Egypt: CIB’s CVentures plans new fintech investments as the country plays catch-up

By David Whitehouse
Posted on Tuesday, 30 November 2021 09:25

CVentures, the fintech unit of Egypt’s Commercial International Bank (CIB), is planning a batch of new investments as the country’s regulatory outlook improves, CVentures managing director Emad Fouad tells The Africa Report.

The company is planning at least three to four investments before year-end, and plans to back between eight and ten startups next year, Fouad says in Cairo. CVentures has used less than 20% of its current fund size, so “we have a lot of room to grow,” he says. CIB is Egypt’s largest private commercial bank.

Fintech development in Egypt has lagged behind other African countries. About two-thirds of Egypt’s population are without access to banking services.

Tellimer has estimated that the number of fintechs in operation relative to the population is about half that in Nigeria, and a quarter of the levels in Kenya and South Africa. CIB rival Banque Misr has said it plans to launch what would be Egypt’s first digital bank in the first quarter of 2022.

Fouad is confident that Egypt is in the process of catching up. The country has been “constantly growing at a much higher pace than its peers in recent years,” he says.

Policy makers have been “very active in supporting the growth of the Egyptian fintech ecosystem.”  He points to examples such as regulation for mobile payments and e-wallets, the National E-Commerce Strategy, the fintech regulatory sandbox, and the Meeza national payment scheme supporting a cashless society. “The Egyptian ecosystem is currently not that far behind.”

Increased interest in fintech is part of a wider trend towards investing in Egyptian start-ups, Fouad says.

  • So far this year, Egyptian startups have secured more than $400m in funding, up about 160% compared with the whole of 2020 and exceeding the total for the past three years combined, he says.
  • Fintech has for the first time taken the highest share at 38% this year, he adds. “Egypt is definitely on track to lead the continent.”

Specialty lending

Fouad works start-ups which have growth strategies giving “high exit potential.” This is assessed by tracking M&A activity and working with founders to identify potential acquirers. Exit strategies are aligned with those of the founders. The CVentures investment process is “totally independent” from the startup’s potential collaboration track with CIB, he adds.

Payments and remittances remain the areas which have been attracting most of the investment, Fouad says. In the coming year, specialty consumer and small business lending will be the “winning horses,” he adds. Fouad says fintech startups offering B2B services and those able to adopt a “collaborative” model with incumbents such as banks and other financial institutions will have the best chance of succeeding.

  • Current CVentures investments include online medication company Yodawy, business banking and accounting app provider Counting Up, and MagicCube, which provides software security.
  • The firm remains focused on Egyptian startups and is broadening its field to include e-commerce, agri-tech and health-tech, Fouad says.
  • CVentures is also interested in foreign markets which act as “launch pads” for fintechs and other startups in, “provided that these startups have clear and viable cross-border expansion plans and are considering Egypt as a go-to market.”
  • The United Arab Emirates and Jordan are “good examples,” Fouad says.

Bottom line

CVentures is confident that the time has come for Egyptian fintech.

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