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In Depth: Banking with Egypt Post
Published in Daily News Egypt on 30 - 10 - 2008

CAIRO: No matter where you travel, there's always a post office around the corner. In fact, there are almost twice as many post offices and postal agencies as commercial bank branches in the developing world, according to the World Bank.
This is especially true in Egypt's rural areas, where the local post office is where a lot of governmental services are offered - as well as an increasing number of financial services.
In a country with around 10 percent of the population being banked, many count on Egypt Post to provide the latest financial services in places where branches of commercial banks are harder to come by.
What gives Egypt Post an edge over the "competition is its close relationship and understanding of the different communities and their needs. How to best use and develop this large network to expand access to financial services is a key area for policy makers.
But it's not only rural areas that are benefiting from Egypt Post's financial services. For years, people have looked to the savings accounts available through the post office as a safe investment.
Today, with a network of around 3,700 branches across the country, Egypt Post has the largest network in the country and more branches than all commercial banks combined. It also has a digital network that connects to 2,600 outlets and 90 ATMs nationwide.
With an expanding base of services, Egypt Post's profits reached LE 200 million this past year, a significant increase from LE 120 million the year before.
Under the tenure of incumbent Chairman Alaa Fahmy, Egypt Post - a subsidiary of the Ministry of Communication and Information Technology - launched a series of partnerships with specialized institutions to strengthen and diversify the services offered to the public.
Since 1963, Egypt Post has distributed pensions to millions of Egyptians - today, the post office distributes almost LE 1.3 billion worth of pensions every month. More than 3 million pensioners benefiting from this service every year, with around 300,000 choosing to have their payments delivered to their door while others collect their money from the ATMs around the country.
The post office networks also delivers remittances and allows customers to pay some of their bills in cash, namely auto insurance fees, Egypt Telecom bills and a number of taxes including sales and car taxes.
In 2005, GiroNil - founded by Banque Misr, Egypt Post, CIB and Netherlands-based Inclusion Group - became the largest collection network in Egypt today. A shared payment network, based on electronic (non-cash) transactions, GIRO aims to cover 1,100 outlets and 5 million bank accounts this year.
The way it works is that your salary or pension are directly transferred to a GiroNil account and can be collected from the nearest ATM, post office or bank. You can also arrange for your monthly bills to be paid automatically.
"GiroNil is an automatic system that banks subscribe to in order to carry out the payment of bills, salaries, and pensions without any cash money with a purpose of achieving the speed and safety in the implementation of settlement operations, according to the Egypt Post website. Its aim is to "create a non-monetary economic society.
Service for all
As the global credit crunch hits economies around the world, banking markets are promoting the financial inclusion of lower income brackets in the local economy. Bringing lower income brackets into the financial fold has topped government agendas in many countries. The trend is supported by evidence that increased access to financial services can promote faster economic growth and also reduce poverty and income inequality, according the World Bank.
The Macro Fiscal Policy Unit of Egypt's Finance Ministry issued a report on the country's economic outlook in September, outlining its plans for fiscal consolidation centered on reducing the budget deficit to 3 percent of GDP by 2010 and "tax reform policies to support economic activity and income redistribution across social groups.
Financial inclusion policies by the Egyptian government aim to encourage institutions to include innovative financial products and services to meet the needs all segments of society.
Today, mostly public institutions and relatively wealthy individuals access financial services such as bank accounts, bank deposits and non-cash payment services. With a majority of the population unbanked makes for a costly cash-based economy. The challenge is for the retail banking industry to expand its client base.
Advanced financial services provided by Egypt Post today are daily interest current accounts and investment accounts, Ahmed Abdel Aziz, customer service and marketing manager at Egypt Post's Ataba branch, told Daily News Egypt.
Globally, postal bank accounts are evaluated in terms of accessibility and promoting financial inclusion. For example: the ease of opening an account, fees involved, convenience features (free cash cards, checkbooks, mobile banking) and credit facilities provided.
Banque Misr, through Egypt Post, offers two types of daily interest current accounts "tailored to customer needs. Three paper documents are required to open an account: a copy of a national ID, signature pattern and a signed application form. No third party reference or collateral is requested.
The account is activated instantly online and there are no fees for balance enquiries, withdrawals, or the first checkbook issued for an account. The minimum balance requirement for a "silver (basic banking) account is LE 10 and LE 10,000 for a "gold (premium) account.
Interest rates average 6 percent for a basic account and 7 percent for a premium account. A range of debit and prepaid cash cards are also available.
A savings deposit product is offered with an annual interest rate of 9.25 percent.
Egypt Post recently partnered with EFG Hermes, allowing small investors to participate in the stock market with a minimum investment of LE 100. Abdel Aziz said that this product is secured by the government. "Should any loss in investments occur, the government pledges to repay investors in five years, he said.
Another investment product is on offer through Faisal Islamic Bank, though it is not government-insured.
Daily interest current accounts are available in 57 post offices in 29 areas in all governorates. Postal investment products are offered in 42 electronic stationed postal offices with plans to increase availability in 1,000 more branches by the end of 2008.
A surprising addition to Egypt Post's menu of services will allow travelers to book tickets on EgyptAir through their local Egypt Post office, a partnership billed as the first of its kind the region. The service will start with booking tickets of local flights through a limited number of post offices, currently 28, with a main office in each governorate offering the service, according to the post. After the six-month pilot plan ends, the service will be available on a broader scale.
But back to financial services, one thing missing from Egypt's market is providing credit facilities to low income individuals through the postal network system. But the utilization of micro loans (initially LE 500 to LE 1,000) and financial advisory to the poor and low wage earners in rural economies has proven successful in similar markets, which is a niche Egypt Post can look to fill in the future.
Last month, the Indian government reported that India Post in partnership with the National Bank for Agricultural and Rural Development (NABARD), began a pilot project to disburse micro-credit to 2,900 Self Help Groups through 2,000 post offices.
Partnerships with microfinance institutions and NGOs that specialize in microfinance with the postal network could be key for Egypt. Currently, only 3 percent of Egypt's total microfinance market need is being met, according to Sanabel Egypt.
A favorite tool of the microfinance industry is mobile banking. PRWeb reported earlier this month that a German-based company providing mobile payment services solutions, paybox, was chosen by Masary Egypt to "build the biggest payment network for the unbanked.
Masary is the first branded payment service launched by Payment Systems Development (PSD) - Egypt. The report said that the "e-payment market in Egypt and the Middle East is not well developed, which leaves huge investment and revenue opportunities for Masary to take advantage of, said Omar El Sanhoury, Masary's General Manager.
Promoting financial inclusion in the retail banking sector is proving to be a competitive and financially rewarding race, and providing innovative strategies to cater financial services to different segments of society is the way forward for the retail banking industry.
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