Portfolio Impact – axis: Setting out to revolutionize financial services for Egypt’s un(der)banked SMEs & their employees

We couldn’t be more proud to announce that last Wednesday, our portfolio company, axis, a digital banking platform for small businesses, announced the launch of its services in partnership with Visa, providing a digital banking alternative for small businesses and their employees. The platform has obtained a license from the Central Bank of Egypt for its open-loop mobile wallet, enabling up to 8 million micro and small businesses to digitize their payroll and send salaries to their 20 million employees and contractors instantly. With axis, small businesses can streamline their payments to employees and contractors digitally, offering features such as sending salaries, reimbursing expenses, and offering earned wage advances to employees through the axisPay mobile wallet. The open-loop mobile wallet also allows employees to access a range of financial services, including sending money to any mobile wallet in Egypt, paying bills, shopping online with a virtual Visa card, and scanning QR codes to pay in person. 

This is a tremendously impactful opportunity in a country where up to 60% of the population is unbanked, and even more are under-banked with no access to credit, online banking, digital transfers, and other critical services. Through its open loop wallet, axis offers a critical product to the large segment of under-banked SMEs, while in the process, “banking” their employees.
When we invested in axis in 2021, this was just an idea, and it has been incredible to be a part of this journey.

Accompanying the launch, our Managing Partner, Hany Al-Sonbaty,  sat down with axis Co-Founder and CEO Jacques Marco, to dive deeper into axis’s mission, vision, and impact.

Jacques, how would you describe axis?

axis is a digital banking platform for small businesses. Too many small businesses are excluded from the banking system, and we hope to provide them with a digital banking alternative.  To begin with, we are digitizing employee payroll, enabling small businesses to instantly send salaries onto the axisPay mobile wallet of employees.  But we aim to offer small businesses a full suite of digital products, including business payments, acceptance & lending.

axis’ digital banking platform seamlessly manages employee payroll, salary advances, and expenses onto the axisPay mobile wallet of employees. Employees receive their salary on a fully interoperable mobile wallet that enables them to send or receive money from any mobile wallet in Egypt. They can ask for an ‘earned wage advance’ and can get reimbursed for any out-of-pocket expenses directly onto the axisPay mobile wallet. They can also pay their bills, buy anything online with a virtual Visa card, or buy anything in person by scanning a QR code using their axisPay mobile wallet.

We are also solving the huge pain of handling business payments to suppliers. Small businesses can now use the axis platform to instantly pay their suppliers on any mobile wallet in Egypt, or any bank account.

What was your motivation when founding axis? Was there a specific gap you were trying to fill?

We had two main motivations when we founded axis. The first motivation is increasing accessibility, which is why we called the company ‘axis’ in the first place. We found that over 50% of the 8 million SMEs in Egypt still don’t have access to banking services, while the other
50% remain underbanked. We were motivated to give these SMEs and the 20M Egyptians they employ a full suite of digital banking services.

Banks have been targeting large and well-established corporations and have left many of theSMEs outside of the banking system. Microfinance institutions have targeted micro-businesses, solopreneurs, and women operating businesses from their homes with high-interest loans, but haven’t been able to provide a holistic banking alternative besides lending. axis is really
targeting all SMEs that are too big for microfinance lenders and too small for commercial banks. Unbanked SMEs don’t have access to payroll processing, business payment solutions or working capital financing. Our goal is to partner with these small businesses to provide them with all the necessary financial products to help them grow their business. The second motivation is that we want to set an example for future generations of entrepreneurs who no longer need to look at Europe or the U.S. for success stories and instead can look locally at the example of a homegrown company. 

We are still in a startup ecosystem in its nascence.  We don’t hear of many success stories
coming out of Egypt or Africa, but I’m hoping that over the next 10-15 years, axis can set an
example and inspire others to start their own entrepreneurial journeys. We want to contribute to
building talent pools that inspire the next wave of Egyptian entrepreneurs.

Hany, when you heard axis pitch for the first time, what made you think, this is going to
be different?

I didn’t think that what axis was trying to achieve was necessarily very different. Lots of people are trying to provide these kinds of banking services. But I thought that axis is going to be successful.

People will tell you that Egypt is underbanked, with the majority of its citizens unbanked, but I think it’s deeper than that. I believe that even with the Egyptian banked population, there are lots of services in terms of the digital experience that are lacking with existing banks. Also, the proliferation of digital transactions in Egypt is extremely low compared to the rest of Africa,
which is due to the fact that there haven’t been any meaningful use cases beyond bill presentment, payment, and charging your phones.
I stumbled across Jacques when he was the CEO of Raseedy, which was building a similar idea and got acquired by MNT-Halan.

In talking with him, it became apparent that he had a much better understanding of the potential of the market and the product’s growth and impact potential, as well as market fit than any of the people who had pitched us similar ideas in a similar space. We liked the space, and we saw a huge scope for a well-rounded entrepreneur who can lead the way into digitizing financial transactions in Egypt; we believe we found our man in Jacques! For the almost two years that we’ve been working with him, he has proved us right so far. Jacques has been on the ball, and we couldn’t be more excited about this week’s official product launch and to see what comes next.

Jacques, what would you say is the value that Sawari has brought to your company as an investor?

The most important aspect of Sawari’s value is its role as a thought partner. To have somebody who isn’t in the nitty-gritty details of the business but to whom I can speak to regularly about our different problems, needs, and concerns is a very special relationship.

Over the last two years, our go-to-market has evolved two or three times already, even before launching. Speaking with Hany and the Sawari team always gives me a fresh perspective. This is what I liked about Hany from the first conversation. Hany has a thorough understanding of the Egyptian landscape, and I always benefit from getting his perspective on how to best manage
some of the key stakeholders locally.

The wider Sawari team members have been dedicated supporters of axis on all fronts. Sawari has also helped us bring on board some of our most important hires.

axis operates in a very heavily regulated industry – whether we’re dealing with the CBE for payments or the FRA for lending products, there are lots of regulations that take a lot of time, and timelines can be very unpredictable. So having a partner who understands the local regulatory landscape has been very helpful.

The credibility that the Sawari brand brings to the company in the eyes of banking partners and regulators cannot be understated. It’s very important that regulators & third parties see that a trusted investor like Sawari is backing us.

Jacques and Hany, axis is still in its early stages, but where do you see the company going?

JACQUES:  The potential of axis is enormous! We aspire to be the go-to business banking solution for small businesses in Egypt – offering them everything they need, from payroll processing for their employees & contractors, to B2B payments for their suppliers, and working
capital loans. We are starting by digitizing payroll since we have found that it is one of the biggest pain points for SMEs in Egypt, and then we will work closely with our customers to help them grow their business through payments and working capital over time.

At the consumer level, we are starting with a very focused type of consumer, which is the employee consumer who receives their salary onto the axisPay mobile wallet. We believe that we can have a significant impact on them by helping them to build their credit histories by
capturing and digitizing their payments. By doing this, we are creating historical data that can help them access other key products and services. An employee who is getting paid in cash is totally excluded from the banking system and all the products around savings or credit, which results in them being unable to purchase a home, a car or even a new smartphone at a reasonable rate. We want to change that.

HANY: My personal aspiration for axis is that this digital platform changes the game and sets the bar for what comes after. I hope that axis can do for its users in terms of money what mobile phones have done for the world in terms of communication. I hope that axis users will think, “how did I manage before this?”. I hope that axis becomes an inseparable, integral part of their lives.

We believe that the impact potential is enormous, and we hope that ultimately millions of previously unbanked or underbanked Egyptians get access to financial services. That’s what I would want: for axis to have a lasting impact on banking and financial transactions in Egypt and beyond. 

For more background on the axis launch, see this TechCrunch article.