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Take Risks and Change Your Mindset advises Angel Investor Nadeem Hussain When It Comes To Financial Inclusion

 From left to right: Ayman Ismail, Nadeem Hussain, Ahmed Abdel Meguid 


By Nour Ibrahim 


“Being a CEO of a company does not necessarily make you an entrepreneur. An entrepreneur has to have a different skillset and you develop that - you’re not born with it,” said Nadeem Hussain.

Hussain is one of Pakistan’s most prominent angel investors and a world leader when it comes to branchless banking. On September 13, he gave a talk at The American University in Cairo (AUC) where he discussed his take on financial inclusion, fintech entrepreneurship and microfinance.

According to the World Bank, financial inclusion means that individuals and businesses are provided with access to viable financial products. These products may be but are not limited to investments, loans and savings.

In his talk, Hussain discussed how through providing microfinance banking services for the low-income customers and by supporting fintech entrepreneurship which integrates technology to support financial transactions, he was able to financially include more Pakistanis.

When Hussain was 48 years old, he was one of the leaders of Citigroup, the multinational behind Citibank, but he felt what he described as the “entrepreneurship bug.” Hussain recalled that he had ambition, wanted to do something different and to do something for Pakistan.

Hussain’s idea was to find a way to include Pakistan’s millions of unbanked adults in the financial system and the way he did it was through microfinance banking. He put together his wealth and gathered some investors around to create Pakistan’s first microfinance bank, Tameer Bank. Hussain explained that to become a successful entrepreneur, he first had to de-learn much of what he had learnt as an executive.

“I didn’t know what microfinance was but I had ambitions and I had confidence that I would learn and believe me, when you put your own money on the table, you learn very fast,” he said.

One of the lessons that Hussain learned when he ventured into entrepreneurship was that dealing with bad customers and losing some money are inevitable to create a profile of trustworthy customers and good case practices.

Hussain, who came from a corporate banking background, began to realize this as he pioneered microfinance banking in Pakistan. Microfinance banking is about providing small loans and services to low-incomes individuals and small businesses who would not qualify for standard corporate banking services especially loans.

“So, the challenge in microfinance - for those who want to work in microfinance - is not the default, it’s the cost of the administration. Microfinance rates typically exceed credit card rates. The range, depending on which country you’re in, 24 - 40% per annum,” he added.

Even though in Pakistan, the infrastructure forced him to start with microfinance, he admitted that nanocredit was another route that would lead to financial inclusion. Nanocredit services allow for low-income individuals to receive very small loans based on digital profiles that are created based on data gathered from their electronic devices.

In his own effort to reach the unbanked individuals of his country, Hussain had started a mobile banking service called Easypaisa as well as a digital bank that is expected to launch this month. In his talk, he emphasized on the power of technology when it came to financial inclusion by reminding the audience that places that remained hard to reach were covered by cellphone service providers and that mobile devices now hold sufficient data about an individual to help a banking service provider determine their credit.

Hussain assured the attendees that now is the time for fintech startups to take risks in the Egyptian ecosystem as the demographics of the country tilt towards the young and the government has started taking interest in supporting entrepreneurship.

This month, the Egyptian government announced the launch of a startup accelerator and called for applications for its first cycle. In addition, the Alliance for Financial Inclusion (AFI) held their conference in Sharm El Sheikh. The conference focused on showcasing the efforts of regional countries to improve their current status of financial inclusion allowing for an exchange of experiences.

Hussain added that microfinance was sometimes blamed for extorting the poor however it only attempted to override common forms of corruption like bribery and speed money.

“The low income are not looking for charity, they’re looking for solutions that they’re willing to pay for. (So,) create a solution that’s financially viable,” he said.

As for competition, Hussain welcomed it explaining that in Egypt, like in Pakistan, the financial inclusion market was “too big” for one company to dominate.

Hussain advised those with great ideas to use data, take risks and start as early as they can when their responsibilities are limited and they have little to lose. He also advised them to think about the future of their startups and their worth early on.

The School of Business and the Center for Entrepreneurship hosted Hussain’s talk which was led by Abdul Latif Jameel Endowed Chair of Entrepreneurship at AUC's School of Business and AUC Venture Lab’s Director Ayman Ismail and Associate Professor and Associate Dean for Undergraduate Studies and Assessment in the School of Business Ahmed Abdel Meguid.

To watch the full video of Nadeem Hussain’s talk, please visit our page here.

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AUC launched AUC Venture Lab (V-Lab) in 2013 which is the first university-based incubator in Egypt. It incubates early-stage and growth-stage startups that are chosen through a selection process that judges the novelty of the idea, the team’s track record and cohesion, scalability and potential for commercialization, as well as the team’s tenacity and commitment to success. Once selected, the startups benefit from training sessions, mentors, student internships and their presence at the AUC School of Business. They also play an active role in the AUC community and Egypt, sharing their entrepreneurial experience with students, faculty members, mentors and investors, as well as a global alumni network.