Egypt: Driving financial independence

Said zater, group CEO of Contact Financial Holding, shares the Egypt-based group’s efforts to serve and bolster the country’s growing non-bank credit market.

What are the trends boosting the region’s consumer nonbank credit market today?

The consumer non-bank credit market in the Middle East, particularly Egypt, is a rapidly changing landscape. While there are several trends at play, I would like to highlight the top three.

First, the region has seen an increased demand for accessible and personalised financial solutions. This demand is being fuelled by an up-and-coming youth demographic combined with urbanisation. Egypt is the most populous country in the Arab world. Its demographic trends, characterised by a rising youth population, are the drivers of demand for accessible credit solutions. Additionally, technological advancements have ushered in a new era. Digital platforms have overhauled the way financial services are delivered.

This aligns with the emergence of innovative payment systems and fintech disruptors that cater to the preferences of digitally savvy consumers. Another significant trend is the growing emphasis on sustainability and an environmentally conscious investor segment.

This is pushing market players to other green finance products and socially responsible lending solutions. Environmental considerations and sustainability will increasingly shape investment preferences and contribute to the growth of green finance.

Additionally, regulatory reforms will play a pivotal role in defining the sector’s framework and ensuring consumer protection. These factors combined are likely to determine the trajectory of the region as well as Egypt’s debt capital market.

What role does the group play in Egypt’s credit market?

As a leader in the non-bank financial services sector in the country, Contact plays a vital role in shaping and driving the dynamics of Egypt’s credit market. Since its inception in 2001, the company has been a catalyst for change, redefining how individuals and businesses access financial services.

As the first licensee of consumer finance in Egypt, Contact has played a pivotal role in both advocating for and contributing to the drafting of the consumer finance law — a significant legislative milestone in the Egyptian financial landscape. Operating under the regulatory supervision of the Financial Regulatory Authority, the company continues to expand credit accessibility and reshape the credit market landscape.

Tell us about your offerings.

Contact provides a comprehensive suite of financial solutions designed to cater to the diverse requirements of its clients. Its expansive portfolio covers a wide array of sectors, underscoring its commitment to streamlining financial processes and adapting to the evolving demands of Egypt’s credit market.

In its financing division, Contact offers a range of consumer financing choices for both new and used vehicles, serving both passenger and commercial segments (trucks and other similar vehicles). Moreover, consumer durables financing is facilitated through Contact Credit, while Contact Mortgages offers mortgage solutions to facilitate access to homeownership. Addressing commercial needs, Contact Leasing and Contact Factoring provide customised financing
solutions. The insurance segment is robust, featuring Sarwa Insurance and Sarwa Life Insurance, which offer comprehensive coverage for individuals and families.

Additionally, Contact Insurance Brokerage enhances the insurance spectrum, making the company a comprehensive partner in the financial well-being of individuals and businesses.

Contact’s innovation also extends to digital financial services through Contact Creditech and Contact Pay, contributing to a holistic financial ecosystem. The company’s corporate financing activities encompass securitsation, structured debt and debt investment management. Additional offerings include specialised products such as watercraft finance, education finance, maintenance finance, home finishing finance, wedding finance, club membership finance, motorcycle finance, and furniture finance.

How has the group navigated Egypt’s fluctuating economic conditions?

Egypt has recently been buffeted by a complex mix of economic headwinds. These include currency market fluctuations, inflation and logistics-related challenges. Despite these prevailing factors, both our financing and insurance divisions have exhibited remarkable growth rates.

The performance is a reflection of our resilience which can be attributed to robust mitigation strategies, innovative product offerings, and an agile business model that can swiftly adapt to changing economic circumstances.

Tell us about the group’s performance in H1 2023.

In the first half of 2023, Contact Financial Holding exhibited strong operational and financial growth despite facing challenging macroeconomic conditions. Our operating income within the financing and insurance divisions recorded year-on-year growth rates of 37 per cent and 48 per cent, respectively, during this period.

The net income from financing experienced a remarkable surge of 21 per cent in H1 2023 and 71 per cent in Q2 2023. It is worth highlighting that Contact Financial Holding holds a substantial market share of 35 per cent in Egypt’s consumer finance sector.

How has the group leveraged digital transformation?

We have embraced innovation to ensure our continued relevance in this changing financial landscape. Our revamped ContactNow app offers services such as instant credit, account management, and bill settlement. Notably, we’ve witnessed a 65 per cent yearon-year increase in instant credit requests during the six-month period, highlighting the success of our digital strategy. Our innovative approach extends to digital financial services as well, with Contact Creditech and Contact Pay contributing to a holistic financial ecosystem.

How has your leadership impacted the firm and Egypt’s credit market?

Through my position at Contact Financial Holding and role as the chairman of the Egyptian Federation for Consumer Finance, I’ve worked towards bringing about significant transformation for both the firm and Egypt’s credit market. As a group, we have achieved substantial growth, expanding our service portfolio, and playing a pivotal role in shaping Egypt’s credit landscape for the better. Our efforts have always been to raise awareness among
customers and peers about the evolving potential within the financial sector.

What is your outlook for the coming year?

A pivotal facet of our forward-looking strategy is our dedicated pursuit of green finance. Our introduction of the ‘Green Finance’ product stands as a testament to our resolute dedication to sustainable development. This innovative product encompasses a range of offerings, including financing for solar energy equipment – an essential component of renewable energy adoption.

Moreover, our green finance initiative extends to supporting specific agricultural equipment such as greenhouses, irrigation systems, and advanced agricultural machinery. By doing so, we are not only promoting the growth of vital sectors but also aligning ourselves with the global momentum towards eco-friendly practices. This emphasis on green products not only signifies our adaptability to evolving market needs but also reinforces our role as a catalyst for positive transformation in Egypt’s financial landscape.