FRA hands Egypt’s first digital factoring license to Oliv: SME-focused fintech firm Oliv has secured Egypt’s first digital factoring license from the Financial Regulatory Authority (FRA), according to a statement (pdf) by the company. The move will see Oliv leveraging the government’s e-invoicing infrastructure to bring a fresh product to the underserved SME financing market this week. We spoke with CEO Ziad Mokhtar (LinkedIn) and CFO Hatem Sabry (LinkedIn), the company’s co-founders, to get the inside track on the company’s vision and plans.

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Digital factoring? Factoring is a transaction where a business sells its accounts receivable (invoices) to a third party (factor) at a discount in exchange for immediate cash. Digital factoring leverages online platforms to enable faster and more efficient invoice financing.

The offering: Oliv will extend invoice-financing to SMEs in under 48 hours. “This is a breakthrough,” said Mokhtar, seeing as the process typically takes weeks — if not months — with traditional factoring companies. “What's unique about this is that [Oliv] is going to be the first ever digital factoring company to finance invoices without any paperwork whatsoever and implement a very quick data-driven process,” Mokhtar explained.

The mechanism: Oliv analyzes data from the e-invoicing platform — which the client gives the company access to upon registering through the app — along with information from the Egyptian Credit Bureau (I-Score) and other data. It runs its own algorithms to assess creditworthiness and assign a credit limit within minutes. “Clients select which invoices they want an early payment for and then they select how long it will take them to collect this money and pay it back to us. Then they are presented with the exact cost of this financing and they can sign the contract digitally,” Mokhtar told us.

There’s only one physical touchpoint. The company collects repayment checks ahead of their due date. “This is why the process takes 48 hours and not 15 minutes,” Mokhtar said.

It’s an entirely new domain for SMEs: “Small clients never really do factoring, so we’re actually creating that market for this segment,” said Mokhtar. It’s not economically viable for traditional factoring companies to extend invoice financing to smaller businesses because the due diligence process is extensive regardless of transaction size, Mokhtar explained. “It doesn't make sense to go and visit, inspect the invoices, call clients, check the inventory, revise the financial statements, and make sure the documents are all sound. We believe the only way to make it economically viable is to provide the service digitally.”

So how much does Oliv finance? “It's part of our commercial strategy to focus on low tickets that are typically above the micro-finance ticket sizes,” said Sabry. “We aim to finance up to EGP 5 mn pretty soon and then ramp up that amount next year. There's really no minimum amount.”

The company is in the process of raising more funds: “We're speaking with a number of banks and venture debt firms to be able to secure local currency debt facilities and we've identified a number of banks that are a strategic fit,” said Sabry. “We’re targeting a portfolio of EGP 200 mn next year and want a sizable portion of it to be financed using debt facilities.” Oliv is backed by Cairo-based Algebra Ventures and San Francisco-based Alter Global.

And wants to help grow the industry’s client base 10x in three years: Oliv aims to serve over 5k clients by 2028, up from the 605 clients served by the entire factoring industry in 2023. “But I’m sure that’s just the beginning. Others will join and this will definitely stimulate the real growth of the sector,” Mokhtar said.

There’s plenty of room for growth: Egypt’s factoring volume is around USD 1 bn per year, while Turkey’s is USD 27 bn, said Mokhtar. The size of the local factoring industry stood at EGP 44 bn in 2023, accounting for less than 0.3% of GDP. By comparison, Morocco's factoring industry represents over 2% of its GDP. “If the market is well-served, it could probably be a USD 8-9 bn market. We don't know how quickly we'll get there, but our mission is to move [the industry] towards that point,” he said.

More product launches will follow: The company plans to offer reverse factoring in 2025 to help its SME clients finance their purchases and close the cycle, Sabry said.

Behind it all: Zaki Hashem & Partners provided legal counsel throughout the licensing process. Link Data Centers provided tech infrastructure and cybersecurity services and VLense provided the tech needed to implement digital identity, verification, and contracting capabilities.

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