Follow The Leader: Ammar Afif, Co-Founder And CEO, Cashew Afif delves into how leveraging strategic partnerships within the ecosystem has helped his enterprise build a robust network while maintaining financial prudence.

This article is a part of the 2023 edition of Entrepreneur Middle East's annual Follow The Leader series, in which enterprise head honchos from the region talk strategy, industry-specific tactics, and professional challenges as they lead their respective businesses to success.

The need for instant gratification, as well as the desire for convenience and flexibility in today's world, has shone a light on the need for instant credit options. While several players have entered the buy-now-pay-later (BNPL) market in the Middle East (think Tabby, Postpay, Spotii), there is still plenty of untapped potential. And it's in light of this opportunity that Ammar Afif, co-founder and CEO of Cashew, has embarked on a journey to transform the way people access financing in the Middle East.

Afif 's extensive experience in the fintech sector, spanning over two decades in the US, equipped him with valuable insights into consumer behaviors and the evolving landscape of financial technology. "After working in the fintech sector for over 20 years in the US, I moved to the region around 2018, where I saw a need for consumers to obtain instant credit," Afif explains. "In contrast to the US, where instant credit is readily available, the Middle East had limited options, particularly for those without a solid credit history, or a healthy credit score. From the outset, Cashew's mission has been to help consumers obtain instant financing for goods or services they need… In the Middle East, credit card penetration is low, and consumers seek a Sharia-compliant form of borrowing where the decision is made in an instant. We want to help increase their purchasing power by providing access to credit, based on data-driven risk assessment."

The rise of the BNPL model, accelerated by the COVID-19 pandemic, has played a crucial role in Cashew's launch and success. According to a report by ResearchandMarkets, BNPL payments in the region are expected to grow by 29.1% on an annual basis to reach a value of US$12,256.7 million in 2023. "BNPL remains a fast-growing payment method among millennials, Gen Z, and now Gen X, and will continue to see rapid growth around the world and in the region." Afif says. "This is especially the case for consumers making impulse purchases in the retail and fashion space."

The growth of this segment thus plays an important role in Cashew's approach to profitability, with Afif also highlighting the company's partnership strategy as a key driver of its success. "The largest costs for BNPL players are in acquiring merchants, consumers, and debt servicing," he explains. "We took a partnership approach and teamed up with Mashreq Bank in the UAE, accessing their merchant and consumer base, thus our cost of acquisition is a fraction of what fintech companies will spend."

In 2022, Mashreq invested $10 million in Cashew, with the latter integrated as a payment option for NEOPAY, the payments subsidiary for Mashreq. By leveraging strategic partnerships like these, Cashew has been able to build a robust network while maintaining financial prudence.

Looking ahead, Cashew plans to expand its digital distribution network to KSA, Oman, and Qatar by the end of 2023, solidifying its position as a leader in the instant credit space. Meanwhile, Cashew's key business development and growth highlights revolve around delivering a seamless customer experience. "Whilst e-commerce continues to grow, the majority of shopping still happens in person, so we chose to develop a better solution for consumers accessing alternative payment options in-store," Afif explains. "Integrating into the physical point-of-sale terminals to offer a seamless customer experience has been a major initiative we've been working on."

By bridging the gap between online and offline channels, Cashew is thus catering to the evolving needs of consumers. At the same time, substantial funding rounds have played a crucial role in fueling Cashew's growth as well. That said, Afif emphasizes the company's conservative approach to fundraising, having raised approximately $30 million to date. Most recently, in April 2023, Saudi Arabia's Shaker Group completed its 10% investment, albeit of an undisclosed sum, in Cashew KSA to support growth of digital lending solutions in the Kingdom. "Once our digital network is set up with the merchants of banks in the countries we are launching in, we'll access millions of consumers at a nominal cost," he adds.

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"Through our partners, we will raise additional funding to grow revenue and achieve profitability in the next 18 months." In terms of the road ahead, Afif envisions Cashew expanding its offerings. "We want to provide consumers instant credit for their impactful purchases- BNPL for large ticket items," Afif says. The goal, he explains, is to empower consumers to finance significant life events such as education, weddings, family travel, and healthcare procedures not covered by insurance- which they currently pay for through cash, credit card, or a personal loan. "Cashew is focused more on giving consumers in the region a new instant financing alternative for these types of purchases," Afif adds. "It's essential that we also educate consumers on their ability to afford financing for larger purchases, and provide them with the best pricing possible in seconds."

Ammar Afif, Co-Founder And CEO, Cashew. Source: Cashew

When asked to reflect on his entrepreneurial journey with Cashew thus far, Afif is keen to highlight both the happiest and most challenging moments he encountered during it. "Being a part of the startup scene for over 20 years, I've learned that happiness comes in all forms," he states. "It's rewarding to see employees who come on board, and then believe in the vision, and pour their soul into it, showing the willingness to learn and grow. We've had employees start with us from day 1, and have now grown to leading roles in their departments. The signing with Mashreq Bank also presented a special moment, as it provided instant credibility and validation for our ideas."

On the other hand, the advent of the COVID-19 pandemic proved to be a rather challenging time for Cashew- in fact, Afif reveals that the crisis didn't allow the startup to launch as it had originally planned. But this moment also highlighted the importance of perseverance for Afif. "We never lost hope that Cashew would become a leading entity in the instant credit segment," he recalls. "Despite the setback of launching almost a year later than planned, we believed in our mission, and I am proud to see how far we've come."

Looking at the ecosystem at large, Afif is confident about the tremendous opportunities presented by the MENA in fintech and other verticals. Here, he highlights that it's crucial to recognize the unique behaviors and nuances of each country in the region, noting that cementing partnerships with local banks has been critical to Cashew's success. "It accelerates our growth in each market having a partner who knows the merchant and consumer landscape," he explains. "It's all well and good to spotlight companies gaining traction through large funding announcements or valuation numbers, but many companies in the region are focused on delivering the best product, and building a company with profitability in mind. I believe these companies will prosper in the long term."

At the end of the day though, Afif is emphatic about the entrepreneurial opportunities presented by the MENA region. "The region is experiencing huge economic growth that's unfazed by the global economic downturn," he declares. "Coupled with its appetite for innovation, this makes it the perfect place for entrepreneurs to launch."

The Executive Summary: Ammar Afif's tips for entrepreneurs in the MENA region

Hire the right team "I'm blessed to have been mentored by some great CEOs in US startups. These mentors taught me to hire teams that are capable of running the day-to-day operations, and to give them the freedom to make mistakes, and make bold moves by not letting corporate rules get in the way. If you hire the right team with expertise in their respective fields, and give them the opportunity to run on their own, they will win."

Be prepared "I believe one of the most important success factors is luck, i.e. being in the right place in the right time, and I consider luck to have trumped skill in my personal journey. But it's said that luck is preparation meeting opportunity, and so, if you're not prepared when the opportunity comes along, you won't be lucky."

Stay agile "As startup founders, we passionately believe there is a problem we are trying to solve. Many find out that it'll take much longer than expected for that tipping point where the end user adopts change. For luck to strike, you have to be in the game, and stay agile, so that you're in the best position possible for when that lucky moment comes knocking at your door."

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