A big portion of Egypt’s inhabitants lacks entry to conventional banking, forcing many to depend on money transactions and casual lending. Khazna, a fintech startup based in 2019, is tackling this subject by providing monetary companies tailor-made for low- and middle-income employees. The corporate gives options like wage advances, digital funds, and microloans to assist workers and contractors entry much-needed monetary companies.
Khazna not too long ago secured $16 million in pre-Collection B funding, bringing its whole funding to over $63 million. The funding will help its enlargement plans because it prepares to use for a digital banking license in Egypt and broaden into Saudi Arabia.
Once we coated the fintech in 2022, it had simply raised $38 million pre-Collection A with over 150,000 prospects throughout its merchandise. Right this moment, Khazna has grown its person base to over 500,000 folks; that quantity is half what it was concentrating on twice by the tip of 2022, in line with what Saleh shared on the time.
The corporate focuses on employees incomes 3 times lower than Egypt’s minimal wage, offering them with inexpensive monetary instruments. About 100,000 customers obtain their payroll via Khazna, permitting the corporate to combine monetary companies similar to loans and insurance coverage straight into their payroll accounts.
For the remaining 400,000 customers, Khazna presents lending companies, serving to gig employees and pensioners entry credit score. CEO Omar Saleh defined that the corporate initially targeted on payroll-backed credit score and pension lending, contributing to its break-even final month.
“What we did during the last two and half years was to deal with our core product, which is credit score providing to payroll and pension recipients and likewise unsecured loans to gig employees,” co-founder and CEO Omar Saleh advised Fintech on a name. “That is essentially the most worthwhile and core product in our journey, and getting it proper was essential as a result of it has helped us to hit profitability.”
On the trail to changing into a digital financial institution
Khazna gives different companies like invoice funds, purchase now, pay later, medical insurance coverage, and a rent-to-own product. However by embedding itself into each payroll and lending, it’s strategically transferring towards changing into a full-fledged digital financial institution for Egypt’s underserved communities.
However one factor is lacking: not like conventional banks, Khazna, like many fintechs in Egypt, doesn’t have entry to buyer deposits, making it costly to fund loans. To this point, Khazna has relied on wholesale debt financing in {dollars} (USD) and the Egyptian pound (EGP) to fund its lending operations.
To cut back borrowing prices and supply extra inexpensive loans, Khazna is now working to acquire a deposit-taking license in Egypt. This license would enable the startup to simply accept buyer deposits, permitting it to decrease its price of funds.
“The most important recreation changer right here is for us to get entry to person deposits. There’s an enormous alternative for us to seize a part of that market as nicely in a approach that may make our price of funding rather more enticing than it’s as we speak, and in the end, that might put us in a really differentiated place,” he remarked.
Khazna is concentrating on mid-2026 to safe the banking license from Egypt’s Central Financial institution, which laid out its regulatory framework for digital banks in July 2024.
However because the six-year-old fintech will get began with that course of, it’s concurrently setting sights on Saudi Arabia, the place there’s a rising demand for client finance options. Not like BNPL gamers like Tabby and Tamara, which deal with short-term BNPL credit score, Khazna hopes to distinguish itself with medium-term credit score merchandise like earned wage entry (EWA), payroll-backed lending, and pension-based credit score.
Growth plans, together with a not-so-imminent IPO
Another excuse Khazna is prioritizing Saudi is its sturdy reference to Egypt, Saleh notes. With almost three million Egyptians dwelling in Saudi, the Egypt-Saudi remittance hall is likely one of the world’s largest, presenting a possibility to supply cross-border monetary companies, combining credit-led choices with overseas trade (FX) options.
Past market dimension and product match, Saudi Arabia’s capital markets are additionally a driver in Khazna’s determination, in line with Saleh. Tadawul is likely one of the area’s most liquid and retail-investor-driven inventory exchanges, launching a number of IPOs over the previous couple of years.
For that cause, Khazna plans to have 40-50% of its enterprise coming from Saudi within the subsequent 4 years, making it eligible for a public itemizing on Tadawul. For early-stage traders who’ve backed the corporate for 4 to 5 years, Saleh says this gives a transparent path to a high-value exit.
Positive, Khazna will fund this enlargement with the not too long ago raised progress capital. Nonetheless, the macroeconomic challenges in Egypt over the previous two years had a hand in structuring this pre-Collection B spherical.
Between 2022 and 2023, Egypt confronted forex devaluations and financial instability, making fundraising tougher for startups and ventures. The general slowdown in deal movement mirrored this, as traders took a cautious method to Egyptian startups. However 2024 introduced a significant shift, with over $50 billion in overseas direct funding (FDI) flowing into Egypt following financial reforms and a extra versatile trade price. Because of this, investor confidence returned, bringing renewed curiosity from world and regional traders.
As such, Khazna welcomed participation from new and present traders, together with world traders like Quona and Speedinvest, in addition to regional monetary establishments and funding companies like SANAD Fund for MSME, anb Seed Fund (managed by anb Capital), Aljazira Capital (the funding arm of Financial institution Aljazira of Saudi Arabia), Tibas Ventures (the enterprise capital arm of İşbank of Turkey), Khwarizmi Ventures, Nclude (the fintech fund arrange by Egypt’s largest nationwide banks) and ICU Ventures.
