Amr Abu Al-Azm: «ERRADA» aims to enhance financial inclusion in the market. The new products are the company’s main axes

Erada Company for Financing Small and Micro Enterprises was able to leave its mark in the Egyptian market in a short period, It obtained the license from the Financial Regulatory Authority in January 2023. It actually started its activities last March.

Amr Abu Al-Azm, CEO and Co-Founder of ERRADA, He revealed that his company aims to expand in non-banking financial services during the coming period by submitting an application to the Authority to obtain a license to practice financing medium and small enterprises. As well as the launch of an Islamic financing product, As well as cooperating with insurance companies to launch insurance products.

Abu Al-Azm explained, In an interview with Amwal al-Ghad, The company has succeeded in financing 8,000 customers at the level of 48 branches in 12 governorates distributed between Upper Egypt, the Delta and Greater Cairo, With a total financing estimated at EGP 200 mn, Pointing out that the company is based on financing young people from the age of 21 to 40 years, He pointed out that 45% of the customer base are women who are able to manage projects.

He pointed out that the company seeks during the coming period to maximize its financing portfolio and enhance the volume of its business in the market. Signing contracts with four banks and financial institutions during the coming period to obtain new credit facilities worth EGP 400 mn, which will contribute to doubling the volume of credit facilities obtained by the company so far, amounting to about 400 mn from 4 banks.

Initially, Tell us about ERRADA’s strategy during the current period?
ERDAA aims to create a new form of financing, As well as seeking to be a financial technology company “Fintech” through cooperation with Etisalat Misr, This enables it to communicate with the customer in its place as well as provide flexible products that suit all customer needs and innovative financial solutions related to the development of the industrial, commercial and service sectors, And serve Egypt financially and socially, The company also takes into account the selection of its branches in rural and urban areas and the poorest villages to serve a larger segment of the Egyptian society.

What is the size of the funds granted and the percentage of women and males accounting for the total portfolio?
The company has achieved EGP 200 mn in financing since its inception last March until September 2023. Women account for 45% of the total facilities granted. In addition, 10% of them are directed to women breadwinners due to the importance of their economic and social returns. Males account for 55%. The company seeks to provide job opportunities for young people and promote start-ups, so 70% of the portfolio is directed to the youth category.

Tell us about the geographical spread of the company, How many customers benefit from its financing?
The company has succeeded in financing about 8,000 customers through the geographical network, which currently includes 48 branches in 12 governorates distributed between Upper Egypt, the Delta and Greater Cairo. ERRADA also contributes to the presidential initiative “Decent Life” through its presence in many villages of the initiative. This is in line with the State’s 2030 strategy to reduce poverty and provide job opportunities for many young people.

What are the main sectors that account for the largest share of the financing portfolio?
The business accounts for the largest share of the total financing granted by the company with a share of 60% of the portfolio, followed by the service sector with 30%, Then the industrial sector 10% of the company’s total financing portfolio.

How much of the total credit facilities obtained by the company, Are there negotiations with banks to obtain new financing?
The total credit facilities obtained by Erada have so far recorded about EGP 400 million from 4 banks, The company is also in the process of signing with 4 banks and financial institutions during the coming period to obtain new credit facilities of the same value.

What are the company’s goals for the coming period?
ERRADA plans to double the volume of funding currently granted by the end of this year, In addition to aiming to increase its geographical network to reach 77 branches by the end of 2023, and 150 branches by the end of next year, The company’s strategy for geographical expansion also includes serving many border governorates to create job opportunities and growth of individuals’ income and include them financially in the system. This will be done through cooperation with Etisalat Misr E& Installments are paid through Etisalat Cash e-wallet.

What about the most prominent new products and services that Erada seeks to put on the market?
The company aims to expand the activity during the current year by introducing new financial products suitable for customers, It is also in the process of submitting an application to the Financial Regulatory Authority to obtain a license to finance small and medium enterprises in the coming period. In addition to applying for a license to add Islamic finance products and a finance product for specialized traders, In addition to providing various insurance products that suit the needs of customers in cooperation with insurance companies operating in the market, We also intend to cooperate with Egyptian institutions to provide social services to entrepreneurs.

Tell us about the company’s shareholder structure and each shareholder’s shareholding?
Etisalat Misr acquires 65% of ERRADA’s shares. Egypt’s Digital Transformation Fund accounts for 25%. 10% of the company goes to Amr Abu Al-Azm.

The company’s shareholders support its strategic plans to maximize the volume of its business in the Egyptian market. ERRADA has the opportunity to maximize the benefit of technological and geographical cooperation with Etisalat Misr by offering means that make it easier for customers to obtain financing amounts as well as pay installments.

What about ERRADA’s cooperation with electronic payment institutions and its role in promoting financial technology?
The company cooperates with the majority of institutions specialized in electronic payment, Most notably, Etisalat Misr e& through the e-wallet “Etisalat Cash”, As well as companies Masary, Momkn, Guarantor, Fawry, In addition to Egypt Post, allowing customers to pay installments and financial transactions easily and conveniently, the company relies on financial technology in many procedures, It allows customers to submit credit applications through the company’s social media channels. This is to ensure the speed of approval of credit requests and in order to provide an appropriate cost to the customer.

During the coming period, the company aims to submit a request to the Financial Regulatory Authority regarding the establishment of its own electronic application. This is to facilitate the process of submitting credit applications and following up on the processes on an ongoing basis.

What are the highlights of the company’s strategy to enhance financial inclusion?
The company develops a strategy to contribute to the state’s plan to enhance financial inclusion and attract new segments of customers who do not deal with the non-banking financial sector, It also seeks to spread financial literacy to customers in all governorates, especially in remote villages, Through awareness campaigns for customers and clarifying how to deal with the sector and obtain financing, As well as knowing the financial solvency of the client and studying his financial condition to know the size of the appropriate financing for him so that the company does not burden the customer.

What is your vision for the microfinance activity now, Does the sector need requirements to enhance its position?
The sector needs a new form of financing and the launch of new products that suit different segments of customers, In addition to finding new mechanisms and means that contribute to the rapid delivery of financing to customers, It is also necessary to take into account the overall shape of the economy and study the needs of the market and customers, In addition, new products targeting a new form of financing such as green finance should be made available to motivate customers to use clean energy and sustainability through education and a different form of financing.

How do you see the repercussions of higher interest rates on the sector?
Undoubtedly, inflation has put a lot of pressure on the sector in terms of the form and volume of funding granted. It also puts pressure on the customer, The cost of financing has doubled compared to last year with the increase in the lending and discount rate at the Central Bank of Egypt, but we are keen on customers according to responsible pricing controls that take into account the financial ability of customers without incurring any additional financial burdens, which enhances our social role in the market.

In the context of the establishment of the movable collateral registry, how will movable collateral affect the sector?
Movable collateral benefits companies and customers, It is a form of guarantee that helps companies preserve their rights and facilitates financing, On the other hand, it helps customers who do not have proper collateral to obtain financing at a higher value.