Fintech has grown significantly in Egypt over the last five years, as venture capital investments jumped to over $159 million in 2021, up from around $1 million raised in 2017, according to a Fintech report issued recently by the Central Bank of Egypt.
Speaking to Ahram Online, the CEO and co-founder of PaySky Waleed Sadek says that Egypt has reached significant milestones in its digital transformation.
The milestones include recent launches like the Digital Egypt platform, which aims to provide more than 130 digital government services to citizens, in addition to cable landing stations in different governorates and the International Data Centre in Cairo.
Sadek says that PaySky plans to raise funds equivalent to $50 million to expand in four countries, and that the company’s ongoing investments in the Egyptian market surpass EGP 100 million.
Ahram Online: How do you perceive latest developments in digital transformation in Egypt?
Waleed Sadek: The digital transformation and the digital economy are the two wings of comprehensive development and they have become an urgent and inevitable necessity for all countries of the world.
Worldwide ICT spending is projected to record a total of $4.5 trillion in 2022, and to grow by 3 percent from 2021, according to the latest forecast by Gartner, Inc. This significant investment needs significant digital strategy and leadership of the digital transformation.
The Egyptian political leadership has an insightful vision and consideration in strategic planning for the future of Egypt’s digitalisation in light of Egypt Vision 2030 for SDGs. Egypt launched the digital transformation initiative for the Egyptian government and its institutions three years ago to reach a sustainable competitive digital knowledge society and strong digital economy.
These plans have been visible as the country strives towards automating various sectors such as governmental services, financial institutions, and the energy vertical. Egypt envisions a future where innovation will be the next frontier. This is reflected in the country's Vision 2030 strategy, which outlines the end goal of building Digital Egypt through three pillars: digital transformation, digital skills and jobs, and digital innovation, where cybersecurity and cyber risk-aware culture would play a decisive role.
AO: What potentials does the Egyptian market have for a robust tech-based financial solutions industry?
WS: Egypt is one of the most exciting markets in the region. With 102 million inhabitants, as smartphone and internet penetration rates increase, Egypt has a large and growing mass of potential fintech consumers. Currently, Egypt’s total addressable fintech market is between 62 and 74 million users, six to eight times the size of the UAE.
The fintech market in Egypt is still young. However, we are staying abreast of the internet era, where the number of internet users reached nearly 72 percent of the total population in January 2022, but merely 32.8 percent of the population has access to banking services, which proves that the opportunities for fintech companies in Egypt are vast.
Egypt has the third largest cluster of fintechs calling it home in the MENA region, with roughly 80 fintechs in its ecosystem. IT policy shifts and proactive action on the part of the Central Bank of Egypt have boosted fintech growth in the country. In 2020, the Central Bank and the Financial Regulatory Authority began addressing regulatory considerations for digital banks, digital wallets, nano-finance, insurtech and the like.
AO: What is PaySky’s investment plan for the Egyptian market and its possible M&A transactions?
WS: We are an award-winning payment solutions provider (PSP) whose goal is to improve and expand the scope of financial services to clients outside the scope of banking coverage, through Yalla Super App, by activating the country's strategy to enhance financial inclusion mechanisms. Yalla Super App already reached 990,000 users and more than 8,000 daily transactions, as we aim to provide services to more than 20 million active smartphone users in Egypt who lack formal banking and financial services to achieve financial security and spread the culture of electronic payments.
Visa and Mastercard, the world's two largest payment card network processors, joined forces with PaySky in launching new digital payment solutions in the Egyptian market. The company served as Visa’s digital QR payments platform to roll out Visa QR for several banks and launched the first live MPOS solutions on MIGS gateway with four banks with Mastercard.
Regarding our investment plans, we target raising funds equivalent to $50 million to expand in four countries and our investments in Egypt currently exceed EGP 100 million.
Building on the company’s success in Egypt, PaySky has successfully serviced different banks, central banks, merchants, and institutions, revolutionising payment solutions in 10 different countries across the Middle East, Africa and Asia such as Egypt, United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Pakistan, Libya, Sudan, Uganda and Botswana.
PaySky recently announced the launch of Yalla Super App in the UAE market, in partnership with its strategic partner Visa and other two leading financial entities in the UAE to become the first Egyptian Fintech to launch its services in the UAE.
The app will offer a wide range of payment solutions, support services, and value added created specifically to facilitate financial and non-financial services for residents of the United Arab Emirates during the third quarter of the current year.
AO: What are the main challenges that e-payments and the non-banking sector are facing? How is PaySky enabling people to overcome these challenges?
WS: The most prominent risks and obstacles facing the financial technology sector are the lack of financial awareness among owners and managers of small and medium enterprises, the culture of Egyptians that relies on cash payments, difficulty reaching social segments where banking transaction doesn’t exist, especially low-income segments, and the lack of financial literacy.
As PaySky, we are keen to continuously provide innovative solutions that close these gaps that e-payments and non-banking sector face.
In Feb 2022, we launched Yalla in Partnership with Visa and the Egyptian Post Office.
Yalla Card and Super App became the first full-fledged digital financial service offering in the market that provides a full digital account that enables customers to send, receive, save, track and invest money, as well as any online purchases, in-store purchases and daily ordering needs.
PaySky is continuously expanding its reach to strategic markets in the Middle East and Africa, empowering financial institutions, central banks and telecom operators with its full payment ecosystem, and empowering individuals and businesses with its Yalla flagship digital financial services account.
PaySky seeks to provide financial services without pressure or burdens on saving, which helps achieve financial security and spreads a culture of electronic payments. Not only that, PaySky uses the latest technology systems that are characterised by the highest levels of security and is continuously updating.