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The Power of Fintech in Emerging Markets
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04:10ou six years have been bombarded by VCs, giving them, I'm not sure whether this was the exact
04:20good guidance or not, because we have seen really VCs coming to entrepreneurs who are
04:27starting their business, asking them to grow the business regardless of the financial soundness
04:34of the model, regardless of changing the business model, and then they drive those guys in this
04:40direction, and at a point of time, you know, things changed, and they backed from the scene,
04:48and you don't find them now, this money is not available right now the same way. So if I would
04:53like to really advise anybody is, you have to make sure that you are creating real value,
05:03and then the money would come. It is not the other way around. And don't sell a dollar for
05:10a 50 cent and assume that you are growing your business, because anybody who is selling a
05:16dollar for 50 cents will grow the business. It is not magic. If there is an item that is,
05:22you call it marketing, you call it customer acquisition, you call it the way you like,
05:27work. Okay. But at the end of the day, if your growth is driven by selling one dollar
05:35for 50 cents, be aware that there is an issue in your business model, and it is not sustainable.
05:41Thank you. That is a very strong point. And I have to say that talking with some of the entrepreneurs
05:46out there in different booths and going and talking with them, I have heard sort of the same perspective,
05:53of saying that we need to build a business piece by piece and go at a certain rhythm. And I
05:58don't know if
05:58we would have heard the same feedback a couple of years ago, but at least this is probably more the
06:04reality
06:04of today. You know, I was lucky because I mean, I mean, we were born institutional. So I mean,
06:10we were not born as a startup that I did found and I own 90% and then I took
06:1610% and 20% and then
06:19became diluted. We were born institutional. So we had banks, we have organizations at the time we started
06:24the company, and I had only 10% of the company. So the model was completely different. So the governance
06:32was
06:32part of our DNA from day one. Those who are pushing us were not VCs, rather they were institutions that
06:42understand how business practice is being done. So it was a different situation.
06:48It's true. Can you maybe talk a little bit about the fintech business, particularly through the angle
06:53of Fauri and what you've done out of it? Because you've taken the fintech as a platform and then you
06:59use
06:59that to reach out with different types of services to your customers. Yeah, I think I mean to be to
07:07be
07:08technology have brought connectivity. Okay. And connectivity means that you can connect a person
07:17to an organization, an organization to another organization, and you can reach out through mobility
07:24to people that you were not able to reach before. So in reality, if you really think that you are
07:33leveraging technology, to reach out to more people, to take services from big organizations
07:40and bring them to people that big organization cannot reach by leveraging your technology,
07:46technology opportunities will be endless. You can think of that in delivering financial services to
07:52people with a mobile. You can think of that of delivering e-commerce services and purchases where
07:59you are leveraging logistics technology and portals and and so on. So I think the idea that technology is
08:08connecting organizations and businesses and people is creating a whole space of opportunity that would
08:18have been very difficult to achieve until the entire market is and I would take China as a typical example.
08:27I have visited China several times and in reality, there was an I'm in a decade or a couple of
08:35decades in
08:35in China that did not exist. People went from nowhere to the mobile, the laptop and the and the PC
08:41was not part of the
08:42of the story. And so they jumped and actually in terms of inclusion and financial services, they have
08:50superseded even Europe and the States in terms of people using that. So I think technology is a real enabler.
08:57You call it FinTech, you call it the infrastructure, you call it cloud, but at the end of the day,
09:02it is connectivity.
09:03You're right. And what what were your biggest challenges to take the company where it is now?
09:09My biggest challenge in the industry you are working in was trust. Because if you are in the business of
09:17payment,
09:19if you, I mean, make somebody pay for a service or for goods and it is not delivered,
09:27then nobody will trust you. And if nobody will trust you, by all means, you cannot scale.
09:34So the first thing was making sure that the service is of high quality to the extent that it is
09:39trusted,
09:40because payment to me, it is like, I mean, I mean, there is no 90 percent. There is no even
09:4695 percent.
09:47There is no 98 percent. If anybody feels that payment will not go through and he will not go get
09:53the service for the payment,
09:54then probably it will fail. The second was scaling and security and fraud and all the stuff.
10:04Things that you might think that they are far and you are safe. But in reality, if you are not
10:10aware that those are things that are important,
10:13probably you are stuck. So I think building trust and scaling and going, I mean, we are now around 6
10:19,000 employees all over Egypt.
10:21Maybe it is a good opportunity to give you the size of the market in Egypt. We are around 110
10:26million
10:26Egyptians living in a country around 1 million square meter and many urban places and less, sorry, many rural places
10:39and less urban places.
10:40So the problem was even more aggravated in such countries.
10:47You are absolutely right. And I think fintech is also giving a transforming the economy in Egypt.
10:52And when you think of it, it is completely transforming the economy across the continent.
10:56Absolutely. I mean, to realize that you have just to think what would have happened if the mobile is not
11:02there.
11:02And maybe you think even on the very simple application and you see how the poor people that we believe
11:10that they are not,
11:11you know, literate enough and all that stuff are leveraging WhatsApp to communicate and to make jobs done
11:19and to share a dress with my mother and find whether it's good or bad and to share a picture
11:26to a plumber to make sure that he will do the right job.
11:30So, no, it is making life extremely different, but because we are living the age we don't feel.
11:37So, to feel we have to step back and ask ourselves how life would look like if there is no
11:44mobile, no WhatsApp, no online payment, no messaging.
11:48And you will discover that technology have really changed the whole thing, but because we are in the middle, we
11:55are not feeling.
11:56It's true. And I think we feel it particularly in Africa, where if we look at the situation about 10
12:01years ago, mobile penetration, the mobile banking penetration,
12:06fintech was still very low. And it has been not just catching up, but I think moving ahead much faster
12:11than anywhere else.
12:13Absolutely.
12:13And I think it also really builds on some of the development opportunities that we see in the continent because
12:20the population is young and the needs are strong.
12:23There's a middle class that is growing. So, when shifting to that, people embrace the technologies much faster and you
12:30can see a much bigger future.
12:32But I know, how do you see the future of fintech in Africa?
12:35Very optimistic about the opportunities. I think the market is starting. Some people would be facing some difficulties right now,
12:45because they started in a time where money and capital was not very expensive,
12:50and they are moving into times where capital is becoming expensive. But this does not mean that the opportunity is
12:57not there.
12:58And the market, I mean, we have to look into other markets and we know the growth and the connectivity
13:06to the world will drive Africa forward.
13:09I mean, there is no doubt about that.
13:11Absolutely. And beyond capital, there's other dimensions of what companies are needing in Africa to develop fintech.
13:18And whether it's on the regulatory side, whether it's on the access to different tools, the education side and so
13:26on.
13:26And on your side, how do you see that?
13:27Absolutely. I mean, we have to imagine again how technology, for example, have impacted governments and the regulators.
13:36Because those guys have been exposed to things that they would have never been exposed to if technology was not
13:42there.
13:42If there is no report coming from the World Bank measuring the technology and telling them where they are in
13:49terms of ease, in terms of penetration, in terms of bank accounts and all this stuff.
13:54So what's happened, actually, is that because of this connectivity and because of the technology, even the regulators and the
14:01governments are listening more, are understanding more, which had never been the case in absence of technology.
14:07Now, I think that regulators are more agile. They are still regulators. We have to know that they think differently.
14:12But we are seeing more positive regulators towards enabling technology everywhere.
14:18I mean, I am following different countries. You will find all opening.
14:23There are more supporting startups, having sandboxes, easing up the business. So it's happening.
14:31You're absolutely right. And thanks for mentioning the World Bank.
14:34I mean, the IFC is the private sector arm of the World Bank, and we work together on many of
14:41these opportunities that the World Bank gives advice and financing to governments.
14:45And then we come and we finance on the private sector. We also work with governments on helping on this
14:50regulatory side, working with central banks.
14:53And we've been developing a number of very good examples, including in Egypt, where we've been financing incubators and other
15:01partners in that space so that we work on the ecosystem to help and really launch more and more of
15:07these opportunities.
15:07I mean, we also look really closely at country by country. What are the needs? What are the needs of
15:13the companies?
15:14And we bring financing and we bring advice to these companies. I mean, IFC has been able to deploy a
15:19few billion dollars in this space over the last couple of years.
15:22And this is exactly for that. We've been financing the infrastructure because without it, it's very difficult to have mobile
15:29penetration and you can't develop fintech if you don't have all the infrastructure that is needed behind it.
15:35But we also realize that we have to go in a much more granular way to support companies directly.
15:41We've set up mechanisms that look very much like funds that we can deploy in Africa to finance startups directly.
15:51And I think that has been something that had a very big impact.
15:54I mean, we had the honor and pleasure to work with you a few years ago and to accompany in
16:00your first years of the company.
16:02And when we see where you went, we are very, very proud with this collaboration.
16:07So thank you for allowing us to be part of the Fowry story.
16:11And I'm very excited to see that there's a lot of other companies that we are working with.
16:16And some of them are here at Vivatech.
16:19I don't know if you had a chance to go and talk with some of them.
16:22Yeah, I had a chance to walk around, but I have to tell you that the IFC is more than
16:29money.
16:29Okay? It is an ecosystem. It is a platform.
16:32Whether they have direct investment in you or direct investment on other VCs that are supporting other startups.
16:39But the whole idea of being part of a platform that has visibility across the world is really beneficial.
16:47It is more than the money. The money is good. We all like the money.
16:50But meeting people with different experiences, having experiences from other places to other places.
16:57IFC facilitating meeting the World Bank people to know the problems.
17:01So when they speak to the regulator, it is easier.
17:04So the support is coming from many areas.
17:07So, I mean, I would really like to take this opportunity as well.
17:12Not because we are sitting together, but because this is the reality.
17:15I have really seen many good impacts from IFC more than the money.
17:22Thank you. Thank you very much.
17:23And it's been, I think, a great collaboration because we've been able to support you and work with you.
17:27And this is exactly what we want to do with many startups.
17:31We want to support you. We want to help you financially, as you said, with some capital and some funding.
17:36We can also bring, actually, other types of instruments like debt that venture capital funds typically don't do.
17:42And so bring that on the ecosystem.
17:44And with this, help you expand in your markets and beyond.
17:48But I have one last question for you, coming back to Egypt.
17:53Big market, as you said, going through a lot of dynamic energy on the private sector space, on the startup
18:02space.
18:02Where do you see opportunities there for investors coming into Egypt?
18:06Very much so. I mean, as I said, I mean, the opportunities are in financial services, are in logistics, are
18:18in medical, are in education.
18:21Big countries that have been developing still have miles to go.
18:27And then there is an opportunity for somebody to come and make this investment.
18:33And to be honest with you, I mean, I didn't go outside Egypt.
18:37I mean, I have been bombarded with requests to expand geographically and have a pin on every country to say
18:45I am a multi-country and I am de-risking a single country and all these big words of the
18:50investment community.
18:53But when you, you know, focus, have a big market, create enough value, it comes easier.
19:02And I mean, I think, I don't know who is it, but somebody has given me some advice in one
19:09of the talks and all the stuff that, and it is very real, value creates money, money does not create
19:15value.
19:16And so the more you focus on the value, money would come.
19:20The more you focus on bringing money to grow the business without making sure about the value, it will not
19:26end up where you expect.
19:28That's very right.
19:29But I think it's also interesting to think about the bigger countries in Africa, like Egypt, big markets.
19:35And when we look at the startup space in the continent, we realize that the bulk of it is being
19:42developed in some of these large markets.
19:44It's Egypt, it's South Africa, it's Nigeria, it's Kenya.
19:49And so there's the ecosystems there that are being built.
19:53But the opportunities in other countries, I know I'm not pushing you to go there.
19:57I'm just saying this because there's a lot of people in the room that might want to invest in these
20:01other countries also.
20:02We looked, we did a study on the IFC side that identified that the potential of the digital economy in
20:09the whole of the continent is about $700 billion by 2030.
20:13So it's really very large, and it's not just in those large markets.
20:18So I was very excited here when I was walking in the hallways of Vivatech to realize that there's so
20:25many companies in other countries that are here,
20:28from all parts of Africa, Francophone, Anglophone, Lusophone, that are here, that really want to deploy and grow their ecosystem.
20:36So it's something that the successes that Egypt has had with Fauri and with other companies,
20:43I think this is something we could really replicate across Africa.
20:46And this is something that is very exciting.
20:48On the IFC side, we really want to do that and work with companies across the continent and support them
20:54on this.
20:54But any final words?
20:56I see that the timer is getting closer to the red for us.
21:00I would just like to thank you all for your patience and attendance.
21:03and I hope that we manage to deliver something that can be of help to anybody.
21:09And good luck.
21:12The coming days are more difficult than the old days, but the opportunities are there.
21:20So for those who have started and are facing difficulties, don't feel bad.
21:26You will find the opportunity, I'm sure.
21:29That's absolutely right.
21:31Thank you very much, everyone.
21:33Thank you, Ed.
21:34Thank you.
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