From its humble beginnings, Egypt’s tech startup ecosystem has experienced exponential growth. Now it stands tall as a prominent tech powerhouse in Africa, rivalling well-established startup ecosystems like South Africa, Nigeria, and Kenya in terms of entrepreneurial innovation and investment levels.
In the 3rd edition of Egypt FinTech Landscape report 2023, the startup ecosystem hit a milestone despite, witnessing global headwinds in global FinTech investments in the last year. A total of $796.5 million, with $437.7 million coming from private equity investments, has been injected into Egyptian FinTech and FinTech-enabled startups in 2022.
In addition to that, venture capital investments have skyrocketed, reaching a new high of $358.8 million; which has multiplied by 28.7 times only in 3 years, indicating that this year was even a bigger record-breaker.
The emergence of innovative FinTech and FinTech-enabled startups in the market highlights the growing traction and vitality of the ecosystem in 2022. Here are some key takeaways from the report that shed light on the state of the ecosystem.
Egypt is home to over 177 startups & PSPs
Currently, 177 FinTech & FinTech enabled startups and Payment Service Providers (PSPs) offer innovative solutions in the Egyptian market. Of these, 139 (79%) startups provide pure FinTech solutions, 38 (21%) provide technological solutions, and embedded finance.
Within the last five years, innovative startups& PSPs have increased by 5.5 times due to the rising demand for FinTech & FinTech-enabled solutions in the Egyptian market.
Primary sub-sectors of startups & PSPs
As of now, the FinTech industry in Egypt is largely dominated by three sub-sectors, collectively accounting for nearly 60% of the 177 startups and PSPs. Payments & Remittance stands out as the leading sub-sector, representing 36% of the FinTech landscape. Following closely are Lending & Alternative Finance and B2B Marketplace solutions, comprising 11% and 10% respectively. The sub-sectors of Data Analytics/AI, Insuretech/Healthtech, and Agritech each make up 5% of the FinTech industry in Egypt.
Geographical representation
Out of the total of 177 startups and PSPs analyzed, 9 had their headquarters overseas, while the majority, 168, were domiciled in Egypt. Among the 168 startups and PSPs headquartered in Egypt, approximately 67% (113) were based in Cairo, 30% (50) in Giza, and the remaining 3% (5) were distributed across other governorates. Interestingly, out of the 113 startups and PSPs based in Cairo, 17 of them had additional offices in other governorates.
Of the total 46 startups and PSPs with additional offices overseas, the majority, 58%, are located in the United Arab Emirates, while 36% have offices in Saudi Arabia. Additionally, 18% of these startups and PSPs have expanded their operations beyond the MENA region, with the United States being the primary destination.
Out of the 52 startups and PSPs with customers overseas, the United Arab Emirates is the top destination country, accounting for 57% of them. Following closely is Saudi Arabia, with 47% of these startups and PSPs serving customers there. Nigeria ranks fifth with 12%, while the USA stands at 10%.
Customer strength
Among the 143 startups & PSPs that shared their data, 25 startups & PSPs have not acquired any customers yet. However, there were a total of 99.9 million registered customers across the rest of the startups & PSPs. Out of these registered customers, approximately 54.7 million, accounting for 55%, were active in the last 90 days.
Out of the 72 startups & PSPs that provided gender-disaggregated data, female registered customers account for nearly one-third (4.4 million) of their total registered customers (15.6 million). Among these startups & PSPs, there are a total of 1.2 million active female customers, representing 27% of the active customer base.
Upon analyzing customer diversification for each startup, it becomes evident that the average activity level of female customers tends to be higher than that of male customers. On average, for every startup, active females represent 55% of its female customer base, while active males represent only 47% of its male customer base. This suggests that female customers are more engaged and active in using the services provided by startups, compared to their male counterparts.
Females founders & co-founders
Out of the total startups & PSPs analyzed, only 29% (52) have female co-founders, indicating a relatively low representation of women in the founding teams. Furthermore, an even smaller proportion, only 2% (3) of startups & PSPs, have all their founders as females. The majority, 69%, have no female founder or co-founder, further underscoring the need for deliberate action to achieve gender balance in the industry.
By taking deliberate action to achieve gender balance in the startup ecosystem, businesses can unlock numerous benefits and contribute to a more inclusive and successful entrepreneurial landscape.
Challenges faced in the ecosystem
In the ecosystem, startups and PSPs face several challenges that impact their growth and sustainability, and one of the most prevalent hurdles is securing access to sufficient funding. Despite the current strong performance of the ecosystem, there remains a pressing need for additional funding. Particularly during their early stages, startups and PSPs often struggle to raise capital due to investor hesitancy or a lack of awareness about their innovative solutions.
Asides from problems with funding, navigating through regulatory requirements and obtaining the necessary licenses can prove to be time-consuming and financially demanding. This consequently impeded the speed at which these entities can enter the market and scale their operations.
Additionally, currency volatility or devaluation is a concern, as it serves as an obstacle to maintaining profitability, securing adequate funding, and ensuring operational stability. These currency-related challenges pose risks to their overall financial health and ability to sustain their business endeavours effectively.
Interestingly, it is important to note that these problems are not unique to the Egyptian ecosystem; they are recurring issues throughout the entire African continent.
