Forbes Middle East
SERVING THE UNDERSERVED
EGYPT'S HALAN IS POISED TO BECOME THE REGION'S NEXT SUPER-APP. BUT CO-FOUNDERS, AHMED MOHSEN, MOUNIR NAKHLA, AND MOHAMED ABOULNAGA HAVE MORE THAN MONEY IN SIGHT—THEY WANT TO EMPOWER THE MASSES.
Along the dusty, noisy, and packed roads of Egypt’s densely-populated cities, motorbikes are a common sight, weaving in and out of the bustling traffic amongst the blaring horns and car fumes. In a country with more than 100 million people, roads can be a challenge to navigate at the best of times, and for many residents the cost of car ownership is prohibitive, making getting around even tougher for a large portion of the population. However, thanks to technology, the country’s underserved have options.
One such option is Egypt-based ride-hailing app, Halan, which specializes in making motorbikes and tuk-tuks as easy to book as a Careem or Uber car, but at only around 15% of the cost according to the company, making them perfect for passengers living in informal communities and villages. Another option for that market is bus-hailing app Swvl, which enables passengers heading in the same direction to share fixed-route bus trips. Halan and Swvl’s models, however, differ. Swvl has a network of over 600 lines in Cairo and Alexandria, and recently launched in Kenya and Pakistan. Having launched in late-2017, today Halan is available in over 25 cities across Egypt and Sudan—it’s now reportedly eyeing Ethiopia. By September 2020 the Halan app had been download approximately 2.45 million times, and had around 890,000 users.
In that time the startup has also attracted significant investor interest, pulling in more than $23.5 million in investment so far from venture capitalists Battery Road Digital Holdings, Algebra Ventures, MEVP, MNT Investing, UTT, TEXILA and Shaka Capital, as well as Oscar Salazar, the founding CTO of Uber. Halan’s Series B funding round is still ongoing, but so far it’s used its money to branch out in a big way. As well as ridehailing, the app now also offers e-commerce and food delivery options, as well as peer-to-peer delivery and bill payment solutions. But it’s the app’s next evolution that the team are currently most excited about. “We’re really at a time of change,” says Mounir Nakhla, co-founder and CEO of Halan.
In October, the Halan team plans to venture further into microfinance and launch its first lending platform, which will be available—along with all its other services—on one big “super app,” a simple consumerfacing platform focusing on services for underserved markets. Microfinance broadly refers to microcredit, which is the loaning of small sums to people with low income, or other financial services for those without access to conventional banking.
“COVID-19 has acted as a catalyst. People are changing how they are doing things.”
Rather than following local competitors, Halan’s latest moves closely follow the model of Gojek, an Indonesian super app and one of the Asian country’s few unicorns. Gojek began as an offline motorbike taxi service in Jakarta in 2009, but after it launched an app in January 2015 it began to grow exponentially. It currently lists 16 different online services, including an e-wallet. In March 2020, it closed a Series F funding round for $1.2 billion—reportedly raking in undisclosed investment from Google and Tencent among others—valuing Gojek at almost $10 billion. Does Nakhla see the same trajectory for Halan? “Certainly,” he smiles. “We’re on our way, we’re going to make it very big. We’re lucky to be where we are now. There’s a bit of serendipity in it.”
The growing market for microfinance in Egypt certainly seems to offer plenty of opportunity. According to an Oxford Business Group report, in 2016 an estimated 18 million people in Egypt were in need of microfinance services, equating to a $3.6 billion financing requirement based on an average loan size of $988. Recognizing demand, the Central Bank of Egypt launched a microfinancing initiative in 2017, and then in late-2019 Egypt’s Financial Regulatory Authority (FRA) launched a new microfinance programme, called nano finance,
enabling microlenders to begin offering mobile-based loans at a cap of $190 with a maximum tenor of 90 days. This “seeks to provide working capital needs and requirements to small farmers and selfemployed persons, home-based businesses, day-to-day vendors and street vendors,” said the FRA’s Chairman, Dr. Mohammed Omran, in the announcement at the time.
The timing of the Halan super-app launch is no accident for a number of reasons. “COVID-19 has acted as a catalyst. People are changing how they are doing things,” admits Nakhla. But even pre-pandemic, Egypt was already a very tech-driven society. According to Datareportal’s Digital 2020 report for Egypt, there were 92.7 million mobile connections in Egypt in January 2020, which is equivalent to 91% of the population. But, according to the World Bank’s Little Data Book Of Financial Inclusion 2018 report, more than 67% of Egypt’s adults at that time remained unbanked. It’s this portion of the population— with smartphones in hand but struggling to access finance—that the Halan team plans to target.
Importantly, it won’t be Halan itself lending the money. The app will act as a platform to link the client to a finance lender; it will then be up to the lender to perform due diligence and protect themselves and the borrower. What Halan will be doing though, is collecting data to assist in assessing someone’s creditworthiness based on when and if they repay the small loans, and thereby automating and speeding up the approvals process. The company will also take a cut on every transaction.
As well as diving further into microfinance and fintech, Halan’s super app will also continue to develop its verticals in e-commerce and delivery, and it will stay true to its ride-hailing roots. “Ridehailing is a difficult vertical to turn into positive unit economics, but it keeps the stickiness of the client, it keeps the app top-of-mind,” explains Nakhla. “The client is going every day doing his rides, but then he buys his mobile phone off our app, he tops up his loan on our app, he starts paying his electricity bills or transferring money through our app. That’s where the real value is.”
For Nakhla, Halan’s latest development into microfinance is an area in which he specializes. He first began working in the field with his family in Egypt, as a fresh graduate from the London School of Economics. “I worked with my uncle, Dr. Mounir Neamatalla. He is an environmentalist, a pioneer in sustainable development, and the first to launch microfinance to alleviate poverty in Egypt,” says Nakhla. In 2003 to 2005, Nakhla recalls travelling around Egypt working on an impact study on microfinance, conducting thousands of interviews and statistical analysis. “The more I worked with microfinance, the more I realized we are touching a lot of lives. You are not lending money for consumption, you are financing micro-entrepreneurs to grow their business, employ people, and generate more income for them and their families,” he explains. “This is an important part of my life and work. It is my mission.”
With a vision to help those in need in a sustainable and ultimately lucrative way, in 2009 Nakhla partnered with GB Auto and founded Mashroey, a light-transport financing business that helps people purchase motorbikes and three-wheelers, followed in 2015 by Tasaheel, one of Egypt’s largest microfinancing companies. He is also the founder and CEO of MNT Investments BV, the Netherlandsbased holding company for both businesses. In August 2018, Development Partners International (DPI) invested $45 million in a 33% stake in MNT Investments, partnering with existing majority shareholder, GB Capital—Nakhla retained his position leading the company. “Investing in a business that provides financial inclusion by giving access to credit for small business owners to grow their businesses is very rewarding on multiple levels,” says Ziad Abaza, Principal at DPI. “Since investing in MNT, we strongly believe that the digitalization is key to scalability.” Nakhla says talks are ongoing to link up MNT Investments with Halan’s lending platform.
Meanwhile, 2017 had brought with it a fateful encounter. On a business trip to Asia, Nakhla was
introduced to David Halpert, founder of Battery Road Digital Holdings and Prince Street Capital Holdings, and seed investor in Gojek. “I had heard of [Nakhla’s] reputation previously as a thought leader in microfinance in Africa. He knew of my interest in technology and startups in the developing world,” remembers Halpert. “We already had a few friends in common, but as soon as I met him I knew this was someone I wanted to try to work with.”
Halpert advised Nakhla that, although his projects up to that point had been successful, the fact that they were not technology-driven was restricting the value they could create. “I’m very grateful for the conversation we had. It changed my perspective on the world, and by consequence the strategy of the business,” says Nakhla. “Technology is how I can take this mission and scale it very rapidly.”
“I think [Nakhla] will do something great for his country.”
The idea for Halan was born, but Nakhla needed an expert in technology. He reached out to someone he calls a “guru” in his field. Ahmed Mohsen, co-founder and CTO at Halan, was a computer science graduate, published thought leader, and former employee of IBM Egypt with some previous experience in founding startups. Having tried his hand at establishing an e-learning company in 2006, he became a founding member of Egyptian cybersecurity company SecureMisr in 2010, which was acquired by Cysiv in March 2020. He remembers being in the middle of starting a new venture when he met Nakhla in 2017. “We really clicked from the first meeting,” says Mohsen. “I had my doubts about the target market being tech savvy, but Mounir reassured me this was not a problem. He was right.”
The team built the first version of Halan as a simple ride-hailing transportation app, inspired by the Gojek model. It was launched in November 2017, seeded with $525,000 from Nakhla, the founder of GB Auto Dr. Raouf Ghabbour, and Halpert through Battery Road Digital Holdings. By the following year, Nakhla says the business was experiencing double-digit growth month-over-month. The CEO decided to expand the executive team, this time with a co-founder focused on increasing value. Mohsen introduced Nakhla to Mohamed Aboulnaga, now co-founder and CCO at Halan, an engineering graduate with previous experience at Careem and electronic payments company Fawry, both of which have since had successful IPOs. Aboulnaga was intrigued. “I thought I couldn’t leave this opportunity, so I jumped on the boat,” he smiles.
In March 2018, Halan added another vertical by offering deliveries for restaurants, including favorites like McDonalds, Pizza Hut, and KFC, followed by pharmaceutical deliveries. That same year the company raised $4.4 million in a Series A funding round led by Battery Road Digital Holdings and Algebra Ventures. “A combination of an exceptional team and large untouched market led to our investment,” says Karim Hussein, Managing Partner at Algebra Ventures. “Halan also has several unique competitive advantages, as the market is difficult to access and requires a strong marketing and technology backbone to serve profitably.”
As the company grew, the founders’ vision began to change, inspired at least partly by Lyft and Uber’s underwhelming IPOs in 2019. “VCs started to talk more about unit economics. So, it wasn’t merely growth that was attracting investors,” explains Nakhla.
In September 2019, Halan began offering e-commerce through Halan Deals. Although this is now one of its fastest-growing segments, it was not a hit straight away. “I think we had crossed a million downloads and we did not get any sales,” Mohsen remembers. They decided to make a small change and began listing the products on credit so people could pay in installments. Suddenly products began selling out in days. Then, in March 2020, the company launched the Halan Wallet to enable users to pay for their rides and utility bills. “When we launched bill payments we reached a different type of customer, higher in the socioeconomic level,” says Aboulnaga. “We used this to launch more products, like the peerto-peer delivery.”
Now, Halan’s next phase begins. Along with introducing lending, the team is eyeing expansion in Africa, and a revamp of the e-commerce vertical. The long-term goal? To be the preferred consumer app for underserved communities. They have support behind them. “I think [Nakhla] will do something great for his country,” says Halpert. “Arguably he already has, but I think it can get much better.”