Contact Financial Holding Company aims to expand its presence in the African market after entering Kenya about 10 months ago by establishing a new company in partnership with Al-Mansour Mantrac in the field of financial leasing.
Daily News Egypt recently sat down with Said Zaatar — CEO of Contact Financial Holding — to discuss the company’s latest developments and upcoming plans.
First of all, what are the details of your new investment in Africa?
The company’s ownership structure is divided into 40%-60% split between Contact and Al-Mansour. This joint venture was established under the name Al-Massy with a capital of about EGP 80m.
The new company is offering a financial leasing product for heavy equipment and agricultural equipment. The plan includes providing consumer financing products and car instalments at a later stage.
The new company has also started negotiations with banking alliances in Africa to obtain funds to expand with new products. Banque du Caire is among the banks we are negotiating with, along with a number of Kenyan banks.
Why choose Africa as a market for expansion?
The African market enjoys promising growth opportunities. Kenya is the first step for the company in Africa and we intend to expand further in 2023, especially Uganda and the Horn of Africa in general as we begin providing other financing services according to market needs there.
This move to Africa came after expansions that lasted for more than 20 years in the Egyptian market. Strong local institutions are seeking to expand their presence abroad and build brands in Africa and the Middle East.
Are there other markets the company is considering entering in the coming period?
The Gulf is also on the company’s radar; we are considering penetrating the Gulf market next year by introducing a new product designed to serve Egyptian expats.
These international expansions will not affect the company’s expansion plans locally, as Contact has opened about 64 branches in Egypt this year.
The company also launched a number of new points of sale (PoS) in commercial centres and stores, which resulted in an increase in the number of financing transactions.
Our plan is based on increasing our direct presence through a network of branches and developing the package of services provided. Additionally, since the beginning of the year, the company has focused on expanding its network of commercial relations by concluding new agreements with sports clubs, schools, and universities.
Furthermore, the company has achieved its goals by providing all possible services, starting with the education product, expenses, and study supplies, to cars, housing, and finishing. Contact aims to provide all services to its customer at every station of their lives.
Is there a plan to launch new financing products in the coming period?
The company is currently studying the introduction of new financing products to fund solar power plants as well as a product for modern irrigation operations starting next month.
These products fall under the umbrella of green finance, which the company seeks to provide in the Egyptian market during the coming period in accordance with the state’s orientations towards a green and sustainable economy.
The company operates on the principle of responsible financing and studies the client’s needs well before granting financing to ensure the safety of the client on the one hand and the quality of the portfolio on the other.
Furthermore, the company recently adopted a new strategy in evaluating the customer, whereby each of its branches includes a credit officer who inquires fully about the customer before granting the financing.
How did the policies of the US Federal Reserve affect Egypt in general and your activities in particular?
The monetary tightening policies of the US Federal Reserve caused a global inflationary wave. Inflation at the local level led to an increase in demand for consumer financing services, especially in light of the current high prices.
How does one expand fintech applications, and what’s their impact on the growth rates of the company’s financing portfolio?
The company is interested in the technological aspect and constantly developing its electronic applications, especially the Contact application, as well as grabbing stakes in start-up companies that serve the company’s work system.
The volume of new financing has been growing, mainly driven by the rise in the number of new clients. 50% of new consumer financing clients were granted credit approvals by AI that assessed their creditworthiness.
The company also recently invested in a start-up specialised in the field of AI called Synapse Analytics, which helped Contact in exploiting customer base data in order to develop a tool specialised in the instant credit assessment of customers based on customer information, thereby granting instant approvals to new customers, allocating a credit limit upon downloading the application and entering information, and making it easier for the customer to obtain financing service fasters.
Additionally, the company is continuing to develop its digital platforms to facilitate customer access to products and improve the user experience, focusing on creditworthiness assessments, which has led to the significant growth in the size of the financing portfolio.
The financing portfolio of Contact Financial Holding Group reached EGP 12.38bn by the end of the first half (1H) of 2022, compared to 1H 2021’s EGP 8.97bn — a growth rate of 38%.
The company also witnessed growth in the total volume of new financing at an annual rate of 52% to reach EGP 5.1bn in 1H 2022, driven by the performance of consumer financing, working capital financing, commercial vehicle financing, and real estate financing.
Furthermore, the group’s net profit grew by 22% on an annual basis to record EGP 238m, compared to EGP 195m.
The company is always seeking to maximise its financing portfolio while maintaining its quality and creditworthiness while achieving collection rates that are among the largest in the consumer finance market.
Our strategy aims to achieve high profitability to ensure a good return for investors.
How can Egypt attract foreign direct investment at the present time?
Legislative stability is one of the most important factors. Additionally, marketing the country as a one-stop-shop for all procedures is necessary.
The other important factor in providing hard currency to Egypt is Egyptian expats; it is necessary to facilitate any initiative to involve them in the local economy and easing their return home whenever needed by offering them cheaper flights.
Regarding the State Ownership Document, the state has been exerting extensive efforts to strengthen its partnership between the private and public sectors and foster investments that can support the national economy.
A document of this type is of great importance in establishing partnerships between the public and private sectors in order to enhance the participation of the private sector, especially with regard to the implementation of infrastructure projects, which Egypt desperately needs now.
The state must also continue to maximise its investments in strategic sectors such as education, health, and basic infrastructure due to their importance to the economy as a whole and to the citizen in particular.