Pascale Nader is an independent market research consultant, specialized in consumer knowledge management in emerging markets, across the Middle East and North Africa. She consults with a network of local and international organizations to influence their business strategy and processes. As Director of qualitative research (2006-2008), she led a regional business unit that excelled in translating consumer insight into viable and competitive strategies for product, communication and systems development. Since 2008, Pascale is also a freelance business writer in Egypt, contributing articles on trends such as SME development and microfinance. She holds a BA in Economics from the American University in Cairo.
GiroNil was established in January 2005 in Cairo, Egypt, as a joint venture, a public-private partnership of local and international banks and financial institutions, to develop and implement a shared cashless (giro) payment system targeted to the large unbanked low-income population.
To download the GiroNil case study from the GIM database, please click here.
What has been your personal experience going through the GIM training and case research process?
Through my research on GIM case studies, I’ve been fortunate to be working with and learning from business development frameworks that are elegantly simple in their solutions, yet producing results that are robust and thought provoking. I personally felt these same qualities reflected in every researcher, social entrepreneur and person involved in advocating or building inclusive businesses that I met in this experience. My hopes are that their philosophy, trials and enthusiasm for business innovation linked to human development is communicated in the studies written about their experience.
What is GiroNil’s basic value proposition and what makes its financial model sustainable?
With 90 per cent of Egyptians currently unbanked and more than 22 million employees collecting monthly salaries in cash, GiroNil’s business model for building appropriate financial infrastructures to realize a ‘cash-less society’ vision for Egypt is well-placed. The joint-venture company is co-developing a nation-wide payment system, specifically the Automated Clearing House (ACH) in Egypt, with the Egyptian Banks Company (EBC). The ACH’s financial model is based on its’ specific capacity to process large volumes of multiple credit and debit transactions in batches (or bulk transfers). By the end 2010, it is expected that the ACH will allow for the processing of utility bills, salaries, pensions and later down the line, micro-payments and the introduction of lucrative products such as mobile payments in Egypt. With a fully functioning ACH, they estimate the system could process up to 2 billion transactions per year by 2017 and have significant impact on the economic growth of Egypt. GiroNil receives a nominal fee out of every transaction processed by the ACH, sustained by their continued efforts to develop banks’ technological capacities to add volumes of transactions to the shared system.
What have been the biggest challenges hindering GiroNil’s development and growth?
While Gironil had managed to successfully transfer networking and software systems and know-how between Dutch and Egyptian IT specialists and built an infrastructure connecting banks and post office outlets systems in one network, the size of the network was still a limitation. Over 5 years only two founding banks, Banque Misr and CIB, out of 38 operating banks, were onboard the Gironil network. Regardless of the financial incentives apparent to the banks, it was only until a unifying regulatory authority in the form of a central bank decree enforcing banks to join a payments network that gave GiroNil’s model momentum.
Also, a testament to the future business success expected from a payment system model in Egypt, local regulations posed a challenge to the initial sustainability of GiroNil network since only the Central Bank of Egypt may exclusively perform the oversight of payment systems in Egypt. For this reason, GiroNil began concessions with EBC and the central bank of Egypt and due to their demonstration of their business model, early investment and experience gained from 5 years of piloting and operating in the market. Gironil has entered into an agreement with the EBC to co-develop the ACH infrastructure together. There was a lot of persistent work and conviction in their model that saw them through.
What strategic role is the Egypt Post playing in GiroNil’s business model?
GiroNil’s business model was originally co-developed by ING and Post Bank (now ING) based on the power of post office networks, which could be leveraged by banks as a ready channel for distribution of financial services to the unbanked. Without Egypt Post’s partnership, GiroNil would not have been able to set up their network and encourage participation from banks. Egypt Post’s network is an immense 3,700 branches and 2,600 outlets across Egypt and GiroNil’s management team could envision Egyptian citizens of all income levels in cities and remote rural areas using the post office more often to make financial transactions critical to daily life like paying utility bills or to open a bank account. People have certain trust in the heritage of the postal institution in Egypt especially outside Cairo, often based on their reliable deployment of pension payments and other government benefits over decades. GiroNil has made investments implementing new management systems, IT networks and developing post workers’ skills to gear up their capacity to handle and process payments. A lot depends on the strategy taken by the Central Bank and the Egyptian Banks Company who will decide which tools to introduce to capture high volume payments and at the right time in the market. Mobile phone banking is another platform for example, still, enabling the post to be a strategic platform for collecting cash and processing payments online, would add value to Egypt’s transition to a cash-less system.
What are the promises in terms of human development of transitioning from a cash-based to a cash-less economy?
At this point, perhaps more than any other time in our economic history, the use of technology levels out our understanding of the source of financial wealth in Egypt being its people. By moving to a cash-less economy and implementing tools such as an automated clearing house, the financial and banking system can focus more attention to catering to different needs of significantly large populations of low-income customers. As technological systems allow people access to basic financial services like bank accounts and debit cards, the average Egyptian’s capacity to save and plan for the future in a new way, brings improvements to their participation in, and quality of life and human rights. So on a deeper level, efforts toward financial inclusion promise greater representation of all Egyptians in the future economy.