November 14, 2012
Filed under Money Matters
It soon becomes obvious to anyone moving from the UK and the US to work in Egypt that on the whole the banking systems in all three countries are fairly similar. Banks in the both the UK and the US are, of course, tightly regulated, complex and highly transparent. It’s more or less the same picture in Egypt. The banks there are also modern in outlook and regulated to internationally accepted standards.
Having said all of that, the majority of Egyptians will never open a bank account in their lives or experience the pleasure of using a credit card. Yet applying for a credit card in Egypt is a fairly straightforward affair, just as it is in the UK or the US. One reason for the poor uptake in financial services is the cash-only culture. Many Egyptians would far rather stuff money under a mattress than trust it to a bank. Another reason is, of course, poverty. Around a quarter of Egyptians spend below $500 per year (just over £300), or about $44 per month (around £28), which according to government figures makes them officially poor.
Hardly surprising then an Egypt credit card has very little appeal compared to its plastic counterpart in the UK or US. But the situation is gradually changing, especially in the major cities, such as Cairo and Alexandria, where poverty is not as marked as it is in the towns and villages of the countryside. The levels of sophistication and expectation, not to mention opportunity, are of course much greater within the urban setting. As a consequence, credit card offers, for example, are likely to be pursued just as vigorously in the major Egyptian conurbations as they are in Western cities. It seems no fee deals and other marketing ploys appeal no matter where in the world you live!
If Visa and MasterCard have still to dent the consciousness of average Egyptians in any meaningful way, few of them can be unaware of the growing reach of the banking sector. It’s there for all to see in the growing number of branches and cash machines which suddenly appear on a regular basis. Much of this has been driven by the need to assuage Egypt’s massive tourist numbers, every individual of whom expects to be able to put hand to cash whenever the desire takes them.
Yes, the power of the ancient pyramids, temples and pharaohs has much to answer for. But you won’t hear the people of Egypt complaining too much. It’s simply too important a part of the economy, annually raising billions of dollars and employing about one in eight of the country’s workforce.
However, because of the far-reaching consequences of the Arab Spring, which resulted in the overthrow of the old Hosni Mubarak regime and subsequent changes to Egypt’s political system, tourist visitor numbers fell dramatically compared to the pre-revolution figures of 14 million or so in 2010. But the signs this year suggest tourism is once again on the up, and expected to almost match 2010 levels. And if future government plans take hold, Egypt should see in the region of 30 million visitors annually by the end of the decade. Little wonder the country’s banking system is so keen to extend its reach so it can cash in on the coming bonanza.