Mubasher: Abu Dhabi Global Market (ADGM) has already signed a memorandum of understanding (MoU) with the Central Bank of Egypt (CBE) in January 2019, Wai Lum Kwok, ADGM’s senior executive director - capital market at the FSRA told Mubasher in a phone interview.
Is there any cooperation between the Egyptian government and ADGM?
ADGM, [the UAE’s financial free zone and broad-based international financial centre for local, regional, and international institutions], signed this fintech MoU with Egypt’s central bank to jointly promote and enable financial services innovation, and accelerate cross-border FinTech business opportunities in Egypt and the UAE.
Given that the MoU was only recently established, we are at an exploratory stage. One area of interest relates to cross-border testing of FinTech solutions in our respective regulatory sandboxes, under the supervision of the regulators.
How would this help firms and startups in Egypt?
For example, if a firm or a startup in the regulatory sandbox of the central bank of Egypt has an innovative payment or remittance solution, it could enrol in the sandbox programme in ADGM, and test a use case where a buyer in Egypt pays a seller in the UAE and vice versa.
This would help the startup deploy its a solution between the two markets of Egypt and UAE, which could subsequently scale across other jurisdictions.
How challenging it is for startups in Egypt to relocate in UAE to get the funding or enrol in the Sandbox?
As with most startups, the key challenges relate to funding and regulations.
In terms of regulations, it could be particularly challenging if the startup is entering a new market that it is unfamiliar with. In this regard, the ADGM regulatory sandbox --- called the RegLab, provides a safe environment for promising startups to test their solutions and navigate the regulatory requirements under the guidance of the regulators.
With the launch of Hub71 in ADGM earlier this March, startups can now have access to funding schemes to help them anchor their activities in ADGM. Hub71 is a community of founders, investors and business enablers that form a unique technology ecosystem in ADGM. In particular, the Abu Dhabi Investment Office launched an AED 535 million “Ghadan Ventures Fund” to attract top VC funds and investors to increase the pool of capital available to startups and VCs in ADGM. Hub71 also provides startups access to incentive packages to offset their costs of relocating to Abu Dhabi.
Collectively, the funding schemes and the ADGM RegLab, coupled with other support programmes, provide a “soft landing” and ease the transition for startups into the UAE. Leveraging the Hub71 and ADGM ecosystem as a gateway to the region, the startups can look to scale their businesses accordingly.
How would this funding help startups in the market?
They might be able to use these funds to hire people, developers, and officers with the relevant know-how and skills set to develop their product and build up their operations. The funds can also go a long way to subsidising their overheads such as housing, office space and healthcare insurance.
Regarding the Reglab, can startups in Egypt join it since it is an ongoing programme?
Applications for the RegLab is based on a cohort approach. Since we launched in Nov 2016, we have conducted four cohorts of recruitment. So far, we have conducted at least one cohort annually. We are looking to launch the fifth cohort at the end of the year.
We welcome applications from all over the world, subject to certain qualifying criteria. More information and guidance on the RegLab and the evaluation criteria are available on the ADGM website.
Although we open for applications on a cohort basis, interested startups can engage us anytime, where we guide them on the application process and better understand their business model, which would help expedite the evaluation process when we open the programme for applications.
Are you coming soon to Egypt for any event?
I was just in Cairo in September for an event to recruit FinTech startups to attend the FinTech Abu Dhabi Festival that will be held in Abu Dhabi from 21 – 23 October 2019. It is the largest FinTech event in MENA, with an expected turnout of 5,000 participants from around the world.
We are definitely keen to explore coming to Egypt more regularly for events and road trips to engage the FinTech community should the opportunity arise.
Egypt has always been a fountainhead of innovation.
The market is very big and offers a huge potential for FinTech to transform the financial sector and promote financial inclusions.
As such, we are very interested in developments in the Egyptian market. Besides the FinTech MoU between ADGM and the Central Bank do Egypt, I’m glad to know that there is also a B2B collaboration between the Egypt Fintech Association and the MENA Fintech Association (headquartered in ADGM) to promote cross-border FinTech business opportunities in Egypt and UAE.
Such collaboration at the G2G and B2B level to help the FinTech community scale across jurisdictions is important to accelerate the transformation of the financial services landscape in the region.
Wai Lum Kwok previously told Mubasher that “Digital securities can be a very efficient way of raising capital to support economic growth."
(Contributed by Ingy ElSafy)