Vigliotti was in Egypt last week with an EIB delegation to explore the investment opportunities the local market offers in the fields of fintech and digital transformation.
During the visit, the delegation held a meeting, attended exclusively by Ahram Online, with Ahmed Wadi, the CEO of Money Fellows, the Egyptian app that adopts ROSCA model, also known as Gameya in the Arab region, which enables consumers to access affordable credit and savings. The meeting was also attended by the key investor in the app Sawari Ventures.
The European Union (EU) invests heavily in Egypt. Over the past 10 years the EIB has invested 1 billion euro per year in Egypt with a key focus on the private sector, Vigliotti said.
The EIB is owned by the EU’s 27 countries, together having the world’s largest financial institutions, she noted.
“We mainly invest within the EU. But, on a yearly basis, we invest outside the EU between €8-10 billion. So we are a big player at the global level and we support many sectors. We support governments, banks, corporates, and we also support capital markets development,” Vigliotti said.
“I'm particularly glad to be here today because I also chair the European Investment Fund (EIF), which is a subsidiary of the EIB, which is actually a fund of funds that invests in venture capital and private equity funds. The EIF operates mainly within the EU, but we have a division at the EIB, which actually also invests in venture capital and private equity outside the EU.”
Vigliotti said the EIB believes in this business, which needs a patient capital that supports startups and companies that do not have access to finance, or that need a different type of finance with respect to banking financing because there are different needs which can be accommodated through venture capital funding.
That said, Vigliotti noted that the EIB eyes investing in Egypt’s fintech sector in 2023, especially in the small and medium-sized enterprises (SMEs) of the sector.
“We invest broadly in all sectors, but we are even more interested and willing to invest in sustainable and environmentally sustainable activities. And we know that all what is related to digitalization is also green friendly since it allows to save a lot of energy. So, within the fintech we see a scope for participating to environmental sustainability.
“But there is another issue which is very relevant to us, which is financial inclusion. We know that, for instance, experience like Money Fellows allowed to the underserved segments of the population to have access to finance, also for very small amounts in an easy and direct way,” she explained.
Vigliotti also spoke with Ahram Online
About Egypt’s efforts to boost digital transformation Vigliotti said: “As a European investment bank, we have a clear mission to support SMEs. So we are working also through the Egyptian banking system to reach and support these companies. And in this regard, we believe that the decision a few years ago by the central bank to ask the banks to provide at least 20 percent of their lending to the SMEs is very important because we know that in all economies, the SMEs are the backbone of the economy where growth can start and expand.”
She added that the EIB has seen a lot of efforts by some banks to provide some microcredit opportunities, especially that a large part of the Egyptian economy is informal.
“We are supporting some large banks in Egypt with technical assistance because we have a vast experience in providing finance to SMEs. And as I said before, we provide the instrument to measure the environmental sustainability of financing. Because sometimes it's not obvious because very often one thinks that to adapt to climate targets you need extra cost,” Vigliotti explained.
On the purpose of eying investment in Money Fellows, Vigliotti noted that it is a success story because it's working in a sector that is very much relevant to social inclusion, innovation, digitalization, which all are key drivers of growth.
“This is a successful investment and we are also here to celebrate the success of our investment,” she pointed out.
The EIB’s role is to create an ecosystem where also private investors can nurture the development of the startup initiative with venture capital, she added.
Milena Messori, head of the Equity, Venture Capital Funds at the EIB told Ahram Online that the EIB has invested in Sawari Ventures, which is behind Money Fellows.
“We support very much the venture capital industry across the MENA region, but specifically in Egypt. And we are going to indeed enter into a due diligence for the next stage, for the next fund that Sawari Ventures will raise. The human capital is the major asset that is driving the digital industry in Egypt. And we see that what is missing is the availability of and access to finance, because it's an industry that nevertheless is still perceived as risky. And that's the reason why we stand behind it,” Messori explained.
Vigliotti said the current situation in Ukraine is certainly affecting the macroeconomic stability of the region, especially with the rising inflation and its repercussions.
“In terms of the industry, I think it's still quite well re-fenced from what has been caused by the war in Ukraine, which is affecting the food security aspect of the economy in Egypt rather than the fintech business or the venture capital business. For example, just to give you an idea, we continue to support the venture capital funds, not just in Africa, but also in Eastern Europe and Ukraine, because these are industries that continue to thrive because they are based on a business model that is not linked directly to the infrastructure assets, but is very much based on human capital and technology,” Vigliotti explained.
The EIB and EIF recognize that macroeconomic conditions can affect the industry, especially if you want to attract international investors, she added.
“In this regard, we know that, for instance, major pension funds are outside the region. I think that in a way or another, the repercussions of the global crisis will be felt here, but as Milena said, we believe that the business can continue and that actually it should be a source of growth, an independent source of growth that could cope well with the downside cycle,” Vigliotti noted.
Wadi told Ahram Online that Money Fellows started in Germany before entering the Egyptian market in 2018, benefiting from the wide range of potentials it enjoys; mainly the young population and the increasing demand on fintech solutions.
He added that the company has raised $42.8 million in total capital, with its most recent fund of $37.2 million in Series B round closing.