INTERVIEW: Banking law, government support strengthening Egypt’s fintech business

Doaa A.Moneim , Sunday 6 Feb 2022

Ahram Online spoke to Ezz Fayek, the CEO of WaffarX, the first cash back provider in the Middle East and North Africa (MENA) region, who discussed Egypt's fintech scene and his company's plans in the Egyptian market.

WaffarX s CEO

Egypt’s fintech scene has been witnessing a boom in recent years, driven mainly by the pandemic and the rising adoption of online solutions.

Egypt’s fintech financing is projected to jump by 919 percent Y-o-Y in 2021 to reach about $296 million, up from the $29 million recorded in 2020, according to Citi’s report titled ‘Africa & Middle East FinTech & e-Commerce issued in January.

The CEO of WaffarX Ezz Fayek explains how he perceives Egypt’s fintech scene as well as explaining how his WaffarX app is focusing on growing in the Egyptian market.

Launched in 2020, WaffarX is the first cash back provider in the Middle East and North Africa (MENA) region, with more than 280 merchant partners. 

WaffarX recently completed a multi-million-dollar financing round led by the Silicon Valley venture capital firm, Lobby Capital, its first ever investment in the MENA region.

AO: What is the main idea of your app?

EF: We launched WaffarX in 2018 as the first-ever cashback shopping service in the Middle East and North Africa (MENA) region. We began as a shopping website and launched our app in 2020, which has had over 600,000 downloads.

The main idea of the app is using cutting-edge technology to distribute cashback rewards, which helps shoppers save money when they spend. The app also helps companies, as it enables brands to shift advertising spending directly to consumers via cashback incentives. In turn, this creates deep loyalty for brands.

We provide real offers from top brands and offer a variety of CashOut (withdrawal) methods to suit our members’ preferences for how they want to receive their cash.

AO: How do you see the fintech scene in Egypt and the actions that have been taken by the concerned bodies in this sector?

EF: The fintech scene in Egypt has been gaining considerable momentum in recent years, but its development was undoubtedly accelerated by the pandemic. The Banking and Central Bank law which came into practice in 2020 addressed digital payments and payment infrastructure for the first time. This strengthened fintech’s position as a sector within Egypt and demonstrated the government’s support towards it.

AO: Do you mind explaining your total investment profile in the MENA region, including Egypt?

EF: We closed a multi-million US dollar funding round at the end of 2021, led by the Silicon Valley venture capital firm, Lobby Capital, with A15 also participating. This was Lobby Capital’s first investment in the MENA region, and proceeds are being utilised to accelerate our expansion into new markets.

AO: Do you think that fintech in Egypt needs more procedures to be adopted for the sake of supporting business doing in such a sector?

EF: The fintech sector is receiving increasing support from the Egyptian Cabinet’s Information and Decision Support Centre. It recently announced Egypt’s commitment to transitioning to a digital economy as part of the country’s 2030 Vision strategy, which is geared to making Egypt the primary destination for digital investments in MENA.

This will create an innovative and viable digital environment that will support the long-term growth of businesses and e-commerce platforms.

AO: What kind of challenges fintech businesses are facing in Egypt amid the ongoing challenging time? And how could they be overcome?

EF: Digital payment infrastructure is vital for fintech companies to be successful. Several fintech businesses lack the resources to reach the largely unbanked population within Egypt, compared to the banks who already have the foundations.

However, Egypt’s strong focus on a digitised economy, plus increasing acceptance of diverse payment methods, should enable fintechs to overcome this challenge in the future.

Another challenge, which is applicable to the wider region and not just Egypt, is the ingrained role of cash in the economy. Egypt’s ‘shadow’ economy still accounts for 40 to 60 percent of its GDP.

However, Egypt’s commitment to a digital economy can only help, as fintech businesses become more integrated in Egypt’s business ecosystem.

AO: What about your vision on e-commerce activity currently in Egypt? And what is your outlook for such an activity on the medium and long run?

EF: The pandemic rapidly transformed the e-commerce landscape. Consumer habits have shifted, and businesses have begun moving online. We expect e-commerce activity to continue rising in Egypt in the medium and long term.

A sharp rise in start-up investments and an explosion of e-commerce companies is also likely.

As penetration rates of mobile phones have grown significantly, we expect mobile commerce activity by consumers to increase. Penetration rates reached 96% in the second quarter of 2021.

The digital payment infrastructure within Egypt will continue to grow. Awareness of e-payments systems will increase, stimulating e-commerce. In turn, this will benefit the rewards and loyalty app market, causing significant growth and acceptance of cashback apps.

AO: What are the key challenges this sector is facing in the MENA region in general and in Egypt in particular?

EF: Within e-commerce, customer retention will be a challenge as the sector becomes more competitive. A strategy to tackle this is for cashback platforms to become more personalised to consumers.

This is key to the modern shopping experience and what consumers are demanding. Valuable rewards, which require little additional consumer effort - will improve customer retention.

AO: What are your future plans in the Egyptian market?

EF: We are very excited about the future of WaffarX. Our focus is on driving user acquisition and the expansion of our platform as well as introducing a new service: in-store cash back.

Currently, we have over 280 merchant partners and over 600,000 users across Egypt, the UAE, KSA, Kuwait, and Morocco.

Our strategy is to continue our rapid growth and work closely with brands to help increase customer loyalty while also enabling consumers to save as much as possible.

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