Egypt’s journey to a cashless society and financial inclusion

Egypt is no exception. Although roughly 40 percent and 60 percent of Egypt’s economy still remains informal, in August this year, the Egyptian Cabinet’s Information and Decision Support Centre (IDSC), announced the country is successfully managing the transition to a cashless economy and is committed to transitioning to a digital economy as part of Egypt’s Vision 2030.  

Egypt’s digital vision 

According to IDSC, the Arab economy’s total volume is $3.84 trillion – equivalent to 3.55 percent of the global economy. Egypt comprises $361.8 billion, making it the second-largest economy in Africa and the Arab region during 2020, and ripe for digital innovation.  

With Egypt’s Vision 2030, the nation is seeking to become the first destination for digital investments in MENA. This will promote economic growth by creating a smart digital environment and ensuring market competitiveness, allowing international institutions and companies to compete to localise technology in Egypt, while supporting business and e-commerce platforms, e-payment gateways and supply chains.  

Three years ago, the Egyptian President also launched the Digital Transformation Initiative for the Egyptian Government and its institutions, aimed at creating a sustainable, competitive, and strong digital economy. This focus and the transition to a cashless society has been accelerated by the pandemic, which significantly altered the Egyptian population’s perceptions, and use, of digital payments. 

Digital payments skyrocketing 

The Egyptian population is embracing digital payment methods. According to data from Visa in August 2020, active credit and debit cards in the Egyptian market grew by almost 60 percent year-on-year. With nearly 900 percent growth in active contactless cards recorded during the same month, the scale of the growth of cashless payments is undeniable.  

The government has also developed national payment systems and supervised frameworks to reduce the risks and create safe, efficient, and effective systems to further advance digital payments.

Egyptian banks have also issued around seven million prepaid cards, called Meeza, for free, network operators are now using e-wallets, and merchants and consumers are being encouraged to use QR codes for payments. 

According to Mastercard’s latest New Payments Index, 94 percent of consumers in Egypt are likely to consider using at least one emerging payment method in the next year. This growing acceptance of a digital economy among the population, plus the government’s vision, presents many opportunities for fintechs hoping to advance the digitalisation process within Egypt. 

Fintechs and financial inclusion 

The Egyptian government’s dedication to a digital economy has created a secure foundation for fintechs to succeed, with the digital economy fostering economic growth five times higher compared to other traditional methods. Along with huge growth opportunities for fintechs, one of the great social opportunities  is the new focus on financial inclusion. 

Much of Egypt’s unbanked population live in rural areas and have very little income – but they do have mobile phones. With over 100 million mobile subscribers, Egypt had 98 percent mobile penetration as of April 2021. Internet and mobile banking services are rapidly expanding and reaching more rural areas, providing fintechs with the opportunity to present a more seamless and secure banking alternative to cash, across a wider reach.  

Fintech apps have been widely accepted as a way to integrate the largest number of citizens, including those from traditionally underserved segments, into the banking systems. This allows for increased customer reach whilst also driving financial inclusion and bridging the gap between the informal and formal financial sectors.  

Egypt is expected to surpass the limitations of a cash society to become the leading power in the world of digital payments within the MENA region, with the fintech industry complementing Egypt’s overall aim to secure financial inclusion.  

Ultimately, Egypt’s journey to a cashless society gives fintechs the opportunity to tackle supply and demand barriers hindering financial inclusion, from regulations to improving financial accessibility through technology.

The market opportunity for this sector is substantial with over 43 million cardholders, and with no signs of digital payments disappearing, fintechs will continue to have the foundations to prosper within Egypt.

Mohamed El-Feky, CEO of Sympl