When it comes to rewarding employees for their hard work, African tech often finds itself at a crossroads. Incentives can range from a hearty “thank you” email to something more tangible, like shares in the company. Egyptian fintech giant Fawry has opted for the latter, placing its employees quite literally at the heart of its operations through its Employee Stock Option Plan (ESOP).

In July this year, the Egyptian Stock Exchange (EGX) disclosed that 12.288 million Fawry shares — worth 68.32 million Egyptian pounds ($1.3 million) — were transferred as part of the company’s ESOP. For Fawry employees, this was no ordinary payday. It marked a continuation of a program initiated in 2021 to reward long-serving staff with a tangible piece of the company they help build every day.

The program’s growing scope is reflected in Fawry’s financial statements. In the four years since its launch, employees have exercised rights over 124.6 million shares, incurring a cumulative cost of 283 million Egyptian pounds ($5.6 million) to the company. It’s a staggering figure that could be mistaken for the GDP of a small nation.

For Fawry, this expense is more than justified by its financial performance. For instance, in the first quarter of 2024, the company’s profits reached 333.718 million pounds ($6.7 million), more than double the 142.057 million pounds recorded in the same period the previous year. Revenues followed suit, climbing to 1.087 billion pounds ($21 million) from 675.696 million pounds. These figures suggest that, at least for now, Fawry can afford its generosity.

Fawry’s ESOP Mechanics

The ESOP operates with a blend of free and discounted shares, tied to employee tenure:

• Free shares vest over three years.
• Allocated shares are issued at 50% of fair market value after two years.
• Share prices are pegged to EGX valuations on grant dates.

This structure ensures that employees who stick around long enough can reap significant rewards, while Fawry keeps its workforce stable in a sector known for high turnover. Employees win, the company wins — on paper, at least.

Founded in 2008, Fawry has grown into Egypt’s largest digital payments platform. Its services touch 51 million users each month, bridging the gap between the banked and unbanked. The company processes over four million transactions daily, supported by a vast network of 36 banks, agents, and an omnipresent mobile platform.

The ESOP aligns neatly with Fawry’s ethos of inclusion and shared growth. By rewarding employees with shares, the company hopes to integrate its workforce into its success narrative.

For employees in African tech, the ESOP is both a golden ticket and a gilded cage. The promise of shares can feel like a game-changer in economies where disposable income is a rarity. But the catch? These rewards are contingent on long-term service — two to four years for eligibility, a lifetime in the high-octane world of tech.

This strategic delay in payout ensures that employees are less likely to jump ship, even as the ESOP’s costs inflate Fawry’s books. By September 2024, the reserve for the program had ballooned to 113.4 million pounds. Generosity, it seems, doesn’t come cheap.

On a continent where tech talent is both abundant and underappreciated, such schemes could theoretically transform employee engagement and retention. However, not every company enjoys Fawry’s financial resilience or the luxury of a rapidly growing fintech sector.

Critics might argue that share-based compensation is a double-edged sword. It ties employee wealth to the whims of stock markets and company performance, potentially punishing the workforce for failures beyond their control. For every Fawry, there are countless companies where ESOPs might turn into little more than unfulfilled promises.

The Bottom Line

Fawry’s ESOP is undeniably ambitious, offering a model of employee reward that few African tech companies have dared to replicate. It rewards loyalty, aligns interests, and distributes wealth — albeit conditionally. Whether this approach becomes a continental blueprint or remains an isolated case of corporate largesse is yet to be seen.

For the African tech workforce, where pay is not comparable to global standards, ESOP offers a glimmer of hope. For the African tech workforce where pay is not comparable to global standards, ESOP offers a glimmer of hope, a lifeline. For its employers, it’s a reminder that reward schemes are rarely acts of pure altruism.