Under the Central Bank of Egypt’s (CBE) strategy for digital transformation in the financial and banking sector, Egypt Fintech, one of the bank’s initiatives, launched its first-ever report last week tracking the fintech scene in Egypt over the past five years.

According to the Fintech Landscape Report, investment in the fintech sector, including fintech-enabled start-ups, jumped over the last five years to record $250 million, up from only $0.9 million invested in 2017.

Deals concluded in the sector inched up tenfold from 2017 to 2021, from only three concluded in 2017 to 32 closed in 2021, with average funding per deal of $5 million in 2021, up from just $300,000 in 2017, the report said.

Egypt’s information and communications technology (ICT) sector has been the fastest-growing sector over the past two years, and its contribution to the country’s GDP has risen from 3.2 per cent in fiscal year 2019-2020 to five per cent in the current fiscal year, according to the Ministry of Information and Communications Technology (MICT).

MICT Minister Amr Talaat said that the ministry targets raising this contribution to eight per cent of GDP over the coming three years.

On the sector’s start-ups, the report pointed out that approximately 16 per cent of these have not secured any funds, while 40 per cent have raised funding once and about half have raised funding in two or more funding rounds.

The report drew attention to the crucial role played by accelerator and incubation cycles in growing the Egyptian fintech market and listed key challenges the fintech start-ups are encountering in terms of having access to funding.

It showed a decline in the amount of incubator and accelerator funding in 2021, causing a funding gap for fintechs at an early stage.

The report charts a roadmap for a more resilient fintech sector in Egypt drawing on desires expressed by the entrepreneurs and start-up owners themselves. These include highlighting success stories of Egyptian fintechs to stir the interest of global venture capital and holding more talks, matchmaking events, and workshops to involve all fintech players in the market.

They call for more venture capital and angel investors, as well as for providing mentorship and coaching to equip start-up founders with the skillset needed for effective pitching to win a deal. The start-up owners also called for measures to encourage local banks and financial institutions to fund or lend to fintech startups.

Touching upon the CBE initiatives that target the sector and its players in the local market, the report said that funding was one of the core pillars of the CBE’s fintech and innovation strategy.

An investment fund worth more than LE1.3 billion to support innovation and to increase investment in the fintech and fintech start-ups industry has been created, with the aspiration to become the largest fintech-focused fund in the region.

The fund was established by the National Bank of Egypt, Banque Misr, and the Banque du Caire, with the possibility of including other investors, banks, and financial institutions, the report said.

The objectives of the funding encompass making direct investment available to domestic and international fintechs alike, in the event that they intend to launch their businesses in the Egyptian market, providing direct investment to both the fintech sector and the fintech-enablers domain, and extending part of the investment to backing early-stage start-ups.

The fund targets activating the financial technology industry in the Egyptian market, promoting digital transformation and boosting financial inclusion, according to the report.

The CBE developed its fintech and innovation strategy in March 2019 with the aim of promoting Egypt’s fintech ecosystem in line with Egypt’s Vision 2030.

The Fintech Landscape Report comes in line with efforts exerted by the CBE to promote the fintech industry in Egypt, in accordance with directives issued by President Abdel-Fattah Al-Sisi to achieve the digital transformation goals of the Egyptian state as part of Egypt’s Vision 2030, Rami Abulnaga, the CBE deputy governor, was quoted as saying in a statement announcing the release of the report.

*A version of this article appears in print in the 24 February, 2022 edition of Al-Ahram Weekly.