ArabFinance: Egypt recorded 95.75 million mobile connections in 2021, the equivalent to 92.7% of the total population, according to the Digital 2021 Egypt report. Considering that only 32.8% of the country’s population over the age of 15 hold bank accounts, as indicated by the World Bank’s Little Data Book of Financial Inclusion report.
 
The high number of mobile connections has created a fruitful market for fintechs, which are currently replacing traditional finance models long adopted by unbanked Egyptians. One of these models is the gameya (money cycle in Arabic), a well-known collaborative credit solution that has helped many generations of Egyptians finance personal goals and purchases.

The homonymous app ElGameya is a local startup that thrived digitalizing this model. Arab Finance had a one-on-one interview with Ahmed Mahmoud Abdeen, the company’s founder and CEO, to discuss the development of the startup and his views on the local fintech market.

Can you tell our readers how ElGameya started? And what is your unique selling point?

The idea began when I was planning to get married, and like most Egyptians, I resorted to a gameya to cover the wedding expenses. I started to think about it with an engineer’s mindset – I used to be a software engineer.

Egypt issues around one million marriage certificates per year. In parallel, more than 70% of Egyptians are unbanked. That means that most locals resort to traditional financing ways such as the money cycle, also known as the Rotating Savings Credit Association (ROSCA) model. The model already exists in more than 100 countries, and people are very familiar with it here in Egypt, where we call it gameya.

The biggest advantage of the gameya concept is that you can take a bulk of money and repay it in a specific duration, or save when you need a certain amount of money within a specific time to fulfill certain purposes. It can be school fees, vacation, and etc.

However, people who engage in the traditional money cycle face certain problems. Sometimes they can’t find suitable cycles for them, with suitable amounts and timeline; other times they have problems managing the logistics, as in who takes the money first; as well as problems managing who paid and who didn’t and the cash collection. In addition, the most dangerous problem is the lack of safety.

Looking at solving these problems, we digitalized the traditional gameya concept through an application called ElGameya.

Following only three steps, users can sign up and find a diversity of cycles starting from EGP 2,500 up to EGP 100,000. Going through the steps, users register; upload their national ID, HR letter, commercial registration, or any residence proof; and start paying and getting cash through the application.

In order to collect money from the cycles, users don’t need to have a bank account. We have many different ways to distribute this cash. We use Automated Clearing House (ACH) systems of banks in Egypt; make transactions to bank accounts and wallets; hand the money to our clients in person at our office; deliver it through Fawry Plus.

Analyzing the behavior of our active users, we divd out that 61% of them are participating in money cycles to achieve specific goals. They need to buy a laptop, buy a mobile phone, take care of home appliances, pay the installments of their cars or homes, and so on. That’s why we started partnering with companies and vendors to make these products available into our application with exclusive prices and discounts.

It’s a triple win between the user, who needs to buy things at a good price; the merchant, who needs to increase his sales and decrease his costumer acquisition cost; and us, who, as an application, need to increase traffic and get commission from these merchants.

What is your current size of operations, number of users, and value of wallets?

ElGameya has around 10,000 users with an activity rate of around 25%. We do monthly cycles equivalent to EGP 2 million.

We have also implemented a B2B2C strategy in partnership with corporations and entities with over 100 employees, where the companies’ HR avails ElGameya as a benefit to the staff. So far, we have partnered with around 25 companies, which combined, have thousands of employees.

Within this scheme, we ensure that users will pay the cycle’s installments, as the companies’ finance departments will deduct the installment from their salaries. The partnership is also beneficial to these finance departments, since they will avoid having employees going to them to ask for their salaries in advance – employees will instead participate in ElGameya. As a consequence, the cashflow of the company will not be corrupted.

Again, it’s a triple win situation between us, the company, and the staff.

What is the average profile of your users, as per age, city, and gender?

Women are definitely the majority, and our users are around 30 years old.

We are focused mainly in Upper Egypt: in Al Minya and Assuit. About 30% of our users are in Upper Egypt.

Do you plan to expand the company’s operations to other cities in Egypt?

Definitely, yes. We need to continue our plan in Upper Egypt. We need to go to Suhag, Naga Hammadi, Qena, and Aswan.

How were your challenges when you first launched ElGameya compared to your challenges today?

We established the company in the middle of 2019. We made our proof of concept (POC) with Alex Bank, then officially started our operations in the beginning of 2020. Unfortunately, we faced many problems, like COVID-19, which limited our ability to attract investors.

We had many challenges in the beginning, such as the POC itself, the regulations, and the investment. Now, regulations are on our side, users are more familiar with fintech apps, and we became more mature and familiar with our market; what remains as a challenge is the budget for marketing.

To overcome that, we will hopefully launch another fund-raising round this May.

How has the pandemic impacted your operations?

Money cycles definitely increased. We doubled our numbers; first, because everyone needed money; second, because we have now a fintech tsunami in the whole world.

The Central Bank of Egypt (CBE) also promoted many events and removed difficult rules that fintechs had to comply with, which improved our operations. Now we have the CBE Sandbox, increased wallet limits, and a new electronic know-your-customer (eKYC) service.

Why do you believe many Egyptians prefer financing personal goals through money cycles?

Banks have very complicated processes. If anyone goes to a bank needing a loan or a credit card, the bank will ask for many things that might make it difficult for that person to go through the process.

Moreover, Egyptians are very familiar with the concept of gameya as they have done it for many years in many ways.

Can users initiate money cycles through ElGameya exclusively with people of their choice?

Yes, and they will pay a different interest fee, which will be very low. We encourage people and their friends to use our app and do their money cycles digitally with us instead of doing it manually.

The value of fees varies according to the value of the slot, it can go from 8% to 10%.

Which other countries nurture a cultural preference for the ROSCA model? Do you plan to expand ElGameya’s operations to these countries?

In the MENA region, I believe that Sudan, Libya, Algeria, and some of the Gulf countries, such as Jordan and Oman, are very familiar with the ROSCA model.

We have plans to expand to other countries, either here in the region or beyond, like in Canada. Within the expansion plans, I don’t follow the notion that every startup has to first expand in Dubai or Saudia Arabia. I believe the startup should go first to a small market, build a successful story there, and then expand to bigger markets, which is what I intend to do.

 

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