In Egypt and abroad, the pundits have framed the defining questions of 2019 in terms that are both short term and binary: Global growth is slowing — will it tip into recession? Will Egypt continue to attract foreign portfolio investors to its debt issuances and stock market? Is this the year that domestic interest rates start to come down? Will we see significant foreign direct investment? Who will move first: foreign or domestic investors?
Like every bank and publicly traded company in the country, CIB has a fully vested interest in the answers to these questions. But our future as an institution hinges not on those, but on more nuanced answers to much more long-term questions — questions that can, for CIB, be boiled down to just two:
- Can we help reinvent banking in Egypt for the digital age?
- Can we help lead a conversation on the reinvention of capitalism?
Our success not just as an institution, but also as a nation, hinges on the ability to answer these questions in the affirmative. And as longtime shareholders know, we have been working on answers both inside CIB branches, offices, and dealing rooms since 2011, when we placed two things at the center of our strategy: First, innovation, and second, the imperative to improve the communities in which we do business.
Reinventing banking in Egypt for the digital age has been central to our strategy since political change swept our nation in 2011. It is a subject about which our industry and policy makers alike must do more. Banks are slowly awaking to the idea that brick-and-mortar branches are not the only touchpoints that matter. But they are not asking how they can disrupt themselves before they are disrupted by third parties. In parallel, policy makers need to expand the range of questions they are asking of the industry: The place of paper in an increasingly paperless society is only the first of many issues that must be addressed, which range from the rise of cryptocurrencies to the role of sandboxes in the trial of new technologies.
Our government has signalled clearly that it is going cashless — which will make it fundamentally paperless. The notion of physical signatures and of paper document storage are things of the past. They are among the many obstacles to digital inclusion — which, I argue, is core to financial inclusion.
In calling for wider financial inclusion, Egypt is fundamentally calling for the democratization of financial services. But as financial services increasingly go online, this means that obstacles to digital inclusion are the same barriers that prevent fuller financial inclusion. Digital financial services — the same services that will empower people to better their lives — cannot be provided to consumers if the very consumers do not have access to the internet.
At its core, financial inclusion means mobilizing money supply and savings to fund growth and development — whether that’s of micro-businesses or small companies, of national champions or state-driven mega-projects. As an industry and as a society, this means taking stock of all challenges (including regulatory ones) that stand in the way of digital inclusion and start breaking them down.
That’s why, as Egypt takes over the presidency of the African Union this year, we are working with the government to make a Declaration on Financial Inclusion a cornerstone of development policy not just for Egypt, but for our continent. Broadband internet that is universally and affordably accessible by even the most humble of low-income earners is what will make financial inclusion possible.
In parallel, a debate over the future of capitalism in Egypt is essential if we are going to create tangible value in the communities in which we live and serve. This debate is the next natural step in a shift that has seen companies move from philanthropy to corporate social responsibility, then onward to Environmental and Social Governance (ESG) approaches and, today, to the new imperative to create shared value (CSV).
In times gone by, a philanthropic approach to creating value for a low-income earner was to donate to a charity that provides a benefit to her — it was about using corporate wealth to try to drive a measure of social change. A CSV-led approach would, as CEO Magazine wrote in 2016, put that donation in the context of a program that ensured benefits flowed back to the donor in the form of “improved morale, increased staff retention, status as an employer of choice [or] attracting new business.”
However, Porter and Kramer, the Harvard professors who introduced the business concept in 2011, take it further — much closer to a definition we have used internally since the events of 2011 here in Egypt. They define CSV as a core business strategy, policies, and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. This means that our success and social progress are interdependent.
In the case of a microenterprise owner, it isn’t just about banking her. It’s about providing her with the tools today that will help her grow her business tomorrow. As she grows and creates jobs, she becomes a driver not just of our business growth, but of the economic growth of our nation.
These are the powerful ideas we know will guide our future, and they are feeding directly into our five-year plan. It will be a five-year plan that highlights ways to put technology at the heart of what we do and thereby empower our people to make the best possible business decisions. And it’s about ways we create shared value for our employees, our clients, our shareholders, and the wider economy.
Hisham Ezz Al-Arab
Chairman and Managing Director