Egyptian banks poised for African expansion 

Giving some background, Yehia Abou El-Fotouh, Deputy Chairman of the Nationwide Financial institution of Egypt, stated that reforms that started in 2003 had strengthened and diversified the banking sector, permitting for participation by each native and overseas entities. 

There are at this time 36 banks working within the nation, all of that are properly capitalised. This follows the rise in minimal working capital required by the central financial institution, at present at E£5bn. The variety of banks has diminished from over 100 within the early 2000s. 

“There are about 120m folks dwelling right here in Egypt, if you happen to embody non-Egyptian nationals, so we consider it is a good variety of banks, particularly as they’re all very robust,” El-Fotouh burdened. Egyptian banks are additionally increasing into different nations and his personal, the Nationwide Financial institution of Egypt, the largest financial institution by all metrics within the nation, is at present current in Sudan, Dubai, Ethiopia and South Africa.. 

Mohamed Abdel Khabir, Group CFO at EFG Hermes Holding, defined the corporate’s growth into Kenya and Nigeria thus: “The best way we view our growth is that now we have to be within the markets the place our purchasers are, not solely to supply a single service however reasonably an entire suite of companies to them. The division opened in Kenya in 2017 and has grown to change into the largest brokerage companies within the nation. The corporate additionally purchased a small brokerage home in Nigeria that has now grown to be among the many 5 greatest within the nation. 

“The entire thought is to assist our purchasers in Egypt or wherever else on the earth to realize entry to those markets. Aside from [the company] making use of the expertise it has accrued in Egypt in these markets, it is usually facilitating the inward growth of overseas purchasers into Egypt in addition to Kenya and Nigeria. 

EFG Hermes is essentially the most profitable African funding financial institution by way of increasing its actions outdoors its residence market, making it some of the essential funding banks within the Arab world, with a robust footprint within the GCC nations. It’s this expertise, Abdel Khabir says, that may add worth when bringing capital to the African continent from new markets. Based on Mohamed Khairat, Head of Company Banking and Syndicated Loans at Banque Misr, the nation’s second-biggest financial institution is concentrated on boosting its regional presence, even when the Egyptian market in itself has nice alternatives.

“We sometimes have a look at it from two angles – on the commerce hall between Egypt and the nations we need to be engaged in and the way we are able to serve our purchasers between these completely different nations; and we have a look at the cross-border enterprise of our purchasers on each side and the way we are able to meet the banking and monetary necessities in each jurisdictions,’’ he defined. 

Banque Misr’s funding banking arm, CR Capital facilitates funding flows and transactions between the Gulf and Egypt. Banque Misr additionally participates in syndicated loans to finance massive ticket initiatives and comes second solely to the Nationwide Financial institution of Egypt within the rating of establishments on this class. 

Khairat stated the problem in Africa has been the flexibility to facilitate commerce from one finish to a different and guaranteeing that income from initiatives are assured. He noticed that it’s typically a problem to search out banks with a suitable threat profile, which makes Afreximbank a really perfect accomplice in financing Banque Misr’s purchasers engaged in initiatives outdoors Egypt. 

“The truth that now we have a presence in Africa, Saudi Arabia, Lebanon, United Arab Emirates, France and Germany positively facilitates our potential to finance our purchasers and meet their banking necessities as they transfer into new markets,” he stated. It additionally helps when purchasers from different areas come into Egypt, he added.

Huge African community

Ayman Elzoghby, Director, Intra-African Commerce, Funding and Company Finance, Afreximbank stated “our collaboration with Egyptian banks has been very fruitful and rewarding over time.” Egypt is the biggest shareholder in Afreximbank, in addition to forming the biggest portfolio with the financial institution, at 26% of the financial institution’s whole. 

Afreximbank additionally works carefully with the monetary sector in Egypt, together with offering liquidity for native banks and supporting them to drive commerce between Egypt and the remainder of the continent. 

“We work in 52 African nations and therefore now we have relationships and features of commerce with greater than 500 banks across the continent and we use that community to facilitate commerce,” he stated. The Nationwide Financial institution of Egypt, for instance, doesn’t cowl as many banks as its purchasers want so Afreximbank is ready to step in and supply that help the place there may be the necessity.  

Afreximbank additionally works with some Egyptian building banks to undertake initiatives in different African nations. One such initiative is a hydro-electric venture in Tanzania, which, at $3bn, is without doubt one of the largest all-African funding initiatives in current instances. 

Afreximbank, Elzoghby emphasised, can also be selling commerce hubs in nations with bigger economies within the continent. “Egypt is one such nation, with a monetary companies sector that’s succesful sufficient to develop its footprint throughout Africa,” he stated. 

“The Covid disaster taught us an essential lesson,” he added. “Numerous worldwide banks withdrew from the continent, leaving a sizeable hole in commerce and venture finance, which might solely be crammed by indigenous banks.” 

Yehia Abou El-Fotouh, Deputy Chairman of the Nationwide Financial institution of Egypt, stated the African market was the first one for growth, with nice alternatives for mutual advantages. “We’re prepared, now we have the finance and we’re pushing our purchasers to enter Africa. We’re additionally supporting them in collaboration with Afreximbank and different banks,” he stated. 

For Banque Misr, the present financial challenges even have alternatives wrapped in them. “For those who actually have a look at what we try to do by way of export promotion, import substitution, this disaster has actually opened up a variety of alternatives for corporations that weren’t even exports and are actually rethinking their methods and specializing in them,” he stated. 

Poor market info the impediment

Elzoghby stated Afreximbank sees the shortage of market info, reasonably than infrastructure, as the largest impediment to African commerce. “Firms in Egypt have no idea what folks want in Nigeria, Kenya or South Africa, for instance. So what we try to do is bridge the data hole by bringing companies nearer collectively,” he defined. 

The financial institution’s intra-African commerce champions programme in addition to its current overtures to the Caribbean, are all designed to assist African corporations discover and develop the markets for his or her services and products. “Beneath our EPC technique, now we have helped facilitate over $12bn in contracts in African nations, half in favour of Egyptian corporations,” he stated. 

Reflecting on how Egyptian banks can develop their presence in Africa, Elzoghby stated he’d encourage them to have a look at what different native banks, particularly Moroccan banks, have performed by way of regional growth. “ Egyptian banks have to be current in all areas in Africa and this have to be performed as a part of a deliberate technique,” he emphasised. 

Commenting on the exit of worldwide banks from Africa, Ayman Elzoghby defined that intervals of disaster exert strain on some banks to exit these markets perceived to be essentially the most dangerous, therefore the choice by some banks to go away the continent, however this, he stated, is a chance for native banks to take over the property of the departing ones. 

The panel concluded that the reforms that Egyptian banks have undertaken to strengthen the sector had been a lesson that different jurisdictions might take from the Egyptian market, whereas Egyptian banks may very well be inspired to emulate the digitisation efforts made within the banking sectors of another nations within the continent.