Electronic Transactions Reshape Egypt’s Economy

November 24, 2019
Photo: Oliver Weiken for IFC

It was something that Cairo-based shop owner Nader Shawky had come to dread: paying his phone bill. Every month, he trekked to the offices of his mobile provider where he and dozens of others stood in line—sometimes for up to two hours—to settle their bills. It was, he admits, a maddening process.

But the cumbersome system is starting to change. Fawry, a fast-growing Cairo-based company that specializes in electronic payments, makes it possible for Shawky to take care of his accounts online.

“Time is of the essence, and Fawry saves me a lot of it,” says Shawky, who owns three electronics stores in the Egyptian capital.

Cairo-based shop owner Nader Shawky can now save time by paying his bills online.

Fawry is part of a new wave of technology companies ushering Egypt into the digital age. Many of these firms are helping transform industries like banking, health care, and transport, and in the process creating good jobs for young Egyptians, more than 30 percent of whom are unemployed.

IFC invested $6 million in Fawry in 2013 and helped guide founder Ashraf Sabry and his team as they built their business. Now the 12-year-old company handles 2.5 million transactions a day. In 2018 Fawry processed 40 billion Egyptian pounds (about $2.5 billion) in electronic payments. Earlier in 2019, Fawry became Egypt’s largest financial technology firm to list on the national stock exchange. It now employs 1,600 people.

Moving Toward a Digital Mindset

Fawry’s growth has had a profound effect on Egypt’s economy, says Akef el Maghrabi, the vice chairman of Banque Misr, one of Egypt’s biggest banks and an early Fawry partner.

“When you eliminate or reduce the reliance on cash, then you fight corruption, you provide convenience, you lower costs, and you grow the economy. [Electronic payments] do a lot of good for the country.”

Fawry, which went public in Egypt earlier this year, now employs 1,600 people.

The rise of online banking around the world has helped other economies solve these very challenges. Cash, for example, is hard to transport. Coins and bills are prone to theft, and their use makes dodging taxes easier for those so inclined. For individuals who must pay in person, getting across a gridlocked city like Cairo is logistically difficult. Together, these problems can constrain an economy. In Egypt, where 94 percent of all transactions were cash as recently as 2014, such a system stymies economic growth.

Sabry, a former salesperson at IBM Egypt, launched Fawry because he knew these issues kept Egypt’s economy from achieving its promise. The early years were lean as the company worked to convince tech-wary Egyptians that Fawry’s systems were secure—and that their money wouldn’t disappear into an electronic void.

“We did not do well in the first year or the second year or the third year,” says Sabry. “We were almost bankrupt at times. We didn’t have a penny.”

But the company endured, slowly convincing retailers large and small to install Fawry’s electronic payment machines. For many Egyptians, it was the first time they could use electronic payments in stores, to settle utility bills, pay traffic fines, and donate to charity.

Mahmoud El Rawy says Fawry payment terminals help attract customers to his grocery stores.

Spurring Commerce

As the Fawry network grew, shop owners who installed the system saw significant benefits, too. Fawry’s terminals drew new customers into stores, providing the consumer traffic that is the lifeblood of small shops.

Mahmoud El Rawy, a grocery store owner and father of three, can attest to that. His shop struggled until he installed a Fawry payment terminal.

“Fawry has had a big impact on my business,” says El Rawy, who now owns three supermarkets. “It helped bring me more customers and it’s why many come to me now.”

The project is also seen as a cornerstone of IFC’s global Fintech portfolio. “Fawry has developed a robust business model which has become a benchmark for the delivery of digital services through and to micro and small enterprises, particularly in emerging markets,” says IFC senior investment officer Kareem Aziz.

IFC’s support to technology start-ups is part of a broader effort to foster economic growth in Egypt. Since 2005, IFC has has committed about $4 billion, including financing mobilized from other investors. In June 2019, IFC’s portfolio in Egypt totaled $1.2 billion.

Join the conversation: #IFCimpact

Published in November 2019