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Grassroots Food Security Initiative Fosters Agricultural Self-Sufficiency

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F
OOD SECURITY‘s article on this new trend is merely a description of the rediscovery of oneself’s subsistence way of living one’s life in the large but empty regions of the MENA. It addresses the particulars of how the Lebanese grassroots food security initiative fosters Agricultural self-sufficiency as if by chance. Here it is anyway.

Lebanese Grassroots Food Security Initiative Fosters Agricultural Self-Sufficiency

A grassroots national food security initiative is working to revive the Lebanese food system through projects that foster agricultural self-sufficiency.

Ardi Ardak—which translates to my land, your land in Arabic—launched in 2019 to rehabilitate abandoned arable lands and decrease Lebanon’s dependence on food imports. The initiative is a collaboration among The Environment and Sustainable Development Unit (ESDU) at the American University of Beirut (AUB), the Lebanese League for Women in Business (LLWB), the Food Heritage Foundation, and Zico House.

“The idea back then was to create a mechanism that would link local production to the markets,” Nicolas Gholam, founding coordinator of Ardi Ardak, tells Food Tank. Working with rural, small-scale producers under an agroecological, climate-smart approach is central to Ardi Ardak’s mission, explains Gholam.

The food security initiative formed as “a response to the deteriorating socioeconomic situation in Lebanon,” says Gholam.

In October 2019, protests ignited against government corruption and austerity measures. Prior to the 17 October Revolution, Lebanon faced a massive economic downturn. By the end of 2019, Lebanon’s public debt ballooned to the world’s third highest, estimated at 171 percent of its Gross Domestic Product (GDP). In 2020, with the onslaught of the COVID-19 pandemic, the economy worsened. During the first six months of 2021, the inflation rate averaged 131 percent, disproportionately affecting the poor and middle class. 

According to a recent report from the U.N. Food and Agriculture Organization (FAO) and the U.N. Economic and Social Commission For Western Asia (ESCWA), the loss of purchasing power renders 40 percent of Lebanese households unable to satisfy their basic food necessities.

In 2020, the explosion in Beirut’s port—which handled 70 percent of food imports in a country importing about 85 percent of its food—devastated Lebanon’s food supply. The blast destroyed a major grain silo and damaged 120,000 metric tons of staple food stocks stored at the port, including wheat, soy and other beans. Food prices skyrocketed.

Ardi Ardak emerged in response to these events. The initiative links investors and large landowners with small farmers and rural women, and rehabilitates abandoned arable lands. Almost 89 percent of Lebanon’s population lives in urban areas, while agricultural land comprises 64 percent of the country. According to Gholam, “Those people who came from rural areas still have lands they were not looking after.”

According to a 2020 report from the Lebanese Ministry of Agriculture, the agrifood sector remains a low priority from the government. This has resulted in limited public investment in infrastructure and research, and poor organization of the agrifood value chain.

To address these challenges, Ardi Ardak first conducts assessments on the agricultural viability of abandoned lands. The initiative aims to act as a hub connecting large landowners who have left their lands—whether they are “bankers, or restaurateurs, or anything,” says Gholam—with farmers still living in rural areas. Then, the initiative provides technical guidance to promote sustainable agricultural practices for farmers willing to work the land.

“In the first year, we reached 180 assessments, and it’s been steady ever since,” Gholam tells Food Tank.

Ardi Ardak believes it is also important to provide market access and adequate infrastructure for rural small-scale producers. The initiative aims to ease the burden of managing every single aspect of the value chain for smallholder farmers, because, Gholam says, “not all smallholders are entrepreneurs.” Through partnerships with humanitarian organizations and private sector start-ups, the initiative works to create an environment where farmers can focus on production.

Gholam notes that, on average, rural small-scale producers spend two and a half days per week focused on delivery or selling activities. “This time should be spent in the workshop, or on the farm, or testing products,” Gholam says.

The marketing channel Soul aal Souk helps to achieve this goal. A monthly farmers market established in partnership with AUB, it fosters linkages between urban residents and rural producers, offering city residents access to healthy, traditional food. Ardi Ardak supports food trails promoting smallholder Lebanese producers through rural tourism. To further cultivate market access, Ardi Ardak also collaborates with Food and Roots, a company that gathers, packages and sells traditional and innovative products from rural areas.

In the future, the grassroots initiative hopes to complete two projects to transform landscapes, livelihoods, and the Lebanese food system. Ardi Ardak is partnering with a local municipality in the Beqaa Valley to implement an agroforestry model on a large swath of land. They hope to help residents sustain the local forest, work the agricultural land, and enjoy a public park. In Tripoli, Afif Wehbe, an Agricultural Engineer at AUB, says Ardi Ardak is in the early stages of plans to build a small urban garden divided among community members, which would include a section for a farmers market. 

“We have potential, but we need the infrastructure,” Gholam tells Food Tank. “We’ll start by giving people an option they did not know existed beforehand, and that’s a good enough thing to start with.”

Photo courtesy of Ardi Ardak

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How one country responded to disappointing Doing Business scores

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The following story is about how one country responded to disappointing Doing Business scores to reform its rules and regulations for its own benefit. Would discontinuation of this instrument mean its non-availability to others?

The above image is for illustration and is of iStock.

How one country responded to disappointing Doing Business scores

By Akhtar Mahmood 8 October 2021

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On September 16, 2021, the World Bank discontinued the Doing Business (DB) report, one of its flagship diagnostic products. This action follows what the World Bank called “a series of reviews and audits of the report and its methodology.”

The DB report, published each year since 2004, was one of the World Bank’s most influential reports in recent years. Every autumn, people around the world would wait eagerly and, in some cases, with some trepidation, for its release. Over time, the reports increasingly attracted the attention of heads of governments who wanted to see their countries do well in the rankings.

When the DB report came out in 2015, the Indian government was disappointed. Soon after taking office in 2014, Prime Minister Modi announced his government’s intention to bring India’s ranking into the top 50 within a few years. Several reforms were carried out in the following months, which the Indian government hoped would put India on a trajectory of rapid annual improvements in the ranking. The 2015 report (officially called “Doing Business in 2016”, since the World Bank always gave the report a forward-looking title) indicated only a modest improvement in India’s rank, from 142 to 130.

The World Bank explained to the Indian government that while several reforms may have been enacted on paper, Indian businesses did not report feeling an impact on the ground. Some responded, “What reforms?”, while others heard about the reforms but had not seen improvement on the ground. The reforms could not be officially recognized until the private sector reported real improvements. The World Bank suggested that the government put in place feedback loops to provide real-time information from businesses on whether the reforms were being well implemented. The government, instead of whining further about the scores, started working on such feedback loops. For several regulatory reforms covered by the DB indicators, it started surveying businesses on whether they felt any reform impact on the ground.

From February 2016 to May 2017, the government carried out a series of business-to-government (B2G) feedback exercises and focus group discussions (FGDs) on how much the businesses were aware of the enacted reforms and their views on the quality of reform implementation. Nine B2G feedback exercises were carried out. Topics covered construction permits (three surveys each in Delhi and Mumbai), starting a business (two surveys), and trading across borders.

The exercises revealed several implementation gaps, some major and some minor. An example is construction permitting. A business survey carried out in Delhi in March 2016 revealed the following implementation issues: a) significant lack of agency coordination—architects still need to obtain approvals from up to 10 different agencies; b) some facilities for online payment were not properly implemented and certain fees were still paid manually; c) very low awareness of the online system among users; d) no way to track the status of an application; e) information lacking on documentary and other requirements. In other words, the reforms had not gone far enough to have impact on the ground.

This feedback exercise helped generate several recommendations to address the deficiencies. These were provided to the Municipal Corporation of Delhi (MCD), and most were acted upon. Follow-up feedback exercises in October 2016 and February 2017 validated these actions while generating additional recommendations for further improvement. A similar effort was made in Mumbai.

The impact of these efforts can be seen in the trends in India’s performance on the “Dealing with Construction Permits” indicator. In the Doing Business in 2016 report, India’s ranked 183 on this indicator. Thirty-three procedures were involved taking 191 days according to the indicators. Two years later, the number of days had come down to 144 with a modest improvement in the rank to 180. The more substantial improvements came the following year when the DB report published in October 2018 indicated a reduction in the number of procedures and days required to 18 and 95 respectively. Still a long way to go but enough to propel India’s ranking on this indicator to 52. While all this improvement cannot be attributed to the feedback exercises alone, it is possible to trace a substantial part of this improvement to actions taken as a result of these exercises.

The Indian government also recognized that the DB indicators did not cover many regulatory interfaces that created problems for businesses and that the indicator measures were based on conditions in just two cities, i.e., New Delhi and Mumbai. Thus, in parallel to its efforts on the DB front, the Indian government embarked on an ambitious regulatory reform program at the state-level covering all states and union territories in the country. A long list of regulatory reforms was identified covering several regulatory areas, and state governments were instructed to carry out the reforms. Called the Business Reforms Action Plan, the program started in 2015.

Progress was monitored through annual indicators that ranked states according to their performance on implementing the reforms. The first such indicators, published in 2015, did not take into account business feedback. However, seeing the usefulness of the feedback exercises carried out as part of the DB program, the government changed the state-level reform indicators in 2018 by making a substantial part of the indicator scores dependent on business feedback.

The powerful demonstration effect of such feedback exercises had touched individual state governments too. In 2018, four state governments, Chhattisgarh, Jharkhand, Orissa, and Rajasthan, expressed an interest in knowing why there was poor uptake of self-certification and third-party certification options provided in business inspection reforms carried out by these states. At their request, the World Bank carried out an independent feedback exercise that could help design corrective actions to improve uptake.

The Indian experience from 2016 onward is a good example of what the DB indicators can lead to if governments use them well. First, the government refocused its attention from reforms on paper to reforms on the ground. Second, it recognized the importance of consulting with the private sector, which knows best where the shoe pinched, and designed corrective actions based on the feedback. This iterative process helped improve reform implementation quality. Third, the government recognized that while the DB indicators were useful, they were not adequate to diagnose the myriad of regulatory issues that businesses all over India faced. Thus, the government embarked on a more comprehensive, state-level, reform program, and, inspired by the power of indicators, underpinned this program by a set of performance indicators. Finally, once the pioneering DB-related feedback exercises proved useful, they created a demonstration effect, first within the central government, which replicated such exercises for the state-level reform program, and then on individual state governments.

BROOKINGS

Akhtar Mahmood, Former Lead Private Sector Specialist – World Bank Group

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Why The Gaza Strip May Be The City Of The Future

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Gaza is a landscape of extreme economic deprivation born of the region’s complicated political dynamics – but one whose contours may soon become more common. So why may The Gaza Strip be The City of The Future? Let us see what World (c) 2021 and Zach Mortice, Bloomberg tell us.

The above image is of Bloomberg‘s.

In many ways, the political and physical conditions of the Gaza Strip are unique.

Why The Gaza Strip May Be The City Of The Future

When Americans turned on the TV or glanced at their smartphones for news of the deadly clashes that engulfed the Gaza Strip in May – or if they followed the more recent spasm of violence in August that threatened to break the region’s fragile truce – many saw scenes that looked familiar: streets flooded with protesters, engaged in a struggle against highly armed security forces on the streets of a battered-looking city.

In many ways, the political and physical conditions of the Gaza Strip are unique: Nearly 2 million people are packed into a 25-mile-long rectangle of land along the Mediterranean roughly the size of Philadelphia. For decades, the territory has been home to Palestinians displaced by the founding of the state of Israel in 1948, and subject to Israeli occupation since the 1967 Six-Day War. But since 2007, after the political wing of the Islamist group Hamas was elected to power, Gaza has been under an Israeli blockade. In response, Hamas militants have attacked Israel with suicide bombers and missile attacks, and the two sides have settled into a gruesome rhythm of low levels of violence punctuated by intense conflagrations. In May’s fighting, as many as 260 Palestinians were killed; in Israel, 12 people were killed. 
Gaza is a landscape of extreme economic deprivation born of the region’s complicated political dynamics – but one whose contours may soon become more common. 

That’s the premise behind the recently released book Open Gaza: Architectures of Hope, published by imprint. Edited by, an urban geographer who focuses on the Middle East, and essayist, theorist, activist, and provocateur Michael Sorkin, the book presents a vision of Gaza as a glimpse of an imminent future, where violence, surveillance, resource scarcity and provisional use of an extremely compromised built environment are visited on all. 

Sharp sees connections, for example, between the unrest in Gaza and the racial justice demonstrations in U.S. cities after the murder of George Floyd in 2020: In both, the key issue is who has a right to the city – the right to claim contested urban space. “The Black Lives Matter protests and that broader movement and recognition of the types of oppression that are going on [in Gaza] is something that’s been made visible,” he says. 

The Gaza Strip, the book’s promotional copy declares, is “one of the most beleaguered environments on earth.” But the territory and its urban center, Gaza City, is appallingly understudied in terms of architecture and urbanism. That makes it a fitting swan song for Sorkin, who died last year of Covid-19. “Michael wanted to go where others wouldn’t dare,” says Sharp.

Featuring contributions from scholars, urbanists and architects from the occupied Palestinian territories, Israel, India, the U.S. and the U.K., the book’s essays explore the extant condition of Gaza and its wider socio-political context, and offer speculative designs aimed at wresting back sovereignty and dignity for its residents. It posits that the ad-hoc, low-carbon design techniques that Gazans have developed look ahead to a planet failing to meet the challenges of a climate cataclysm, a global pandemic, and growing inequality. As brittle regimes are wracked by crises, mass migrations harden borders, and infrastructure buckles, Open Gaza suggest that the rest of the world may start to look more and more like Gaza.

Or has already. Anyone who’s searched for clean water in Flint or has seen their home destroyed in wildfires or floods might understand what who contributed to the book, means when she says, “The Palestinianization of cities is happening worldwide. It’s happening by destruction and erasure, but also with dramatic climate change.” 

Eco-Adaptation by Necessity

Open Gaza isn’t content to just praise the ingenuity and resourcefulness of Gazan and allied urbanists and architects; nor is the book interested in depicting Gaza purely as a dystopian prison. “You could call [these visions] utopian, but I think these are alternative possibilities,” says Sharp. “They’re not fantasies.” Instead, the collection serves as a “demand that [Gazans] be able to live and shape their urban context and infrastructure, and social lives in ways that are dignified and respectful of their humanity,” he says.

The book presents Gaza’s architectural condition – extant and speculative – as defined by its power imbalance with Israel. This asymmetry means Open Gaza is free of the antiseptic techno-solutionism that often populates architecture tomes. Such documents often claim that low-carbon buildings, made from nothing more than the trees and dirt on their plot of earth, will exist in an atmosphere of happy consumers sipping lattes poured by robots, munching on locally sourced avocado BLTs. Open Gaza tells us this scenario might be a fairy tale. The book’s prescriptions operate with found conditions and severe local constraints on materials; it suggests that your first shower warmed by solar power might happen in between air-raid sirens.

This reality is why buzzwords like “sustainability” or “resilience” don’t mean anything to the average Gazan, says Palestinian architect Salem Al Qudwa, who writes about the territory’s quotidian, everyday buildings. , recycling brick may be a way to save carbon and bestow new buildings with the patina of age. But in Gaza, there is no choice. 

Al Qudwa has developed “incremental housing” templates, he says, that begin by setting foundations and structural columns, and letting Gazans fill in the gaps, creating a low-cost lattice for expandable housing units that feature shaded courtyards and roof decks. Homes often lack electricity, so cross-breezes are essential. Made from local materials, they offer climate-attunement Al Qudwa says non-local NGOs intent on building often miss. “My people need decent shelter,” he says. “A good house with proper insulation, with natural light, etc.”

There is no nostalgia for vernacular buildings or ways of living, says Sharif, but these practices are critical. “Gaza is looking at environmental practices out of necessity,” she says. “The only way forward is [through] traditional ways of living because there is no alternative.”

Rafi Segal and Chris Mackey’s “Solar Dome” – whose name riffs on  – makes the convincing case that there are few places better suited to an entirely solar grid. Gazans uses less than 2% of the average American’s energy footprint, and Gaza’s sunny climate further reduces the need for expensive energy storage. And the concept of “energy independence” takes on new meaning when citizens acquire utilities from . As such, Segal and Mackey recommend a system of building-scaled photovoltaic panels augmented with solar water heaters, and a district-scaled system of concentrated solar power towers.

Similarly, a chapter by Denise Hoffman Brandt unveils a plan for pavilions that collect fresh rainwater and use sunlight to desalinate groundwater, and floating ocean desalination pods made from trash.

Sharif’s “Learning Room” plan, detailed in her chapter of Open Gaza written with Nasser Golzari, addresses the imposed mutability of Gaza’s built environment. A system of modular, mobile shelters made from, rammed earth, wire mesh, bamboo, and more, it’s a migrating community center for exchanging skills, made from rubble itself. “The idea of the was not to see it as a permanent structure that is going to shape the identity of the city,” says Sharif. “It was an experimental space [you] can keep modifying and changing. It’s not a new urban structure. It’s more of a lab to allow new structures to happen.” In this way, the Learning Room underscores the difficulty of long-term planning in Gaza.

It also distills the tactical flexibility Gazans must demonstrate to keep themselves housed. Western architects have made it a polemic to use only materials close at hand – to design their buildings as a bird builds a nest. Architect Jeanne Gang , but it’s unlikely Gazans need such a reminder. 

The most visceral and imaginative collision of low-carbon aspiration with apocalyptic utility arrives in Helga Tawil-Souri’s chapter on the IPN: “The Internet Pigeon Network.” To surmount Israeli restrictions on electricity and bandwidth, the NYU media scholar proposes a decentralized network of pigeon roosts, trainers, and pick-up nodes. This avian internet would fly pigeons with flash disks tied to their necks from point to point, offering a faster and more secure way to share information. Reliant on local knowledge and labor, it’s another way of Gaza asserting infrastructural independence.

A Different Kind of Smart City

But it’s not as though the built environment of Gaza is untouched by technology. In some ways, the digital network that monitors the city and its residents represents a variation on the data-intensive “smart city” concept – another way Gaza looks ahead to the future.

Since 2014, Gaza’s reconstruction has been managed through an online database called the Gaza Reconstruction Mechanism (GRM). , the GRM records all the building material that flows in through its border, along with what it’s to be used for and who will receive it. The mechanism, designed to ensure that resources aren’t being used for military purposes by Hamas, was agreed upon by Israel and Palestine, and was meant to be temporary. But Franceco Sebregondi of says it puts Israel in an “ultimate supervisory role”: His chapter in Open Gaza, called “Frontier Urbanization,” details how the GRM gives Israeli authorities a granular picture of Gaza’s built condition, and the ability to delay Gaza’s rebuilding.

Such omniscience is increasingly a goal of the design and building industry, where there’s a push to translate plans into data and ensure that what’s built closely aligns with digital models, to more efficiently manage construction and operational performance. But that’s not the only way it could be used. How much of this information, for example, might a refugee resettlement nonprofit at the U.S.-Mexico border want to share with immigration authorities? While the GRM is relatively primitive, its broad usage across Gaza still creates a map of its reconstruction that exists nowhere else.

For, who earned a PhD on the architecture of the Gaza blockade from Goldsmiths, University of London, this intrusion reveals that the problem of the smart city is not technical. It’s political. As with sunny visions of our eco-friendly future, design and urbanism themselves have no inherent autonomy to resist political agendas, and their calls for ease, efficiency, and low-impact living make ready Trojan Horses for power. “Who will be in charge of accessing certain data?,” says Sebregondi. “What levels of transparency and access [are] granted by using this infrastructure? I don’t think that the technologies behind smart urbanism cannot be re-engineered toward serving another idea of collective urban environments. But the ones that are currently marketed and very light-heartedly deployed across our cities tend to pursue the opposite.” This, he says, is a “dark horizon we need to avoid and fight against.”

The complex intimacy of the Israeli-Palestinian conflict has turned the region into something of a proving ground for purpose-built surveillance technology that could be plugged into a future smart city. Indeed, Israeli companies are selling cybersecurity technology all over the world, including the U.S., where it’s used in a new training center .

Sebregondi sees Gaza as further along a continuum of ricocheting colonial violence: As states become more fragile and defensive and climate change adds layers of stress, inequalities skyrocket and people divide into camps. Where these two groups are anywhere near each other, the market for surveillance and control technology booms. Debates over the on the streets of U.S. cities and the rise of privacy-eroding public safety technology have collapsed the distance between Palestine and Pittsburgh.

“There is an extent to which Palestine becomes a sort of crystal [ball] of this particular future, within a very compacted and dense territory, [featuring] some of the most striking aspects of this splintering urbanism,” says Sebregondi. He describes the “boomerang effect of colonization,” where techniques to wield control over restive populations in distant countries eventually come home, as with the NSA’s experiments using the. 

It’s a cycle that’s eradicated distance, says Sharp, pulling Gazans and the rest of the world closer together, and bringing the front lines, already at their doorstep, into ours.

“These circulations of violence and containment,” he says, “come back to haunt us all.”

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Labour Market Skills Gap In The MENA Region And Sub-Saharan Africa

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INJAZ Al-Arab And JA Africa partner with Oliver Wyman to explore Labour Market Skills Gap In The MENA Region and Sub-Saharan Africa

INJAZ Al-Arab and JA Africa have partnered with global consulting firm Oliver Wyman to explore labour market skills gap in the MENA Region and Sub-Saharan Africa in an effort to tackle the unemployment challenge.

The “Youth Employment Perception” survey was conducted in response to the realization that these incremental unemployment figures cannot solely be attributed to lack of opportunities in the formal labor market.

The study took place across thirteen countries, including Egypt, Saudi Arabia, Kuwait, Lebanon, Morocco, Qatar and the UAE in the MENA region, along with six countries in Sub-Saharan Africa i(Eswatini, Gabon, Nigeria, South Africa, Uganda and Zimbabwe).

The study looked at markets across four key areas to provide a dual-perspective from both youth and employers which included sectoral opportunities and challenges, qualifying the skills gap, bridging the gap, and the impact of COVID-19 on the labour market. Interestingly around 60% of youth are unable to secure employment due to lack of relevant work experience, while 70% believe they need updated education and upskilling to find employment, showing just how much a problem the skills gap currently is.

The study surveyed more than 350 employers across the Middle East and Sub-Saharan Africa, and over 2,000 youths across both regions. The employer respondents were selected from various industries to get a broad view, including education, public sector and nonprofit organizations, financial services, manufacturing, engineering, and professional services. The insights from the study will be used to influence the private sector and public policy in addressing these challenges.

AkefAqrabawi, President &CEO of INJAZ Al-Arab, said: “In keeping with our commitment to inspire and prepare a generation of Arab youth to become the leaders of tomorrow, we were pleased to collaborate with Oliver Wyman on a project that has the potential to support the MENA region and Sub-Saharan Africain tackling the unemployment challenge. The survey sheds awareness on the disparity between the skills that youth are currently being equipped with, and the requirements requested by today’s employers. We will continue our work at INJAZ-Al Arab by leveraging the insights garnered from this study to provide the necessary programs and mentorship opportunities to students to close this gap.”

Continuing to discuss the power of the partnership, Pierre Romagny, Partner at Oliver Wyman, said: “We were pleased to partner once again with INJAZ Al-Arab and JA Africa on such a pivotal project to deepen our common understanding of the skills gaps and youth-employer disconnects on the labor market. These insights are critical to point the private and public sectors alike in the right direction to start addressing these challenges. We are proud to have collaborated withINJAZ Al-Arab and JA Africa on this study: 13 program facilitators and 18 friends of the work-readiness programs (employers) across MENA and SSA have provided valuable insights on challenges and opportunities in their market. We look forward to leveraging this report to create awareness with employers and drive opportunities for youth across markets.”

JA Africa’s CEO, Simi Nwogugu, said,”Parts of Sub-Saharan Africa has some of the highest rates of youth unemployment in the world and the COVID-19 pandemic has exacerbated the situation, making it increasingly important that we develop solutions quickly as the region also has the largest and fastest growing youth population in the world. We are grateful for this partnership with Oliver Wyman which will inform the work we do at JA Africa over the next few years to equip youth with requisite skills for productive employment and entrepreneurship.” 

For further details on the survey findings and to download the report, visit https://owy.mn/3xS7IQP

Fintech industry poised for significant growth in the MENA region

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The MENA region, like much of the undeveloped world, is characterised by an omnipresent Informal Economy with however differing specifics. This label dates back to most countries Planned Economy. So why is now the Fintech industry poised for significant growth in the MENA region? And how?
All world economies have an informal economy, and the duties of all business and governments alike leaders are to sustain, help and assist in its good maintenance and eventual development. Informal Economy is not Black Market and can easily be formalised to become the locomotive of any nation’s economic life. Could Fintech be of serious help here?

Any way, the reasons are tied to those specifics at this conjecture as well summarised by Ayad Nahas below.

The Financial Technology (Fintech) industry in the Middle East and North Africa (MENA) looks well placed to enjoy a period of substantial growth.

  • As many as 69% of adults remain totally unbanked in the region
  • Internet penetration in Saudi Arabia stood at 95.7% in January 2021
  • Fintech is going to be the “game-changer”

Fintech industry poised for significant growth in the MENA region

By Ayad Nahas, Communication Strategist

The Financial Technology (fintech) industry in the Middle East and North Africa (MENA) looks well placed to enjoy a period of substantial growth.

 Part of this growth could come from a large unbanked population.

According to the World Bank, only 8% of adults belonged to the banked population in 2018 and as many as 69% of adults remain totally unbanked in the region.

GCC expatriates with low and middle-income salaries constitute a large proportion of the unbanked such as in the UAE, where around 80% of the population is outside the current financial system.

Yet, regional smartphone and internet penetration is very high, reaching 2 mobile-cellular subscriptions per UAE inhabitant in 2019, while Internet penetration in Saudi Arabia stood at 95.7% in January 2021.

 Regional governments spotted this opportunity and introduced regulation to substantially attract investments into the sector.

 Fintech is a term that describes new technology which seeks to improve and automate the delivery and usage of financial services. At its core, fintech helps companies, business owners, and consumers better manage their financial operations, processes, and lives by applying specialized software and algorithms on computers and, increasingly, smartphones.

 Fintech’s adaptability across a slew of consumer sectors is propelling its widespread acceptability. Managing finances, trading shares, furnishing payments, and shopping online (often on your smartphone) has never been more convenient.

At the forefront of the fintech disruption are agile innovations such as peer-to-peer (P2P) lending and crowdfunding, providing alternative lending platforms, and widening access to fundraising.

While they may currently still need some centralized form of finance, at the minimum, P2P lending and crowdfunding can use fintech and blockchain to quicken the process, avoid paying high banking fees, and garner the interest of digitally-minded Millennials and future Z-generations.   

A recent report by consultancy firm Deloitte also states that the UAE houses over 50% of the region’s fintech companies, with nearly 39% of the population using fintech for P2P money transfer.

According to a report by Crowd Funder, a leading online source for the fintech industry, the number of financial technology companies in the Middle East increased from around 105 companies in 2015 to 250 firms in the year 2021.

Hanna Sarraf, a senior banking executive from the MENA region, said fintech is going to be the “game-changer” that will decide the winners and losers within the financial services industry, globally and in the Middle East, in the short and long terms.  

He points out that new technologies and advanced data analytics are transforming the traditional banking business models from the way banks interact with customers to the way banks manage their middle and back-office operations. 

The global fintech market is expected to reach $309.98 billion at a CAGR of 24.8% by the year 2022 according to many key sources from the banking industry. In the MENA, the fintech industry is expected to hit a record valuation of $3.45 bn by 2026.

The growth of this sector is currently being propelled by the rapid rise in fintech startups as a result of the very high internet penetration in the region. Another major factor is that several traditional banks are undergoing digital transformations or even becoming neo-banks, a trend especially evident in the UAE.

In a survey by the Boston Consulting Group (BCG) last October, 70% of respondents said they are actively searching for a new bank, and 87% said they would be willing to open an account with a branchless digital-only lender.

Today, the UAE is leading the pack in financial technology and developing itself as a digital-first nation when it comes to banking, payments, and fintech, as evidenced by the UAE’s first digital bank to provide both retail and corporate banking services and which will soon be launched and led by Former Emaar Chairman, Mohamed Alabbar.

According to many experts, the fintech market in the MENA region is set to account for 8% of the Middle East financial services revenue by 2022. COVID-19 turned out to be a wakeup call to switch from traditionally deployed financial services to more sustainable finance and technology platforms

The fintech revolution is set to continue to disrupt, and traditional banks must keep up with the pace of technology in order to stay relevant and competitive. In this rapidly evolving, ever-changing market, it’s time to innovate, integrate and accelerate into the future.

Published by AMEInfo on 28 April 2021.