CBE leads banking sector’s major role in supporting Egypt’s digital transformation efforts

Hossam Mounir
7 Min Read
The Central Bank of Egypt (CBE) has launched a new EGP 15bn initiative to finance the dual-fuel vehicle conversion plan, with a lump-sum return of 3%. In a Sunday letter to banks, the CBE said that the initiative aims to support the government’s ambitious, recently announced multi-year plan to replace car engines powered by traditional fossil fuels with dual-fuel engines that run on both petrol and natural gas.

The Egyptian banking sector, led by the Central Bank of Egypt (CBE), played a major role in supporting the state’s efforts towards digital transformation and developing electronic payment (e-payment) systems.

The spread of digital technology solutions is contributing to the acceleration of financial inclusion at banks, and the creation of electronic products that serve large groups of citizens. This in turn enables bank customers to conduct all their financial and banking transactions via mobile phone or the Internet, without the need to physically present themselves at branches.

Among the projects that the CBE has worked on to support digital transformation was the government payments and receipts project. This included a project to replace and renew government employees payroll cards, pension cards, and the farmer’s card, as well as financial technology (fintech) projects. 

It also includes the establishment of a fintech hub, and the establishment of the FinTech and Innovation Support Fund. This is in addition to the platform for small- and medium-sized enterprises (SMEs), and the establishment of the national e-payment system “Meeza”. 

Meeza aims to ensure the  independence of national payment systems, as well as reducing the cost of payment services to citizens.

According to CBE data, about 23 million new Meeza cards were issued, including Takaful and Karama cards, the Farmer’s card, people of determination cards, pension cards, and government payroll cards.

All government employees will receive their salaries via Meeza cards by the end of December 2021, according to Egypt’s Minister of Finance Mohamed Maait. The cards will allow users to withdraw cash through ATMs, make purchases online, and pay government fees through its e-payments portal. 

In a press statement, Maait said that the government began the trial phase of Meeza cards to pay salaries in August 2020. During this time, obstacles and challenges were overcome before the official launch this February.

He pointed out that, the government plans to issue 1.2 million cards between February-April 2021, in cooperation with several Egyptian banks.

In line with the strategy of the National Payments Council, chaired by President Abdel Fattah Al-Sisi, the CBE’s boarddecided to extend some of the decisions previously taken to confront the novel coronavirus (COVID-19) pandemic. 

The extension will take place for a further six months, and is valid from 1 January until 30 June 2021. This comes also in continuation of the CBE’s proactive efforts to confront the effects of the pandemic, and reflects its keenness to revitalise and protect the national economy, whilst preserving the gains of economic reforms and the stability of the banking sector.

These decisions included: continuing to exempt customers from all expenses and commissions for bank transfer services in Egyptian pounds; issuing electronic wallets for free, including creating virtual cards (VCNs) from the wallet; and cancelling all commissions and fees for transfers between mobile phone accounts and transfers between any phone and bank accounts. It also takes into account issuing prepaid cards to citizens for free, provided that those cards are contactless.

CBE Deputy Governor Rami Aboul Naga has previously said that these decisions come as part of the CBE’s keenness to ensure the continuity of banks’ work. This is in light of the continuous monitoring of the banking sector to encourage the adoption of e-payments. This is set to take place in a manner that supports the state’s direction to transform into a cashless society.

Amany Shams El-Din, CBE Sub Governor for Banking Operations, explained that the decisions also include continuing to cancel fees and commissions for cash withdrawals for pension cards. These fees, whose approximate value ranges from EGP 40m to EGP 60m over the course of six months, will be borne by the CBE. This is also in addition to what was incurred in the previous period from the cost of approximately EGP 90m.

The CBE’s extension decision also includes obliging banks that have obtained a licence for electronic acceptance to cancel all fees and commissions that private sector merchants incur on transactions whilst using contactless payment tools issued by banks operating in Egypt.

Bankers and experts forecast that e-payments services would witness a significant growth during 2021. This will coincide with the precautionary measures that the government undertook with the beginning of the second wave of the pandemic. It will also coincide with the state’s plan to limit the circulation of cash in the markets, and launch national initiatives to enhance financial inclusion and automate government services.

Banking expert Tarek Metwally said that digital development and fintech solutions are among the most important pillars of the future of the banking sector.

Metwally explained that COVID-19 has pushed the banking sector towards developing its digital infrastructure during the previous period. The pandemic has also motivated it to enhance the digitisation of banking services provided to customers.

He pointed out that the pandemic has contributed to increasing customer  awareness of the recent developments in banking services. 

It has driven them to rely on e-payment solutions, especially point of sale (POS) services, QR code, and Internet and mobile banking applications.

For his part, banking expert Mohamed El Beih believes that the state needs to accomplish the transformation into a cashless society to support the macro-economy. Towards that goal, the technological infrastructure efficiency needs to be raised.

It will also provide more incentives to encourage digital payment for both merchants and banks.  El Beih expects that the demand for e-payment services to grow by 15% in the near term.

El Beih emphasised the importance of the state’s efforts towards encouraging fintech startups through financial inclusion and electronic payment initiatives. These efforts also include allowing banks to acquire e-payment companies, pointing out that the increase in digital payments  is directly proportional to the rates of macroeconomic growth.

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