The fintech company hopes to enter at least one new country in the first quarter of 2022 under a plan which will need a presence on the ground, Nakhla says in Cairo. He declined to name the countries being considered.
MNT-Halan claims to be Egypt’s largest lender to the unbanked. It has about 1 million monthly active users and has disbursed $1.7bn in loans to date. In September, the company completed the raising of about $120m from investors including Apis Growth Fund II, Development Partners International, and Lorax Capital Partners.
Regulators have granted the company licenses for micro and consumer finance, and it holds the first independent electronic wallet license for the Raseedy wallet from the country’s central bank. The business is getting a “tailwind from the regulatory environment” with Egyptian regulators aiming to eliminate physical cash, Nakhla says.
“To win in payments, you need to have a float on your wallets,” as this allows different use cases such as cash-outs, Nakhla says.
Two of the countries under consideration for expansion are in Africa and one is in Asia, says the company’s chief technology officer Ahmed Mohsen.
- “We look at countries with large unbanked populations, and healthy levels of lending and technology,” Mohsen says. “Mobile phones are a strong force for change.”
- The company’s core payment and lending processing solution draws on machine learning and artificial intelligence, and was designed from the outset to handle scale, Mohsen says.
Ride-hailing to payments
The pair started Halan as a ride-hailing and delivery app in 2017. Nakhla was inspired by a meeting with Nadiem Makarim, CEO of Indonesia’s first unicorn Gojek, a tech company operating in transport, payments and food delivery. In June this year, Netherlands-based micro-lender MNT Investments concluded a share-swap agreement with Halan, creating the new entity to focus on digital lending and payments products.
Fintech has been slow to develop in Egypt. Tellimer’s head of financials equity research Rahul Shah estimates that the number of fintechs in operation relative to the population in Egypt is about half that in Nigeria, and just a quarter of the levels in Kenya and South Africa.
Legislative changes are creating the possibility that Egypt will catch up.
- The country in 2020 passed a law allowing the creation of digital banks. This month, the central bank has approved licenses that will let merchants accept contactless payments from mobile phones.
- MNT-Halan estimates that more than 70% of Egypt’s population, which exceeds 100 million, is financially under-served, despite a mobile penetration rate above 90%.
The company in August started a product that provides a combined credit and delivery solution for digital consumers.
- Total credit limits under the buy now, pay later solution will reach $10m by the end of 2021, and $100m by the end of 2022, Nakhla says.
- By the end of December, MNT-Halan will offer a new product in Egypt allowing merchants to accept digital payments. The company has “lots of boots on the ground” ahead of the nationwide roll-out, Nakhla says.
- The domestic and foreign expansion plans may mean that further fundraising will be needed, Nakhla says. “It’s on the radar.”
MNT-Halan believes its payments solution is built for scale and can be rolled out in big markets outside Egypt.
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