Aman Financial Services is planning to provide financing of EGP 500m for 40,000 small and medium enterprises (SMEs) in the coming year. Hatem Moghazy, CEO of the company, said that they are working on a new online instalment scheme to better fit e-commerce market, which will be launched before the end of the year.
Daily News Egypt sat down for an interview with Moghazy, the transcript for which is below, lightly edited for clarity:
How do you see impact of recent investment climate changes?
There are strong changes in the Egyptian market. There is a law for microfinance and the government supports this file significantly, as well as the campaign of financial inclusion, which was positive and spread awareness of the importance of financial inclusion and its nature.
In the coming period, I expect the market to see a boom in the laws of the Central Bank of Egypt (CBE), especially, for the e-wallets services and EGN Banking, which will contribute to spreading banking services in different area, thus helping in the shift towards cashless community. The CBE is also working on the Prepaid cards.
What are main features of your plans during coming period?
Aman operates in the field of financial services through three companies: Aman Electronic Payment Company, through which the customer can pay the bills and recharge the mobile balance. Currently most services have been made available in point of sale (POS), including bill payment for mobile companies, electricity, water, and gas.
Currently we have 25,000 POS with plans to reach 35,000 before the end of the year. We are also about to sign agreements with banks to provide e-wallet services for three of them.
The second company offers instalment services. The number of services that can be installed through the company have increased after a time of being limited to electronics and home appliances.
Currently, through Aman, you can arrange for domestic and foreign travel tours on two years, in cooperation with Travco. We also provide instalment services for cars and furniture, with plans to offer instalments services for schools, universities, and MBA tuition fees over three years. This product may be launched this year. Moreover, we are considering a new service to offer instalments for costly surgeries, such as cosmetics.
There are 170 shops in 22 governorates that offer instalment services, with plans to reach 230 shops before the end of this year.
We also launched the instalment service to third parties, whereby clients can purchase products from places that provide instalment services, such as Kabbani Furniture, Abdul Rahim Amr, Art Home, Hyper One, and Fathallah.
We also have a partnership with Telecom Egypt to provide instalments on 67 mobile devices displayed there in the first phase. The service will be launched in two weeks in Haram and Oraby branches that see some 35,000 visits per day.
The third company is Aman Microfinance Company, which has now financed about 2,000 projects with EGP 24m through four branches. By the end of this year, the number of branches will reach 25, up to 55 by the end of next year, and 150 in three years.
We plan to increase the number of projects funded through us by the end of this year to 6,000 projects with total funding of EGP 60m. Next year, we aim to boost funding to EGP 500m for 40,000 projects, each with EGP 4,000-100,000.
This is a promising sector, where global ratios indicate that a country with Egypt’s economic conditions and current population density should spot about 10% of credit to SMEs, but the rates now are below 3%, indicating huge growth opportunities.
You have an online instalment experience with Jumia. How can you rate this experience? Will you continue to offer this service?
It was a good experience to explore the market. We are currently working on a new instalment product for Jumia to be launched during the Black Friday discounts.
The new instalment system depends on the customer getting the value of the product to be paid in the form of a purchase voucher, which can be used to buy the product. This method cuts through many steps, as the client gets the service within 48 hours of submitting the application request.
We have also facilitated instalment procedures through a new programme we use called Smart, where online instalments applications can be accepted based on points of clients. For instance, if you have a credit card; you can get the instalment service capped at EGP 8,000 without the need to provide other paperwork.
If you own a car you will have other advantages, and if you have a post-paid mobile line with a plan of over EGP 200 per month, you get more points. This helps put together a final assessment of the clients’ profile that can place them in the appropriate instalment category.
Has instalment facilitation increased risk rate?
The instalment services have a risk ratio but the facilitation of the above measures does not increase the risk ratio but reduces it, but the risk ratio remains, but does not exceed 1.5%.
How do you see role of instalment services as an economic engine after rising prices?
Instalment plays a strong role in moving the selling and buying. After the liberalisation of the exchange rate and other economic reforms, on which the government works, the cost of living has increased, but there are consumers who still need some products—which they can now pay for on instalments basis.
In my opinion, it helps the economic boom. The automotive sector used to see sale of 250,000 before the float, which dropped to 100,000 only following it. This includes 70% through instalments. This means that this huge market relies mainly on instalments.
I expect the use of instalment services to increase exponentially over the next five years.