Technology Start-ups Power Economic Progress across Egypt
Electronic payment systems allow customers to make purchases with credit cards—benefiting shoppers and business owners alike. © Mohamed Essa/ IFC
For the last six decades, Nabil El-Jabari and his family have run a small grocery store in downtown Cairo. It had a devoted group of customers, but El-Jabari long wanted to grow the business.
Nabil El-Jabari attracted more shoppers to his store after
installing an electronic payment system. © Mohamed Essa/ IFC
To attract a larger number of shoppers, he installed an electronic payment system developed by Fawry, a local tech start-up that had received a $6 million equity investment from IFC. Fawry's hardware allowed El-Jabari's customers to make purchases with credit cards—a novel service in a city where almost all transactions are done with cash.
"It has really helped," says El-Jabari, a father of four. The system attracted dozens of new customers to El-Jabari's store, raising revenues by 15 percent.
Recognizing the potential for progress like this on a much larger scale, IFC has stepped up investments in technology start-ups in the Middle East and North Africa. In the last two years, we have channelled close to $50 million in funding to up-and-coming businesses in fields like e-commerce, software development, and electronic payments.
Technology start-ups spur progress
El-Jabari and his grocery store patrons are among the 15 million Egyptians, many of them poor, who now use Fawry's services to do everything from pay for groceries to settle their cell phone bills. The company, which processes 1.3 million transactions a day, is a good example of the impact that technology start-ups can have on developing countries.
Firms like this one can move businesses forward in two ways: by extending crucial financial services to the poor, and by creating well-paying jobs for young people. All of that is vital in Egypt, where economic growth has been slow, and unemployment, especially among youth, is a long-standing problem.
In addition to Fawry, IFC provided $27 million to Souq, the region's largest online retailer—an investment that has helped support the company’s growth, boost e-commerce in the region, and create jobs.
IFC also recently invested $10 million in Cairo-based Algebra Ventures, one of Egypt's largest venture capital funds. Algebra plans to invest in up to 25 technology-related start-ups. And in December, we pledged $2 million to Flat6Labs, an Egyptian start-up accelerator that will support about 100 Egyptian tech start-ups and 300 entrepreneurs over the next five years.
Among the final beneficiaries of this investment is entrepreneur Nour El-Assal, a petrochemical engineer that three years ago founded a company that turns used cooking oil into biofuel. Flat6Labs helped El-Assal's company, Tagaddod, raise more than 2.8 million Egyptians pounds (the equivalent to $150,000) to open a factory on the outskirts of Cairo.
"Before Flat6Labs, we were just a team with an idea. After that, we had the proper resources to make the idea happen," said El-Assal.
A long-term commitment
IFC’s support to technology start-ups is part of a broader effort to foster economic growth in Egypt. Since 2011, IFC has committed almost $1.5 billion in the country, which amounts to 5 percent of all foreign direct investment. In fiscal year 2016 alone, the institution invested $352 million, including funds mobilized from other investors.
Those investments covered a host of sectors, including banking, manufacturing, infrastructure, and hospitality, helping to create jobs and spur economic growth.
IFC’s commitment is solid. We have pledged to invest up to $2 billion in Egypt during the next three years while also implementing an ambitious advisory program. We are committed to supporting the private sector, tapping into its capital and know-how to foster the development of sectors like renewable energy, agriculture, information technology, healthcare, education, and housing.
To learn more about IFC’s work in telecommunications and technology, visit www.ifc.org/TMT
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Published in December 2016
