Oliv Finance, a digital lending startup founded by Ziad Mokhtar, former founding partner at Algebra Ventures, has secured a rare fintech lending license from Egypt’s Financial Regulatory Authority (FRA), despite an ongoing regulatory freeze affecting the sector. This milestone comes at a time when Egypt’s regulatory landscape is undergoing significant changes, particularly within the microfinance and consumer finance sectors.
The newly granted license enables Oliv Finance to offer digital invoice financing to small and medium-sized enterprises (SMEs) in Egypt. Through this innovative service, Oliv Finance aims to simplify the financing process for SMEs by providing fast and efficient end-to-end solutions for invoice-based financing, with approval times expected to be under 48 hours. This move is seen as a significant step toward addressing the growing demand for streamlined financing options for businesses in Egypt, a country where SMEs are crucial to the economy but often face barriers to traditional financing.
Oliv Finance, founded in 2024, is led by Mokhtar Ziad, the Founder and Managing Partner of Fund I at the prominent African investment firm Algebra Ventures. The team also includes Hatem M. Sabry, former CFO of Money Fellows, who brings extensive experience in the investment space. Mokhtar, who played a key role in the establishment of Algebra Ventures, has now transitioned into the fintech sector with the goal of revolutionizing SME financing.
“While I will remain a general partner in Algebra’s first fund and will continue to play the exact role with our current portfolio for years to come, I decided that my involvement in Algebra’s next fund will be of an advisory nature. I continue to be a firm believer in the firm, a solid supporter of its managing partners, and have a vested interest in its future successes,’’ Mokhtar said in a statement.
The company’s success in securing the license is noteworthy given the current regulatory climate. In October 2024, the FRA imposed a sweeping freeze on the issuance of new licenses for microfinance and consumer finance companies, halting the acceptance of new establishment applications and initial approvals for a period of one year. This decision, part of a broader strategy to ensure the financial stability of Egypt’s non-banking financial sector, came as a surprise to many players within the industry.
The regulatory freeze, encapsulated in FRA Decision №184 of 2024, aims to slow the rapid pace of new entrants into the market and ensure that existing companies remain solvent and capable of fulfilling their financial obligations. The move was prompted by concerns over the sheer volume of licenses granted in recent years. According to the FRA, 15 consumer finance licenses and 10 microfinance licenses were issued over the past two years alone, resulting in a sector where nearly 25 companies are licensed to engage in microfinance and an additional 30 companies hold consumer finance licenses. As the market matures, the FRA’s decision reflects its desire to balance growth with financial stability.
Despite this freeze, some fintech companies, like Oliv Finance, have managed to secure licenses by adhering to the 2022 Law Regulating and Developing the Use of Financial Technology in Non-Banking Financial Activities. This law offers a pathway for fintech firms to operate under the regulatory framework, ensuring their compliance with the FRA’s solvency standards and requirements.
The timing of Oliv Finance’s achievement is particularly significant. While traditional microfinance and consumer finance firms have been stymied by the FRA’s freeze, fintech companies that have already established themselves, or those that submitted applications prior to the announcement, are unaffected. Oliv Finance, by securing its license under this framework, has effectively sidestepped the regulatory bottleneck, positioning itself as one of the few fintech firms to benefit from the current regulatory environment.
Oliv Finance’s success in obtaining the license is not only a significant achievement for the company but also a potential catalyst for further growth within the Egyptian fintech sector. The company plans to launch its digital invoice financing service to its first batch of clients before the end of 2024, marking the beginning of its operations in the market.
The company’s founders have expressed gratitude to their investors, Algebra Ventures and Alter Global, for their support. “We particularly want to thank Laila Hassan and Heba Abu Ahmed for leading the investment efforts from their respective firms,” said the company in a statement. “This milestone would not have been possible without the unwavering commitment and expertise of our team and partners.”