Partner for Transaction Processing in Egypt and Africa: e-finance

Interview with Haithem Trabeek, Strategy & Business Planning Director at e-finance

What are the main projects you’re working on right now?

In general, we’re working in transacting and outsourcing for transactional processing products. All of our projects are related to outsourcing for the operation of financial and non-financial transactional processing. We work on major national projects, and have an ongoing project from 2014, a national pension project where 6 million pensioners are now capable of cashing their pension from the post office or pension authority office from any ATM using their [debit or ATM] card. Before this, the pension had to go to a specific office, and the pensioner had to go on a specific date to cash it, but now all the pensions in Egypt are automated. This project is the largest [pension] project in Africa, Middle East, and Europe. Today, for example, we’ll process around 2 million transactions because pensions get their payment around the first of the month. Two million is considered a huge number, and this is beyond the capability of banks when you talk about how many customers they have in their system – it’s not the same number. This is a project we are proud of because of its magnitude and how it affects the lives of people, and we have achieved very good performance on it; hopefully we are trying to have another project like this nominated and awarded in Dubai and Sharjah.

The second project is an electronic collection for customs and taxes by the government. We built a network between the government agencies, customs and taxes, and the banks. So now, you can pay customs and taxes to the 32 banks in Egypt. This reduced the time for collection from 21 days to 1 day; before it had to be paid by checks or cash, and it usually took 21 days, but now it takes 1 day on this network. In December 2014, Law 201 obligated payments through this network for tax collection – now, no company is allowed to write checks anymore, they have to pay the banks and the bank channels through our network. This affects the economy, because we’re talking about billions of Egyptian pounds instead of taking 21 days it takes 1 day, and it affects the economy in the sense that there is the opportunity of having the cash and not issuing government bonds to cover the cash deficit. The success story is that the law as issued, which means the government trusts this network to facilitate in tax collection.

We have two projects, Takaful and Karama, which are condition-subsidy programs for the least-privileged in the country that was launched by the government.

Fuel subsidy control project: phase 1 is control the fuel flow from the depot to the fuel stations and large customers. Large customers are factories hospitals, electrical plants, and others. We have a control through using smart cards and point of sales, similar to payment flow, but we are controlling and monitoring the amounts that are registered on the cards with the flow from the fuel depot to stations and customers. I’d like to point out, this affected the subsidy amount, it’s not calculated yet – but it’s a major reduction between 10-20%. The second phase depends on if the government wants to continue the project, and is a control outside the fuel station. By applying this, we close the whole cycle. This hasn’t a lot of effect on the economy because now the government knows how much fuel is used by each industry and we know who is taking how much and when.

For the first time ever, it gives a government the ability to understand the effect of changing the subsidized price for large customers. If the government would like to support the metal or tourism industry, they can subsidize that sector and see the balance and effect the next day. This gives the government a negotiation tool. Telecommunications industry creates huge revenue in Egypt and they have subsidized fuel for their antennas and other equipment. There were two options: either subsidize their prices or get known-subsidized fuel. So, the government now has this tool to negotiate this. They started to exercise this option, which means for us – who perform this job – we see it as a great success.

Not only for the government, subsidies are also important for the ministry as well.

But, they don’t see it unless it’s materialized. All of the world’s governments think like that. It came from this [monitoring] system, that we increased the efficiency of distributing the fuel across the country. It was very common, where in one governorate there would be an excess supply of a certain type of fuel, and another governorate would have a shortage; but now, with creating data throughout the year, we know which government uses how much fuel during certain points of the year. For example, people travel to Alexandria in the summer, so we know we have to push more fuel around that time. The Beheira Governorate is the largest user of diesel, and, after some analysis, we found out that was because the large trucks that were moving from Jordan to Libya (and vice versa) were going on a highway and stop at a fuel station in Beheira that uses diesel. This is the first time that we have this type of information that creates efficiency. Now, the Egyptian General Petroleum Corporation (EGPC), who is responsible for fuel and natural gas in Egypt, has an operation room where they can see all of these numbers and flow based on our system; we created this operation room for them as a present. We also have other projects that are a bit more financial.

During the last interview, you talked about attracting strong partnerships with Middle East and North African companies to leverage your experience in implementing large-scale government projects. What is your experience or can you express that?

We revisited our strategic direction last year, in using our platform and experience in Egypt to expand to other countries; our original vision was to be the preferred partner for transaction processing. To achieve that, we had a lot of strategic directions: one of them, was to keep moving forward with our capacity and performance; the second, was to get more government project on the same-scale (which actually succeeded); and the third direction, was using this experience and platform to serve other governments.

We are the largest operator for cards in Egypt, there are around 20 million cards and we distribute 6 million of them. Our cards are also local cards, so Visa and MasterCard most likely have an interest to change our cards to their cards.

I just came back from Kenya from a three-day matchmaking event with companies and government entities from Nigeria, Ghana, Zambia, Tanzania, Ethiopia, and Kenya that was arranged by Egypt’s Information Technology Industry Development Agency (ITIDA). ITIDA is responsible for creating jobs in IT and supporting Egyptian companies to expand. Over these 3 days, I had 53 meetings, which was overwhelming, but beneficial. After having all these meetings, I found that there was a need for e-finance’s services in a lot of these countries, especially Ethiopia, Tanzania, and Zambia, these territories look promising and we are in talks with them now. I expect to have one major implementation (national or mega project) or agreement with one of these countries by the end of this year.

I mentioned before that expanding and using our platform to help other governments is one of our strategic objectives in being the ‘preferred partner.’ We have two projects, Takaful and Karama, which are condition-subsidy programs for the least-privileged in the country that was launched by the government [through a $400 million World Bank project]. It has two parts: one part is karama, or dignity, is a financial subsidization for people who are over 65 or handicapped, and don’t have income, that gives them financial support; the other part is takaful, or taking care of each other, for families who have children, but don’t have financial support or income. They would receive financial support for each child, only if they are going to school. This is a very real example of our vision, that we are a preferred partner, because the government decided that they wanted us to take on this project.

What do you do with this? What is your part or role in this?

This project has two phases and the first phase, the registration phase, just started. We unveiled the system for government employees to go around Upper Egypt and register families using iPads in order to automate registration. We provide the registration system and technology for the government. They expect to reach around 3 million families. It started last month and there are around 60,000 families registered already. After this, we start the evaluation period when we receive the metrics, so we can create the conditions or logic engine in the system to categorize the families to determine how much money each family will receive. After that, we will issue cards – similar to the pension cards – and would be able to cash their money from ATMS, post offices, and pension offices. This is another mega project for financial subsidies, or condition subsidies, and it’s very important and a big accomplishment for our vision to be the partner of choice for these transaction-processing projects.

You still need to educate people about e-payments, as well?

All of our projects are at the economy level; we need to help people in order to help the economy. We still see educating people as one of our roles, as we are the largest in this field. There are other companies, like Massari, but their role is a little different than what we are doing. We work with billions of dollars and huge transactions, and they are working with millions. We did two initiatives, we started issuing a quarterly magazine in Arabic, Cashless, and distributed it to banks, government agencies, and other companies to educate and market e-payment security, retail payments, and other topics.

The other major initiative is the Information Communication Technology (ICT) exhibition in October or November. We partnered with them to create a new platform for payment, PAFIX, and the exhibition was two days [last year], and was very successful. It was under the patronage of the Central Bank of Egypt’s (CBE) Governor, and attendees included the Sub-Governor, Minister of Communication, Ministry of Planning, Ministry of Social Solidarity, and the keynote speaker was the Social Strategy Minister. We had a lot of interest from companies like Visa, National Bank of Egypt, Banque Misr, and Arab African Bank. At the end of the forum, our partners got interest calls about PAFIX and this year’s exhibition from MasterCard, First Data, and other international companies. We see this forum as part of educating and moving society forward.

Companies like Visa and MasterCard could be your partners everywhere. What did you propose to do for them?

They definitely add another dimension and would open a lot of potential. We are the largest operator for cards in Egypt, there are around 20 million cards and we distribute 6 million of them. Our cards are also local cards, so Visa and MasterCard most likely have an interest to change our cards to their cards. For example, in another project, we’re working on government salary distribution where the cards are issued by the banks, but there is an interest to switch to our cards in order to increase the speed of implementing this project. Right now, there are 1.5 million government salary cards currently in use, out of 7 million government employees. We are rolling out and implementing banks to issue cards for them. They are trying to push this faster, to increase the number of units, to unveil this data for cooperating with Visa or MasterCard. They are thinking about establishing any platform in Egypt, it will be here. That’s how they see us, and right now, we’re working with them to support us in extending our services in Africa.