Cairo 04 Feb 2025:
A large portion of Egypt’s population lacks access to traditional banking, forcing many to rely on cash transactions and informal lending. Khazna, a fintech startup founded in 2019, is tackling this issue by offering financial services tailored for low- and middle-income workers. The company provides solutions like salary advances, digital payments, and microloans to help employees and contractors access much-needed financial services according to techcrunch.com.
Khazna recently secured $16 million in pre-Series B funding, bringing its total funding to over $63 million. The investment will support its expansion plans as it prepares to apply for a digital banking license in Egypt and expand into Saudi Arabia.
When we covered the fintech in 2022, it had just raised $38 million pre-Series A with over 150,000 customers across its products. Today, Khazna has grown its user base to over 500,000 people; that number is half what it was targeting twice by the end of 2022, according to what Saleh shared at the time.
The company focuses on workers earning three times less than Egypt’s minimum wage, providing them with affordable financial tools. About 100,000 users receive their payroll through Khazna, allowing the company to integrate financial services such as loans and insurance directly into their payroll accounts.
For the remaining 400,000 users, Khazna offers lending services, helping gig workers and pensioners access credit. CEO Omar Saleh explained that the company initially focused on payroll-backed credit and pension lending, contributing to its break-even last month.
“What we did over the last two and half years was to focus on our core product, which is credit offering to payroll and pension recipients and also unsecured loans to gig workers,” co-founder and CEO Omar Saleh told TechCrunch on a call. “This is the most profitable and core product in our journey, and getting it right was very important because it has helped us to hit profitability.”
Khazna provides other services like bill payments, buy now, pay later, medical insurance, and a rent-to-own product. But by embedding itself into both payroll and lending, it is strategically moving toward becoming a full-fledged digital bank for Egypt’s underserved communities.
But one thing is missing: unlike traditional banks, Khazna, like many fintechs in Egypt, doesn’t have access to customer deposits, making it expensive to fund loans. So far, Khazna has relied on wholesale debt financing in dollars (USD) and the Egyptian pound (EGP) to fund its lending operations.
To reduce borrowing costs and offer more affordable loans, Khazna is now working to obtain a deposit-taking license in Egypt. This license would allow the startup to accept customer deposits, allowing it to lower its cost of funds.
“The biggest game changer here is for us to get access to user deposits. There’s a huge opportunity for us to capture part of that market as well in a way that will make our cost of funding much more attractive than it is today, and ultimately, that would put us in a very differentiated position,” he remarked.
Khazna is targeting mid-2026 to secure the banking license from Egypt’s Central Bank, which laid out its regulatory framework for digital banks in July 2024.
But as the six-year-old fintech gets started with that process, it’s simultaneously setting sights on Saudi Arabia, where there is a growing demand for consumer finance solutions. Unlike BNPL players like Tabby and Tamara, which focus on short-term BNPL credit, Khazna hopes to differentiate itself with medium-term credit products like earned wage access (EWA), payroll-backed lending, and pension-based credit.
Expansion plans, including a not-so-imminent IPO
Another reason Khazna is prioritizing Saudi is its strong connection with Egypt, Saleh notes. With nearly three million Egyptians living in Saudi, the Egypt-Saudi remittance corridor is one of the world’s largest, presenting an opportunity to offer cross-border financial services, combining credit-led offerings with foreign exchange (FX) solutions.
Beyond market size and product fit, Saudi Arabia’s capital markets are also a driver in Khazna’s decision, according to Saleh. Tadawul is one of the region’s most liquid and retail-investor-driven stock exchanges, launching several IPOs over the past couple of years.
For that reason, Khazna plans to have 40-50% of its business coming from Saudi in the next four years, making it eligible for a public listing on Tadawul. For early-stage investors who have backed the company for four to five years, Saleh says this provides a clear path to a high-value exit.
Sure, Khazna will fund this expansion with the recently raised growth capital. However, the macroeconomic challenges in Egypt over the past two years had a hand in structuring this pre-Series B round.
Between 2022 and 2023, Egypt faced currency devaluations and economic instability, making fundraising more difficult for startups and ventures. The overall slowdown in deal flow reflected this, as investors took a cautious approach to Egyptian startups. But 2024 brought a major shift, with over $50 billion in foreign direct investment (FDI) flowing into Egypt following economic reforms and a more flexible exchange rate. As a result, investor confidence returned, bringing renewed interest from global and regional investors.
As such, Khazna welcomed participation from new and existing investors, including global investors like Quona and Speedinvest, as well as regional financial institutions and investment firms like SANAD Fund for MSME, anb Seed Fund (managed by anb Capital), Aljazira Capital (the investment arm of Bank Aljazira of Saudi Arabia), Tibas Ventures (the venture capital arm of İşbank of Turkey), Khwarizmi Ventures, Nclude (the fintech fund set up by Egypt’s largest national banks) and ICU Ventures.
