Oman’s Ministry of Technology and Communications (MTC) has committed to a memorandum of cooperation (MoC) with BankDhofar at the Sas Center for the 4th Industrial Revolution (4IR), in order to manage a technology innovation lab at the center.
The MoC was reportedly signed by Dr Salim bin Sultan Al Ruzaiqi, CEO at MTC, and Abdul Hakeem Omar Al-Ojaili, CEO at BankDhofar.
The innovation lab has been established to help students and local Fintech startups, as they focus on developing innovative financial technology products and services.
“The Ministry has launched the SAS Center for the 4th Industrial Revolution to keep pace with the current developments in the ICT sector. Signing this MoC with BankDhofar reflects the significant role of the private sector in supporting this dynamic sector and the Omani youth initiatives in entrepreneurship.”
He added that through this cooperation, they aim to create an encouraging environment that can help develop useful Fintech solutions, which could become part of the 4th IR technologies.
He also said the project aims to encourage and support Oman’s private sector organizations to continue to empower the nation’s emerging technology fields.
“The innovative lab at Sas Centre for 4th Industrial Revolution serves our vision of contributing to such projects of national value, and it also contributes to the development of the Fintech field in general.”
“We are in the midst of the 4th Industrial Revolution where the banking sector has to seize the opportunity and take part, supporting the youth and encouraging them to become effective in a field which will positively contribute to the national economic growth in the future.”
MTC and BankDhofar will work cooperatively to establish, host, and manage the innovation lab. They will provide mentorship and training for Omani students, staff, local startups and Fintech firms.
In December 2019, Bank Muscat, the leading financial services provider in the Sultanate, revealed that the Central Bank of Oman had approved the institution’s request to establish a $100 million (appr. OMR38.5 million) nationwide, strategic Fintech investment program.
The investment program is reportedly part of Bank Muscat’s strategic growth initiative.Sponsored Links by DQ Promote
The following article titled Oliver Wyman: MENA youth’s perception of the private sector by Georgia Wilson – Leadership is worth reading to comprehend the peculiar situation of the MENA youth. In effect, the region despite having the highest youth population shares in the world, as well as the highest rates of youth unemployment, there seems to be still some sort of freedom of choice between private and public service employment.
Business Chief looks at Oliver Wyman, and INJAZ Al-Arab recently conducted research on the youth perception of the private sector.
Across the Middle East and North Africa (MENA) region, over 2,400 young people between the age of 16 and 36 were surveyed to gain insight into the youth perception of the private sector.
“It is critical to capture the perspective of the youth and assess what they require to bolster the private sector of the future. We see a healthy inclination towards entrepreneurship, and a clear idea of what factors can facilitate lifelong learning. These are both indicators of their perception of the private sector, which is key to sustainable economic growth of their countries and the region. The youth are a key driver in the realization of economic stability, and we are proud to support INJAZ Al-Arab in helping the youth to fulfill their economic potential,” commented Jeff Youssef, Partner at Oliver Wyman.
Key findings of the youth survey:
79% feel positive about the private sector’s contribution to the economy – a 41% increase from 2018
75% expect the private sector to grow in the next five years – an 11% decrease from 2018
55% are discouraged from working in the private sector due to lack of opportunities and lack of competitive benefits – an 8% increase from 2018
50% perceive the “who you know” favouritism within organisations, to be the primary obstacle when seeking private sector employment
78% see themselves working in the private sector in the near future
84% feel inspired to start their own entrepreneurial venture in the near future
53% see leadership, creativity and communication as the most important skills for the private sector
“For young people today, it is extremely important that they are well equipped with skills, knowledge, and sense of entrepreneurship to enter the workforce. INJAZ’s collaboration with Oliver Wyman will further allow us to tackle the issue of youth unemployment in MENA, as we are certain that the findings are of great benefit to multiple stakeholders and that our initiative reflects on their potential to impact policy reform, program creation, and educational institution transformation,” added Akef Aqrabawi, CEO at INJAZ Al-Arab.
Muscat: Enhancing skills and supporting job creation for locals is the new goal and vision 2020 for Knowledge Oman.
Speaking about the new plans, Tariq Hilal Al Barwanni, Knowledge Oman Founder said: “Supporting job creation by enhancing the necessary skills employers require from nationals to acquire is Knowledge Oman’s 2020 new goal and direction.”
This came as an announcement of the Sultanate’s multi-award winning knowledge-sharing platform’s strategic plan to make vision 2040 a reality. Knowledge Oman begins the new year with setting attainable goals, based on past achievements, which will support His Majesty Sultan Haitham bin Tarik in maintaining a prosperous and thriving country.
“Empowering the society with the necessary knowledge that is required to build a prosperous future is our key objective going forward. We will do this by aligning with vision 2040 and supporting His Majesty Sultan Haitham bin Tarik’s leadership,” he emphasised.
Since 2008, Knowledge Oman has managed within 12 years to solidify the vision of late His Majesty Sultan Qaboos bin Said bin Taimour of transforming Oman into a knowledge based society by impacting hundred of thousands of people with 74 initiatives in the form of projects, workshops, seminars that positively impacted students from college and universities, women, entrepreneurs and professionals from various industries.
Projects were supported by over 35 partners locally and internationally attracting over 80,000 registrations and 700 volunteers across the years.
Knowledge Oman received 4 awards that includes the Outstanding contribution to the cause of education from the World Human Resource Development (HRD) Congress.
Members of the platform consist of multinational group of both locals and expatriates living in the country with the passion of creating, sharing and exchanging knowledge.
“In planning our strategy for 2020, we are focusing on three key areas to support Oman towards a society which is rich in human, economic and natural resources that aligns with the 2040 vision. We are launching Knowledge Oman Talks, refining our Knowledge Oman Seminars and collaborating with like-minded partners to deliver initiatives that benefit the society” outlined Tariq.
Knowledge Oman Talks will manage and invite experienced professionals to schools, colleges, and universities to bridge the gap between academia & industry. Knowledge Oman Seminars will be enhanced to organise periodic events that discuss contemporary issues and offer suggestions for development to society. Moreover, Knowledge Oman will invite partners to collaborate on initiatives that benefit the society.
Knowledge Oman’s mission in the past was driven by the vision of late His Majesty Sultan Qaboos bin Said bin Taimour to create a knowledge-based society.
Optimistic about the year ahead and working under the leadership of His Majesty Sultan Haitham bin Tarik, Knowledge Oman will continue to build local and international partnerships and work towards providing people in Oman with the necessary knowledge and skills to meet the Oman Vision 2040.
Adelle Geronimo informs that despite all the hoo-hah in the Middle East, the UAE to accelerate space tech startups is no extraordinary youth employment programme. This follows the UAE launching in October 2018, its first satellite built entirely by Emirati engineers in the UAE and after sending an Emirati astronaut to the International Space Station. The UAE plans also to establish a self-sustaining habitable settlement on Mars by 2117.
The UAE Space Agency has announced its collaboration with the Abu Dhabi-based global innovation hub, Krypto Labs, to launch the UAE NewSpace Innovation Programme, which aims to maximise the growth of space technology start-ups with NewSpace, the rising private spaceflight industry.
The programme falls under the purview of the National Space Investment Promotion Plan, which aims to heighten the role of the space industry in contributing to the economy of the UAE.
It is also in line with an MoU signed between the UAE Space Agency and Krypto Labs, which aims to increase innovation and investment in the space sector, drive a diversified UAE economy, and promote awareness through specialised initiatives that support space technology entrepreneurship.
Dr. Mohammed Nasser Al Ahbabi, Director-General of the UAE Space Agency, said, “The UAE NewSpace Innovation Programme invites students, entrepreneurs and start-ups to share their ground-breaking ideas and transform them into viable commercial products. This supports developing space technology as part of the UAE’s private spaceflight NewSpace sector, which aims to make space more accessible, affordable and commercial.”
Selected applicants will take part in a three-month incubation programme at the headquarters of Krypto Labs in Abu Dhabi, with access to the hub’s facilities. They will also have access to the innovation hub’s local and global network of investors, be mentored by global space experts, and develop their skills in business creation, marketing, and sales, among others.
Applicants will also have the opportunity to secure funds to ensure their start-ups are prepared to enter the market.
Eligible applicants must present an innovative and original idea with a clear technical approach, which generates a feasible and scalable product. The teams must have at least one Emirati team member.
Dr. Saleh Al Hashemi, Managing Director of Krypto Labs, noted, “By supporting innovators and young entrepreneurs, we aim to foster a spirit of originality and zest within start-ups to solve global challenges that keep the UAE on the frontier of the innovation map and elevate its position as a leader for innovation-focused businesses.”
SMEs in the Middle East and North Africa (MENA) contribute approximately $1 trillion to the region’s economy per year, accounting for 96% of registered companies and employing approximately half of the workforce. Unsurprisingly, these businesses are the backbone on MENA’s rapidly evolving economies and are being recognised as a priority among the region’s governments. However, SMEs face fundamental obstacles to their potential growth, namely stringent regulations and compliance procedures, but chiefly access to finance. Indeed, traditional lenders have typically shied away from smaller and less established businesses in the wake of the financial crisis, instead opting for the assurances of larger companies.
However, as the region’s SMEs grow in importance, opportunities for alternative finance providers are emerging to plug the finance gap. Traditional lenders, including banks, are having to adapt and are increasingly responding to these needs and leveraging technology to ensure SMEs can tap into their full potential.
SMEs emerging as a priority
As the region shifts its economic focus away from oil to economic models that enhance the role of the private sector, governments have recognised the importance of SMEs. The added value of jobs and economic growth offered by these businesses has meant that SME have become a priority. For example, Dubai’s Department of Finance has most recently announced a set of initiatives to boost the UAE’s fledgeling SMEs, which have grown by over 30% in the last decade. Among these initiatives, the government has committed to allocating 5% of the government capital projects to SMEs.
Financial crisis still resonates for banks
With SMEs therefore seen as a catalyst for economic growth, they still face major obstacles that stop them from reaching their potential. Following the financial crash in 2008, access to funding has been more limited in the region and indeed globally.
SMEs face a $260 billion credit gap in the region, with just one in five SMEs benefitting from traditional finance and accounting for only 7% of bank lending. But now, the attitude of lenders, such as banks, is having to catch up as these businesses take on their role as pivotal contributors to economic growth.
Various types of alternative finance emerging
As a result of the credit gap faced by SMEs, innovative alternative financing options have emerged, fuelled by the increasing digitalisation of businesses in the region. Funding models, such as Peer-2-Peer lending are seeing growth increase, from $4.5 million total market volume in 2014 to $32.5 million in 2016. Over the same period, equity-based crowdfunding has enjoyed growth from $62 million to $100.32 million.
However, there are indications that this growth is slowing, where the lack of regulatory clarity and flexibility is making the activity of alternative finance providers more complicated.
Opportunity for traditional lenders fuelled by technology
The lack of regulatory clarity for alternative finance providers has created an opportunity for traditional lenders, such as banks – an opportunity they are beginning to tap into. The increasingly sophisticated digitalisation of finance has also enabled traditional lenders to adopt these processes, allowing them to mitigate risk and broaden their offering, making bank lending more accessible to SMEs.
One example of this is the growth of established models such as asset based financing and factoring. As this form of finance has evolved, the emergence of new technologies has improved its appeal to banks, making a long-established model increasingly effective, efficient and ultimately more attractive. This has resulted in asset based financing growing by 7% in the Middle East in 2018 alone – not far behind the global figure of 9%.
The increased take-up of such technologies by banks means that they can now not only compete with alternative finance providers to provide modern financing to SMEs, but they can also partner with these providers to evolve their offering even further.
MENA is experiencing a period of exceptional growth for SMEs, but in order to realise the true potential of these businesses, we must place greater focus on access to funding. Only with better access to finance can these businesses unlock growth as they navigate supply chains, working capital gaps and encourage innovation. Well established lenders have in recent years shied away from such businesses, but as technology evolves and the popularity of alternative finance providers signal the changing demands of businesses, there is an opportunity for them to tap into this market once again. Banks that recognise the opportunity to seize digitalisation and work to learn from the innovation in alternative finance, will be the ones who are working hand in hand with the region’s governments to ensure that the businesses that form the backbone of their economies reach their full potential.
This year marks a decade since Yahoo acquired Maktoob, in a deal worth $164 million. It was the first time that a technology company based in the Middle East had attracted such significant interest from a giant of its day.
At the time, the deal paled in comparison to the acquisitions and mergers typical in the region, between telecoms operators, industry and real estate. But for the entrepreneurship ecosystem, it was a seminal moment, validating the region as a place for technology and startups.
Back when this happened, there were no venture capital (VC) funds, mobile and internet penetration was low, Apple’s iPhone was still out of reach for most people and unicorns were mythical creatures with the power of flight.
Maktoob was founded in Jordan by Samih Toukan and Hussam Khoury as an Arabic webmail service. It grew to become the main destination for Arabic speakers on the internet and amassed 16 million users. Beyond the main portal, Maktoob offered online payments through CashU, an e-commerce platform that resembled US-based eBay called Souq and gaming company Tahadi MMO Games.
Yahoo was only interested in the main portal and so Toukan and Khoury established Jabbar Internet Group to absorb Maktoob’s other assets. In hindsight, Yahoo failed to see the consumer trends that unfolded in the region and the inevitable rise of online payments and shopping.
Souq became the biggest asset in Jabbar’s network. Emaar Malls reportedly made an offer of $800 million in 2017, but it was Amazon that would come to acquire the e-commerce site for $680 million of which $580 million was paid in cash. Emaar’s chairman Mohamed Alabbar decided to pump $1 billion into launching his own e-commerce platform, noon, as a result.
In between these two acquisitions, the technological landscape in the region had changed drastically. Internet penetration was on the rise, mobile penetration was close to or exceeded 100 per cent in every country of the Middle East and North Africa (MENA). Smartphones were also popular and Nokia’s dominance in the mobile phone market had been dismantled across the region, replaced by the app-friendly iPhones and Android-based Samsung and Huawei phones. With the introduction of 4G technology, the cost of mobile broadband fell from an average of $9.50 for half a gigabyte in 2016 to $5.27 for double the amount of data.
Empowering The Youth
Amid the protests and revolutions that disrupted the region’s economies in the so-called Arab Spring, the high youth unemployment highlighted the importance of the private sector for job creation. Entrepreneurship was presented as the silver bullet to stymie the rise of unemployment and a way to empower the youth, who make up two thirds of the region’s population.
Government policies and regulations across the Middle East and North Africa (Mena) slowly became friendlier to entrepreneurs and investors. Efforts to cut down startup costs continue as regional competition to become a hub for entrepreneurship has ignited. Startups have been recognised as a way to create not only employment but a means to solve for problems that societies and economies face in the Middle East.
The general shift in attitude and government policies created fertile ground for companies like Dubizzle, Talabat and Babil to emerge, most replicating models and ideas that had proved successful in other parts of the world. Germany’s Rocket Internet arrived in 2011 and began founding startups aggressively, replicating successful business models to launch companies like Namshi, which was recently acquired by Emaar Malls, wadi.com and Carmudi. Serious investors began to emerge and institutionalise and the region became home to VCs and angel investors with an eye to reap lofty returns. Today, there are several funds dedicated to entrepreneurship and a few governments have established fund of funds, to co-match VCs and help develop a local ecosystem that can generate economic growth.
One of the most prolific of these early angel investors was Aramex founder and Wamda chairman Fadi Ghandour. He was one of the initial investors in Maktoob and then in Jabbar Internet Group before establishing Wamda Capital.
“The world was changing and I had felt the internet change the world, I already felt it affecting Aramex, so when Samih and Hussam came for investment, for me, it was a no-brainer,” he says.
Still On The Backfoot
But even after all these years, there has only been a handful of exits valued at more than $100 million across the Middle East. Oil still accounts for the majority of gross domestic product (GDP) in the GCC, youth unemployment is the highest in the world at 26.5 per cent according to the World Bank and costs to start a business in the current hub of the region, Dubai is among the highest in the world. For almost every country, regulations still need improvement beyond registering a business. Innovation is also lacking, the highest-ranking MENA country in the Global Innovation Index is the UAE at 36th place, behind smaller economies like Cyrpus and Malta.
Yet, there is hope.
“There are more mature companies and more mature VCs, so there are better deals happening. Exits like Careem and Fawry, those kinds of big companies that are having a real impact is one key metric of a potentially successful ecosystem,” says Abdelhameed Sharara, founder of RiseUp. “I think we are still very early compared to the US and China, but it’s a very promising space compared to the past.”
The region also has a more active female population in the startup sector, with 23 per cent of startups in Gaza and the West Bank led by women, while 19 per cent are led by women in Beirut, both ahead of New York which stands at 12 per cent. Even at RiseUp, women accounted for almost 40 per cent of the attendees last year.
“The region has really become a place where entrepreneurs can thrive and provides supportive environments for startups,” says Amina Grimen, co-founder of e-commerce beauty site, Powder. “In the beauty space, looking at the accomplishments of big female players like Huda Kattan and Dr Lamees Hamdan is truly inspiring.”
Setting up a business is exciting, but it requires level-headed planning. To be successful you need to consider the logistics performance of the country in question, along with its reputation, ease of company setup process, simplicity of doing business, and opportunities for future growth. So, when you’re looking at where to locate in the Middle East and North Africa (MENA) region, it’s important to weigh up the pros and cons of the different regions. If you’re considering this part of the world, here are four tips to improve your chances of finding the right place for your MENA business:
1. The best location for logistics A quick look at the World Bank Logistics Performance Index (LPI) helps define all the logistical considerations in six points: customs, infrastructure, ease of shipping, tracking and tracing, timeliness, as well as logistic services. These factors are important for all businesses and vital if you will be importing and/or exporting. Why the UAE has got logistics covered: In that World Bank Logistics Performance Index, the one MENA country that stands head and shoulders above all the rest is the UAE. It ranks 1st in the GCC and MENA. Globally it’s listed 11th, ahead of the United States and Switzerland. In terms of specifics, the UAE is placed 5th in the world for international shipments and 4th for timeliness. Meaning you can expect to have your deliveries reach their destinations by the deadline.
And it’s important not just to stop at Dubai when it comes to thinking about locations for your new MENA business. Investigate the other emirates that boast excellent logistical networks as well as ample warehousing space at a lower cost. Setting up in Ras al Khaimah, for example, is the perfect jumping-off point to do business across the UAE, the Gulf and entire MENA region, and it’s less than an hour’s drive to Dubai.
2. Finding an easy setup process Here we have to consider procedures, time, cost and minimum capital required to start a company. Different countries in the MENA region take different approaches to helping new businesses achieve this. There are a huge number of options, so it’s important to locate your company in a top-level business hub that can offer you a tailor-made solution. The UAE is always going to score highly when it comes to easy setup. Look for a hub within the UAE that gives you flexibility, allowing you to choose whether you want to set up on the mainland or in a free zone.
Why the UAE has the easiest setup process: In the World Bank’s Doing Business 2019 report, the UAE was ranked 25th in the world for starting a business, with a score of 94.06 out of 100. The MENA average was 82, with only one other regional country, Bahrain (89.57), breaching the top 100. Why? Well, the UAE was deemed to have hugely streamlined procedures and greatly reduced setup times. It’s worth looking outside of Dubai and Abu Dhabi as well– Ras al Khaimah has put in place a highly-simplified and fast-tracked business setup process. So, look for a hub that offers this level of service, and get your company off to a strong start. It’s about costs as well: Choosing the right location can mean halving your setup costs.
3. The importance of a good reputation The MENA country you set up in will be a reflection of your business. Set up in one that is well respected for business equality and fairness and this rubs off on the organization itself. It also affects how you are perceived by companies in the MENA (and wider) region with which you do business.
Why the UAE’s reputation speaks well for your business: The UAE has a great reputation for business for a number of reasons. It’s politically stable, has a strong economy, and offers state-of-the-art infrastructure. Its laws prohibit monopoly and encourage competition, while maintaining intellectual property rights and trademarks. No surprise then that it’s probably the major international business hub of the Middle East. Even if you do business outside of the UAE, being based there puts you in great standing with the MENA region.
4. Having the room to expand Whatever the size of your business right now, you’re probably aiming to grow. This means you need to keep options open because what might be the best choice now, especially in terms of location and suppliers, may change in the future. You need a location that offers flexibility. One that has good access to other markets and one that lets you expand your offering. For example, you could be attracted by the easy setup process and zero taxation offered by many UAE free zones, but perhaps one day you will want to do business directly with the mainland. Finding the right hub that allows that type of flexibility will be a vital part of your decision-making. So, it’s important to think about your immediate requirements, and how those requirements might change down the road.
Why the UAE helps your company grow: On top the strong economy and great transport links, choosing the right business hub in the UAE brings peace of mind that you are set up for years to come. You haven’t just taken an ‘off the shelf’ solution but got one that truly reflects the kind of business you want to run today, and tomorrow.
Question your way to success
When setting up in the MENA region, you need to make an informed decision rather than a leap of faith. You can improve your chances of success by asking the right questions about your business needs and the locations on offer. The UAE ticks the right boxes– the question, then, is making sure you pick the right economic zone and the right location within it.
Opinions expressed by Entrepreneur contributors are their own.
In MENA’s Maturing Ecosystem dated September 3, 2019, author Chloe DOMAT says that “as the region’s digital startups and fintechs grow and prosper, they must learn to scale, despite a highly fragmented economy.”
Once again this year, the digital economy of the Middle East and North Africa is set to break records. The first half saw $471 million in total funding and 238 deals, according to the latest report from Magnitt, a Dubai-based entrepreneurs’ network. That’s a 66% increase over the dollar volume in the first half of 2018 and 28% more deals.
Digital startups barely existed in the MENA region a decade ago. Now, fintech is a thriving sector embracing hundreds of new companies, jobs and investors. As the ecosystem expands with tens of newcomers each year, funding tickets get bigger and bigger.
“If we look back a few years, a deal at $2 million or $3 million would have made the headlines; today, we have multiple $10 million-plus deals,” says Omar Christidis, founder and CEO of Arabnet, a Beirut-based events and research company specializing in the region’s digital economy. “This is an indicator of the increasing maturity of the market.”
Major deals so far this year have included a $100 million capital injection in Dubai-based Emerging Markets Property Group (EMPG); a $65 million Series A round for Yellow Door Energy, also in Dubai; and $42 million for Egypt’s Swvl, a transportation app.
There is still a disconnect, however, between the growing demand for funds at all levels and the capital currently available to satisfy it, industry insiders say. Money is expected to keep pouring in, as an increasing number of international institutions enter the region. Big names like Endeavor Catalyst (US), Vostok New Ventures (Sweden), MSA Capital (China), Global Founders Capital (Germany) and Kingsway Capital (UK) already make up a third of the Middle East’s investor list.
Aiming to attract even more foreign capital, countries including Bahrain, Saudi Arabia and the United Arab Emirates (UAE) have also started establishing funds of funds.
Funding ($ Mil.)
Yellow Door Energy
For the first time, numbers of local companies are successfully reaching the end of the startup lifecycle and exiting through mergers or acquisitions. In March, Uber bought Careem, a Dubai-based ride-hailing application, for $3.1 billion, in a deal that marked the region’s first unicorn exit.
The pace has only picked up. At least 15 Middle Eastern startups have performed exits since January, including digital fashion platform Namshi, sold to Dubai’s Emaar Malls in February; the purchase by Majid al Futtaim, a Dubai-based shopping mall and retail operator, of Saudi Arabian online grocery store Wadi in May; and EMPG’s purchase of Jumia House, a property portal for Morocco, Algeria and Tunisia, in June.
These exits leave a new generation of former staff members with a lot of means. After Careem’s exit, 75 ex-staffers cashed out over $1 million each. That financial capital, as well as the beneficiaries’ acquired knowledge and expertise, will allow a number of them to start new business ventures.
The Imperative to Scale
While tech companies grow larger, entrepreneurs face new challenges.
“As mature startups move to larger funding rounds and raise interest for acquisitions, they need to scale operations, whether vertically with new business lines or geographically,” says Philip Bahoshy, CEO and founder of Magnitt.
Navigating across the region’s approximately 22 countries, each with its own complexities, is not easy, however. From Morocco to Iraq, Arab states differ dramatically from one another in size, population, wealth, laws, digital infrastructure and business culture.
“Seeing the MENA region as one big market is to a certain extent a misrepresentation because our markets are superfragmented,” says Christidis. “A company that wants to grow from Lebanon into Jordan into Iraq into Kuwait into Saudi Arabia has to enter five separate markets.”
The UAE is clearly driving the game. In the first half of 2019, the Emirates received 66% of the money invested in all MENA startups and captured 26% of the deals, according to the Magnitt report. Dubai has by far the most developed ecosystem, with a concentration of global firms’ regional headquarters, major funding institutions and accelerators.
The UAE, and Dubai itself, have worked to build an advantage. In 2017, the UAE became one of the first countries in the world to appoint a minister of artificial intelligence. Dubai’s Crown Prince Hamdan bin Mohammed bin Rashid al Maktoum has promised that the government will go 100% paperless by 2021.
“The UAE has been leading from the front,” says Amol Bahuguna, head of payments and cash management at Commercial Bank of Dubai (CBD), which just launched a new e-invoicing service. “Everything that has to do with the government is going digital. You have a real top-down approach to innovation and things move fast.”
Much will hinge on how the UAE, and Dubai in particular, manage their response to the current economic slowdown. Recent government data show that real estate, financial services and tourism—the pillars of the economy—are in a slump. In 2018, Dubai also recorded its biggest net loss of jobs since the global financial crisis.
The Emirates have competition, too, from Saudi Arabia, the biggest emerging market in the region with over 34 million people and high purchasing power. The authorities there are keen to diversify their oil-based economy, including promotion of the digital sector.
Riyadh set up a fund of funds to attract foreign investors to support startups. Saudi authorities will invest dollar-for-dollar as a limited partner in any new fund that commits to investing in the kingdom. They have also promised to streamline the licensing process for foreign startups so that they can settle in Saudi Arabia easily.
New Saudi-based funds such as Saudi Telecom’s $500 million ST Ventures, Vision Ventures and Hala Ventures, that have emerged in the past three years, are becoming large players in the regional venture capital game, leading $10 million-plus investment rounds.
On the other side of the MENA map, North Africa is also showing strong digital growth potential. Morocco, Tunisia and Egypt are investing heavily in the development of their own high-tech ecosystems, aiming to become the bridge to Europe and the gateway to sub-Saharan Africa. Tunisia recently passed laws supporting tech innovation; and in September, Tunis will welcome Afric’Up, a large pan-African startup-pitch competition.
Fintech’s “Gold Mine”
Although it hardly shows in this year’s top deals, fintech remains the fastest growing sector within MENA digital economy. In the first half of this year, fintech accounted for 17% of all deals, up 9% from 2018. Interestingly, almost 90% of the total $24 million funding went to early stage startups, underscoring that the sector is still in its infancy.
The data also reveals enormous potential. Arab countries are home to over 380 million people, half of them under age 26. Financial inclusion is among the lowest in the world, with only 52% of men and 35% of women owning a bank account as of 2017. The vast majority of those with bank accounts, however, own a mobile phone (86% of men and 75% of women).
By mid-2018, the whole MENA region, including North Africa, had 381 million unique mobile subscribers, according to GSMA Intelligence, a mobile industry trade body. Smartphones accounted for 52% of all connections and are expected to grow to 74% by 2025.
“These figures highlight the tremendous opportunity,” says Nameer Khan, founding board member of the newly established UAE-based MENA Fintech Association. “The region is literally a gold mine.” The lure for fintech investors and entrepreneurs is the chance to enter an untapped market in which hundreds of millions of users could leapfrog from the cash economy to the digital.
Fintech subsectors widely thought to hold growth potential include insuretech, robo-advisory wealth management and sharia-compliant services. But payment services, not surprisingly, stand out prominently for both the number of startups and the value of deals. Mobile payment, money transfer and lending platforms remain the main focus; while more-sophisticated technologies such as blockchain, the cloud and artificial intelligence still lag.
Egypt’s Fawry is one of the biggest success stories in payments. Launched in 2008, the company raised $122 million; its initial public offering on August 8 sold 36% of its share capital for $97 million. Also attracting notice in the sector are PayTabs, a Saudi Arabian online payment facility that announced in August that it had raised $20 million to support its expansion in the region and into Southeast Asia, India, Africa and Europe; and the Dubai-based peer-to-peer lending platform Beehive, with a total capital injection of $15.5 million as of March 4.
The payment landscape looks to change rapidly, however, as larger players seek their share of the fintech market. Careem, for instance, claims over 30 million users in the region and is currently rolling out its Careem Pay e-wallet. If the service succeeds, Uber-owned Careem could become one of the biggest MENA fintechs.
Digital Banking Multiples
Banks and financial institutions view the fintech surge as an opportunity to outsource innovation and digitization. From simple online banking and mobile applications to investment platforms and e-wallets, most MENA lenders are seeking partnerships with startups. Some have even rolled out fully fledged, branchless digital neobanks, including Emirates NBD’s Liv., Mashreq Neo, and Gulf International Bank’s Meem.
These operate under a conventional lender’s license, however. Since they were developed by traditional banks, they are not industry disruptors, like startups Revolut and N26; rather, they act like new-business verticals, intended to seduce tech-savvy youth and target the unbanked. For a digital banking startup to seriously challenge the major players would be a monumental task.
“Banks in the Middle East are very large; what we are seeing recently is market consolidation, so they are getting even bigger,” says Arabnet’s Christidis. “I don’t think any of the startups really want to take them on, head to head. I’m not sure either that there would be investors ready to bankroll that kind of an investment. Furthermore, I question what kind of industry lobbying bite the banks would put on if they really started seeing that kind of thing emerge.” Christidis believes only an already established player from outside the region would have the financial muscle to give it a chance to compete.
Such a competitor might come from outside the financial sector entirely, however. Abu Dhabi Global Market, a key Emirati financial center, announced in July that it is ready to issue digital-banking licenses to nonbanking firms “with innovative value propositions.”
As this suggests, while the MENA digital economy is developing faster than ever, legal and regulatory frameworks need to adapt for growth to be sustained. Procedures to register a company, licensing and liability laws in case of business failure or bankruptcy are among the key differentiators governments will have to consider as they look to make themselves more competitive.
“Governments are showing concerted interest in building digital ecosystems for their countries,” says Magnitt CEO and founder Bahoshy. “There are still challenges to be overcome, but we can expect success stories to be more frequent, have higher value and have more impact in the coming years.”
Ras Al Khaimah Economic Zone (RAKEZ) has today launched its BusinessWomen Package, a ‘first-of-its-kind’ product in the United Arab Emirates (UAE) designed exclusively for women who are passionate about business.
The package is offered at a pocket-friendly rate starting from AED 6,200 with instalment plan options, a free zone licence, a shared workstation and various support services in a one-stop shop.
Businesswomen who want to set up their company with the economic zone can either select the 1-Year or 3-Year Package. Both packages come with value-added services such as free usage of RAKEZ shared workstations, free printing of business cards, priority tokens at RAKEZ Service Centres and eligibility for a UAE Residence Visa(s). The 3-Year Package has an added benefit of one free investor visa, which is equivalent to AED 3,950.
In addition, the newly-launched package gives businesswomen eight free zone licence types to choose from: Commercial, Educational, E-Commerce, General Trading, Individual/Professional, Media, Service and Freelancer Permit.
Commenting on the introduction of the new package, Ramy Jallad, Group CEO of RAKEZ, said: “We are very proud to launch the RAKEZ BusinessWomen Package, which is a clear testament to our commitment of encouraging more women to achieve their entrepreneurial dreams. In the past, we have conducted events exclusively for women, such as networking sessions. We have used these events as platforms to get to know what challenges they are facing and what can we do to support them. Then, here we are, we have introduced an entire package that has all the elements to help them become the successful businesswomen that they are meant to be. It comes with a selection of cost-effective office spaces, licences, as well as support services. All they have to do is pick the solutions that suit their needs and they are good to go.”
“This is just the tip of the iceberg,” Mr Jallad added. “Watch out as we are going to work on more initiatives to inspire women to be in business.”
According to the World Economic Forum’s 2018 Global Gender Gap Report, there is a 40% gender gap in the Middle East and North Africa in various areas of the society, including business. Closing this gap by promoting female entrepreneurship can help the region achieve a more sustainable and inclusive economic growth path.
Teaching entrepreneurial thinking at a young age can help kids learn and hone valuable skills that they can use to cope with stress and unforeseen issues that arise in their ever-changing world.
Moving from childhood into adolescence can be a very challenging time for kids. Not only are social norms changing, but their ability to adapt to their quickly evolving environments is being developed. Schools change, responsibilities change, and their lives become different from day to day. Throughout this time, maturing happens, and it aids in their ability to critically think, react to situations, and become more independent.
But is there a way to develop these skills sooner to help them mature, and ultimately, cope better? In a nutshell, yes. Teaching entrepreneurial thinking at a young age can help kids learn and hone valuable skills that they can use to cope with stress and unforeseen issues that arise in their ever-changing world. Creativity, problem-solving, and emotional intelligence are just a few of these skills that can be gained through early teaching and long-term practice. For kids that practice entrepreneurial thinking, in difficult situations, they are able to problem solve effectively by analyzing long-term ramifications. This kind of processing comes with so many benefits that will bode well for kids from childhood all the way into adulthood.
1. Positive habit-forming Entrepreneurial thinking is not just an activity, but rather a lens through which all situations are viewed. This is also known as a “positive habit.” Instead of going down another path, the child has to make a conscious decision to change their perspective. By making these daily decisions, kids become more aware of the benefits that come along with forming positive habits and find them easier to engage in a variety of life aspects.
2. Emotional support When a child is able to effectively problem solve, and see the fruit of their efforts, positive feelings and increased self-worth follow. This internal confidence leads to kids feeling emotionally supported, and it has a great effect on their ability to take criticism and grow without fear of failure.
3. Behavior Most of the time, bad behavior comes from the inability to control one’s emotions and/ or the inability to communicate. Practicing entrepreneurial thinking solves both of those inhibitors by giving the child the tools to be able to look at the problem from a big-picture and emotionally intelligent perspective. All of the attributes that are gained from teaching entrepreneurial thinking tend to lead to better behavior, emotional health, and positive habits by giving kids the tools to not only cope, but thrive. Equipping them early helps kids navigate the landscape of their lives so that they can face obstacles with creativity and without fear. Difficult situations, new experiences and issues that arise are all the more easily handled and learned from by learning and practicing entrepreneurial thinking young.
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