EDBE: helping to drive Egyptian exports

Egypt is home to one of the largest banking sectors in North Africa, also one of the most profitable as you’ve mentioned earlier. How did banks make sure to preserve the trust of the investor and clients within the political and economic turmoil?

I think that’s evident and obvious in what happened throughout 2011 onwards until stability was restored. The central bank has very strong supervision controls over the banks. The banking reform had started back in 2004. So by 2009, even before 2011, when the financial crisis started in 2007/08, followed by the Dubai crisis, the banking sector has been able to withstand all of these very, very well.

And as we speak, the balance sheets of the banks are growing, the deposit base is growing, the lending portfolios are growing, non-performing loans are being addressed in a more prudent manner and provisioned for. Every single day there are new regulations that the banks have to abide by to ensure that they have a strong capital base to ensure that they have proper systems, proper controls, and proper business models.

So the central bank has already started working on that long before the turmoil started, and I think we were blessed because by the time things happened, that was the real test for the banking sector. At the time I was working for a different institution, a multinational bank, and I can safely tell you that none of the Egyptian banks delayed a single payment under any liability that they owed to their foreign counterparts.

Let’s go to market penetration. What are the main strategies to reach and how big is the opportunity?

I’ll start by how big. I think it’s huge because I think that penetration in Egypt is quite low, again there isn’t one official number that you can stick to. It ranges between 15 to 30%, the different numbers that are being published. But even if we go with the maximum that’s being published which is 30%, you still have 70% that is unban. You have the informal economy, or the parallel economy, so there’s a lot to be done. I think technology is a major driving factor.

Now financial inclusion is a phrase that is not only common in the Egyptian banking sector and market, but it is a term that you’re being asked to live up to and to think and work towards more financial inclusion, offering more innovative products that can encompass a wider percentage of the market. Definitely I’m positive that this will impact all the banks positively. It’s just getting to know how to do that thing is the challenges now, but once it starts, and once you get the experience and expertise of doing this, it’s going to turn into a big sort of opportunity for all the banks.

As it is important to fund the small and medium enterprises, and a priority for the government as you mentioned as well. What are your strategies for the micro finance business?

Now for the micro finance I think the easiest thing, to be honest with you, to get to that mass, either you do that through the existing providers by funding those who fund that segment, which is what we are currently doing. So we either lend the micro finance companies or the NGOs that offer that kind of micro finance funding. Or you create the technological ability to be able to do that through the mass and we will probably.

 If I read the future correctly, which I hope I do, I think the E-wallet services are going to develop. Now we are ready to launch the E-wallet within the coming couple of months. We’ve been working on it. Some regulations change every now and then while you’re in the process, so it gives you a bit of delay. The E-wallet is not just going to be for me to pay you. We can also probably use the E-wallet to offer micro savings. We can also offer it as a whole banking sector, and we would be willing to go with that flow to offer micro loans. So there’s a lot that can be done through the wallet as well. I think that can also help a great deal in serving the purpose of financial inclusion

As for the SMEs, we already have a well-established department that already has a good portfolio. We are close to the 20%. We are a little bit north of 18%, so we’re very close to the required percentage by the central bank. And we’re looking non-stop for ways to enhance the structure and the offering that is made to the small and medium enterprises. I have to differentiate here because maybe the Ms are more towards the large corporates, but we need to develop the S like the smaller companies, you know, like the ones below 100 million.

What is your regional strategy to boost investments on export operations?

Well it’s not a regional strategy. I think it’s a strategy because we want to boost exports everywhere. So regional meaning, first of all, we don’t have presence anywhere outside Egypt. We are purely Egyptian; domiciled in Egypt. We actually have a strategy to help boost exports anywhere. We’ve done a bit of restructuring and we’re establishing a new group that should start working very soon, like an international banking group. Under the international banking group, we will have specialized departments and they are not under the corporate supervision or the SMEs. They are independent so that they can work across all sectors: the very small, the small, the medium, and the large.

So we kept them as independent so they can help provide non-financial services like research, subscriptions, look up markets and products, where to be marketed. So that should be launchedwithin the next few months. We also have a strategy towards Africa because we believe there’s a lot of intra-African trade that needs to be done. We partnered with banks like afrexim and African development bank. We also have a good network of correspondence across the world where we could actually help exporters reach anywhere in the world, and accept the risk of most of Europe, USA.

As a bank, strategically, we are trying to grow our base of exporters. We are trying to help those who export 10-20% to export more -- those who export 0, to understand the benefit and we’re getting there.