Credit history of Egypt – the role of The Egyptian Credit Bureau (iScore)

Interview with Mohamed Kafafi, Chairman and CEO of iScore (The Egyptian Credit Bureau)

What is your personal assessment of the Egyptian economy?

The Egyptian economy in the last three years has suffered due to various factors. Firstly, the lack of foreign direct investment and secondly, the lack of funds coming from the tourism sector. However, the Suez Canal and the Egyptian workers’ remittances have been seeing much better influx. The most important thing is that we need to work hard to regain the confidence of tourists and investors. We have been very much inspired by the most recent speech of our president. He was very articulate regarding investment in terms of how we shall deal with investors and what facilities they shall be granted. The other important thing to note is that the Minister of Tourism has made many announcements saying that the tourism infrastructure must and will be improved. There is also going to be a lot of education available for people working in the hospitality sector. We want all tourists to come and see a new Egypt.

To move onto your sector, which is credit evaluations, based on the data that you have collected over the past years, what is the credit climate like in Egypt at the moment?

The company was founded in 2005 by a consortium of 26 banks. We then started commercial operations in 2008 and so far, we have registered 8.8 million individual customers. We have also taken over the records of 125,000 small and medium enterprises. The criteria to get the information is that the consumer will be registered for any amount but the SMEs with credit facilities up to 1 million Egyptian pounds. The total number of credit facilities historically maintained on our system has reached 30 million. The registered companies of the SME sector now represents 126,000 companies and they have a balance of facilities worth 16 billion Egyptian pounds. The consumer sector represents 133 billion Egyptian pounds and we have seen a large increase in the last year. The private sector and the consumer two years ago equalled to 109 billion Egyptian pounds. The companies were around 97,000 with facilities of approximately 13 billion Egyptian pounds.

How is the Egyptian Credit Bureau creating an overall credit awareness in the country? Are you running any education campaigns?

Yes we are, we run campaigns via the universities, clubs and associations and we have a mass campaign in the newspapers and on the radio. We also provide the banks and the banking community with ongoing training regarding either our traditional products or the recent products. We do this very frequently.

We are gaining momentum and we are now seeing a difference. Since we started our commercial operations in 2008, the public’s awareness is really increasing. People are now aiming to maintain a good credit history and they are trying to maintain good payment records of accomplishment. We are continuing these campaign efforts because it is a continual process to educate people about the credit bureau. We are not here to be the bad guys. We are here to help the customers rationalise their credit and help the banks evaluate and make rational credit decisions when granting a loan to a customer.

Would you be interested in expanding the business?

Yes, we have just been approved by the Ministry of Investment to establish a rating agency for small and medium enterprises. This company was established by a consortium of 22 banks. iScore, the Credit Bureau of Egypt, has the majority stake of 74%. The company will definitely support the government’s vision; the president has already mentioned that he is concentrating on boosting SMEs. We will support all of the banks who are currently giving loans to the SME sector. We have seen increased activity. Our company now has 126,000 companies registered with us, whilst a year and half ago we had just 97,000 companies, and only around 67,000 the year before that. We are seeing progress and we think that this is the right time for this company. The company will support both the community and the government’s vision.

The collection of data itself is a difficult challenge. What are the other challenges you face on a daily basis?

Our main challenge is time. Our system has to be available 24/7 because some banks are contingent on providing credit to customers on a very short turnaround. We also have to ensure ourselves against hacking. However, the most important thing is turnaround time. The banks communicate with us through communication lines and when they issue a credit report, we have to ensure our response time is within 5 to 10 seconds.

We also provide many value added products such as market analytics to show each bank´s positioning in the market. We also have early alerts for the banks if a customer starts to degrade the credit facility. We have an automatic scoring facility when credit reports are issued. The company has gained the confidence of the baking community. Some banks are even happy to rely on our scoring facility without having their own duplicate. They use ours as their main facility and as an external benchmark.

Egypt is nowadays witnessing another restart. What is your personal vision for the country?

I am very optimistic. I think the surrender of the presidency from one to the other was the most peaceful that we have ever seen. Our president was elected by around 23 million Egyptians. I am confident that every Egyptian is going to work hard for our future and that we are going to see many volunteers helping with the development of Egypt. I know that the new government has a vision to tackle issues such as education, youth and poverty. Recently the government announced a 5% tax on income exceeding a certain threshold. We are very happy about this because it is what we call justice in our society. Many countries were having upscale taxes whilst Egypt for a time was having 20% flat rate on companies and individuals.

Is there anything else you would like to add?

Egypt has a population of 86 million but the most important thing is that 93% are below the age of 60 and 48% are between the ages of 15 and 45, which means Egypt has a wealth of youth and energy. I hope that we can use this energy to the benefit of the country. We need the youth; they are our future.

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