprise SaaS platform, has surpassed $1 billion in transactions within a record seven months.

? Global fintech revenue is expected to surge sixfold by 2030, reaching an annual total of $1.5 trillion.

? Private banking is flourishing in the Middle East, with increasing wealth formation and retention leading to expanded hiring and a broader range of Shariah-compliant asset classes.

? Africa is set to become the fastest-growing region in fintech revenue, with countries like South Africa, Nigeria, Egypt, and Kenya projected to achieve a CAGR of 32% by 2030, reaching $65 billion.

? Global investment in fintech startups have declined by 48% during the second quarter, totaling $7.8 billion.

?? Open Banking & Open Finance

?? Mastercard is leveraging open banking to enhance its technology and plans to introduce a range of products that don’t rely on fees from card payments.

?? The World of Web3

?? Global venture accelerator, Brinc, has announced its chosen 25 global startups for the Summer 2023 cohort of its Web3 accelerator programmes.

?? Crypto & Defi

? Crypto Oasis Ventures has entered into an MoU with DIFC to provide subject matter expertise for their ongoing and upcoming start-up accelerator programmes.

? Kuwait joins the growing list of jurisdictions that have prohibited all cryptocurrency operations, including Bitcoin.

? National Australia Bank has also announced its decision to block transactions to certain cryptocurrency exchanges, in a move to combat financial crime.

? According to Elliptic's former head of technical crypto advisory, there’s been a shift of crime from Bitcoin to stablecoins.

? American blockchain firm Fluent Finance is expanding into the MEA region, establishing its operations in Abu Dhabi.

? Sam Altman, CEO of OpenAI, has launched Worldcoin, a groundbreaking crypto project aiming to create a comprehensive global financial platform.

?? The Future is AI

? OpenAI launched "custom instructions" for ChatGPT, so that users can include a preface in their prompts, providing instructions to take into account when generating responses to commands.

? Salesforce says that AI will likely be driving the future of B2B commerce.

?? The State of Investment

? Scalo Technologies, a tech venture company based in Dubai, has spearheaded a $3.5 million investment round in Hexacore, a web3 mobile game publisher.

? Financial infrastructure layer Native and MENA web3 VC Cypher Capital have partnered to kick off a funding agreement.

? Egyptian fintech startup Menthum has raised an undisclosed amount in a pre-seed funding round.

? Nigerian insurtech startup MyCover.ai has closed a pre-seed funding round of $1.25 million.

?? Report of the Week

The State of Global Insurtech 2023: This report investigates the recent reduction in VC funding for insurtech, which has dropped by over 50% in H1 2023 compared to H1 2022. However, early-stage funding remains robust and opportunities still exist for quality startups, especially given the underfunded areas like life insurance. The importance of operational efficiency, adaptability, and resilience in the changing market dynamics is emphasised. Despite the funding cutbacks, insurtech represents a vast $7 trillion opportunity. Click here to download the full report.

?? The Podcast for Fintech Enthusiasts

In the latest episode of Couchonomics, I talk to Abdallah Abu-Sheikh, CEO of Botim and Founder of Astra Tech, in a discussion about the future of fintech and digital services. Known for his innovative approach, Abu-Sheikh shares his vision for Ultra Platforms, designed to streamline daily transactions and activities for consumers. He discusses the evolution of his ventures including Botim, PayBy, and Rizek, and shares the strategy of "last mover advantage" in saturated markets. Tune in here.

?? This Week’s Payments News

??? Thank you for reading

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