Raghu Malhotra, the President of MasterCard in the Middle East and North Africa region
As an international company, how do you evaluate the Egyptian market? How do you see your participation in it in future years?
We are quite committed to getting 500m new consumers globally to become financially included and have new consumers come to the banking sector. Egypt is very important to us as part of that strategy. That is one aspect on how important Egypt is. The second aspect is that Egypt is an emerging market and 90% of the population uses cash and cheque. But if you look at the mobile and Internet penetration among youth, then it starts to make sense. It a market you can invest the future in. The last part is what does this mean to MasterCard. It is not just about financial inclusion; the interoperable mobile ecosystem is one of the best in class in the world. It enables the common person to have access to the same service that the rich has. It means true inclusion and it is a concept we apply globally. Unlike quite a few companies, this is a reverse in a lot of ways. It is a very unique ecosystem that we are exporting to the world and we are creating a business model for the rest of the world to follow. That is super critical for us, way beyond money and all commercial interests.
What is Egypt’s share in the 500m global consumers?
This is a very hard question to answer. We are not allowed to give you an exact number, but you can do the maths, because you know of people in Egypt and the total number of people who have a mobile phone. Our idea is that every mobile phone in Egypt has a form of financial instrument linked to it. The question is how long will it take to get there and what are the services required, and what the penetration will be. A few million would be nice.
In terms of services offered, how do you think you would cater to the low-income segments in Egypt? How different would they be?
In this particular case, we are enablers and providers of technology. Don’t think of this as your usual credit card company seeking benefits; MasterCard wants to provide the backbone and the technology infrastructure to enable people in the village. So if you have a mobile phone setting in the village and you are connected through a 16-digit pan number, you will connect this person to the rest of the world and provide a series of services. Within the services, there can be different types in any case. Just like the Internet, different people have difference speeds and pay different prices for it and get different services.
How much would you be willing to pour into the country in terms of investments?
I don’t disclose exact sums but it will be a multimillion dollar investment. But I don’t think that is the right answer. When it comes to technology, it is not the quantum of money you put in, but what you create that is the most important. What we have done is take a mobile gateway and call services and various partners and come together in an ecosystem that creates efficiency in the economy and allows for access of the common consumer. The framework that was created is the biggest investment. This, then, becomes the go-to model for the rest of the emerging markets in the world. For us, that is the biggest investment and is strategically far more important than building a few million dollars model. Will we continue to enhance our services? The answer is yes. We will start the next stage of the national ID system with the government to build an ecosystem. We also talked with different industries, such as medical and health insurance [to be part of that system]. We will continue enabling more and more people in the country.
Can we discuss MasterCard’s memorandum of understanding (MoU) with the government further? What are the updates?
The first thing is the government payroll. The government said they need to have a better system on how they manage payroll for government employees. Today, we have about five million government employees who are paid through MasterCard. That is one aspect of the partnership. The second aspect is the programme for national IDs. I actually feel it has other benefits beyond people being connected. Just imagine that Egypt will have a database that will link a mobile phone with the national ID with a financial instrument, which can be switched on and off. See what it will do for the banking services. See what it does to the economy. As much as our MoU is about four or five things, its impact will be far bigger.
How much do you plan to increase the number of employees in the government who get paid through MasterCard?
The total [of the agreement] is six million and so far we have reached five million. We expect to reach our target by the end of this year.
Do you have plans to sign a new MoU with the government?
Our MoU is a very open one in terms of driving innovation, and we have talked about supply chain managements and those are something that we can do in the next life. I think we are covering all the basics, but it is more about the implementation. It is not about signing the MoU and another MoU. We just want to execute and deliver what we promised.
Another pillar is enhancing the efficiency of the government tax collection. A great example that has just been implemented is that tax collection will be made available so that MasterCard holders can pay 12 types of taxes. It was recently launched.