Free broadband: internet access is now a human right, no matter who pays the bills, as per Merten Reglitz, University of Birmingham, it is a universal entitlement as well.
The UK Labour Party is promising to provide free broadband internet to every British household by 2030 if it wins the 2019 election. To do this, the party would nationalise the broadband infrastructure business of BT and tax internet giants like Google and Facebook. Whatever you think of this plan, it at least reflects that the internet has become not only an essential utility for conducting daily life, but also crucial for exercising our political rights.
In fact, I recently published research that shows why internet access should be considered a human right and a universal entitlement. And for that reason, it ought to be provided free to those who can’t afford it, not just in the UK, but around the world.
Internet access is today necessary for leading a minimally decent life, which doesn’t just mean survival but rather includes political rights that allow us to influence the rules that shape our lives and hold authorities accountable. That is why rights such as free speech, free association, and free information are among the central rights included in the UN’s Universal Declaration of Human Rights. And, crucially, everyone needs to have roughly equal opportunities to exercise their political rights.
Before the internet, most people in democracies had roughly equal opportunities to exercise their political rights. They could vote, write to newspapers or their political representative, attend public meetings and join organisations.
But when some people gained internet access, their opportunities to exercise political rights became much greater compared to those without the internet. They could publish their views online for potentially millions of people to see, join forces with other people without having to physically attend regular meetings, and obtain a wealth of previously inaccessible political information.
Today, a large proportion of our political debates take place online, so in some ways our political rights can only be exercised via the internet. This means internet access is required for people to have roughly equal opportunities to make use of their political freedoms, and why we should recognise internet access as a human right.
As a human right, internet access should be “free” in two ways. First, it should be unmonitored, uncensored, and uninterrupted – as the UN’s General Assembly has demanded in a non-binding resolution in 2016. Second, governments should guarantee a minimally decent infrastructure that is available to all citizens no matter how much money they have. This means funding for internet access should be part of minimum welfare benefits, provided without charge to those who can’t afford to pay for it, just like legal counsel. (This is already the case in Germany.)
A political goal
In developing countries, digital infrastructure reaching everyone might be too expensive to guarantee immediately. But with the required technology becoming cheaper (more people on the planet have access to a web-capable phone than have access to clean water and a toilet), universal access could first be guaranteed via free wifi in public places. Supply can start off in a basic way and grow over time.
Still, expensive infrastructure isn’t the sole obstacle to universal access in developing nations. The spread of the internet could also be increased by promoting gender equality and literacy and digital skills. Developed nations ought to support these efforts by honouring their commitments to the UN Sustainable Development Goals.
Should everyone in Britain have free broadband in their homes? There are many good reasons to provide the best possible internet access to everyone, such as increasing economic productivity, sharing prosperity more evenly across the country, or promoting opportunities for social engagement and civic participation. And, as such, free broadband for all may be a worthy political goal.
But what is most important is ensuring that everyone has the kind of internet access required for roughly equal opportunities to use their political freedoms. Guaranteed internet access should be considered a human right in our virtual world, whoever ultimately pays the bills.
The UAE has added another feather to its cap. After appointing the world’s first artificial intelligence minister, it has established the world’s first AI Research University in Abu Dhabi at Masdar City.
ABU DHABI, UAE, Oct. 16, 2019 / PRNewswire/ — Abu Dhabi today announced the establishment of the Mohamed bin Zayed University of Artificial Intelligence (MBZUAI), the first graduate level, research-based AI university in the world. MBZUAI will enable graduate students, businesses, and governments to advance artificial intelligence.
MBZUAI Board of Trustees launching the world’s first graduate level AI university.
The University is named after His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, who has long advocated for the UAE’s development of human capital through knowledge and scientific thinking to take the nation into the future. MBZUAI will introduce a new model of academia and research to the field of AI, providing students and faculty access to some of the world’s most advanced AI systems to unleash its potential for economic and societal development.
His Excellency Dr. Sultan Ahmed Al Jaber, UAE Minister of State, who has been appointed Chair of the MBZUAI Board of Trustees and is spearheading the establishment of the University, said: “The Mohamed bin Zayed University of Artificial Intelligence is an open invitation from Abu Dhabi to the world to unleash AI’s full potential.”
“The University will bring the discipline of AI into the forefront, molding and empowering creative pioneers who can lead us to a new AI empowered era,” he added.
Experts from around the world have been selected for the University’s Board of Trustees. They include MBZUAI Interim President, Professor Sir Michael Brady, professor of Oncological Imaging at the University of Oxford, UK; Professor Anil K. Jain, a University Distinguished Professor at Michigan State University, USA; Professor Andrew Chi-Chih Yao, Dean of the Institute for Interdisciplinary Information Sciences at Tsinghua University, Beijing, China; Dr. Kai-Fu Lee, a technology executive and venture capitalist based in Beijing, China; Professor Daniela Rus, Director of Massachusetts Institute of Technology (MIT) Computer Science and Artificial Intelligence Laboratory (CSAIL), USA, and Peng Xiao, CEO of Group 42.
Over the next decade, AI is set to have a transformational impact on the global economy, with experts estimating that, by 2030, AI could contribute nearly $16 trillion to the global economy[1] and account for nearly 14% of the UAE’s GDP[2].
Professor Sir Michael Brady, Interim President of MBZUAI, said: “We are now at a turning point in the widespread application of advanced intelligence. That evolution is – among other things – creating exciting new career opportunities in nearly every sector of society. At MBZUAI, we will support students to capture those opportunities and to magnify their contribution to the field of AI globally.”
The University will offer Master of Science (MSc) and PhD level programs in key areas of AI – Machine Learning, Computer Vision, and Natural Language Processing. All admitted students will receive a full scholarship, monthly allowance, health insurance, and accommodation.
Graduate students can now apply to MBZUAI via the University’s website. The first class will commence coursework at MBZUAI’s Masdar City campus in September 2020.
From artificial intelligence to autonomous vehicles, transformative science and technology have driven impactful change across the GCC countries in recent years, a report said. Trade Arabia in 10 key technologies disrupting the GCC market, elaborates on how the latest advances in technology are impacting the countries of the Gulf.
With regional governments now set to reduce oil dependency through policy and regulation change, the Industrial Revolution 4.0 and the phenomenon of the Internet of Things (IoT) is now rife among all sectors in the region, added the report from MEED, a leading business intelligence provider.
Organizations are on board to make structural changes through the usage of advanced and innovative technology. But while many of the innovations that promise to shape the region in the coming years are still new, and sometimes experimental, others are widely known, even if not yet in common use.
MEED looks at 10 technologies set to transform the Middle East over the next decade.
Grid-scale batteries to enable energy diversification
Global investment in high-capacity batteries is transforming the market for renewable energy. The large-scale adoption of alternative energy has long been hampered by the unreliable, inflexible nature of its major sources, the wind and sun. The problems caused by intermittent energy production can only be solved by developing effective storage solutions; batteries that can store energy at peak production times for later deployment.
A significant drop in the prices of lithium and vanadium – essential battery components – in addition to improvements in battery efficiency, are enabling large scale adoption of energy storage facilities.
Abu Dhabi’s recent launch of the region’s first Grid-Scale Battery Deployment and the world’s largest Virtual Battery Plant is indicative of the region’s commitment to diversifying its energy supply.
Digital payment – fintech
The initial caution of governments in GCC to digital payments and financial technology (fintech) is beginning to abate and the first online payments were made across the region in 2018, following a series successful trials of the technology that persuaded authorities to relax regulation. With limited access to banking facilities, an estimated 86 per cent of adults in the region (Reuters) do not have a bank account. This, coupled with an increase in the mobile phone capabilities makes the Mena market a real opportunity for fintech investment. Research company Mena Research Partners estimated the fintech market in the Mena region to be worth $2 billion in 2018 and it is expected to reach $2.5 billion by 2022.
Smart’ everything
There is a growing realisation that complex systems such as oil fields, electricity grids, building sites and entire cities can be managed more effectively if siloed data can be combined on a single platform. New remote sensor technology can provide critical real-time data, allowing managers to make quick, informed decisions and increasingly intelligent software is being developed to automate complex processes. Internet of Things (IoT), which is a convergence of technologies such as remote sensors, machine learning and real-time analytics, is central to the development of these smart, digital ecosystems.
Autonomous vehicles
The GCC has been a global frontrunner in the uptake of autonomous driving, with UAE leading the way. The Dubai Future Foundation in partnership with Dubai Roads and Transport Authority (RTA) launched the Dubai Autonomous Transportation Strategy which aims to make 25 per cent of Dubai transportation autonomous by 2030, saving $6 billion annually. The RTA is currently conducting tests to decide the winners of the Dubai World Challenge for Self-Driving Transport, which are focused on the provision of first/last Mile transportation.
5G supporting the new digital ecosystem
In May this year, Emirates Telecommunication Company, Etisalat, launched the region’s first 5G enabled smartphones. The new 5G networks transfer data 20 times faster than 4G, have a bigger capacity, are more reliable. This vital development is needed to support the emerging ecosystem of digital technologies including IoT, smart cities, cloud computing and autonomous vehicles. According to Globaldata, the number of mobile network subscriptions in the Mena region is expected to be 15.8 million by 2023.
Hydrogen fuel
Shift away from traditional fuel sources to free up crude oil for higher value products and export sees an increase in demand for alternative energy sources. One of the most promising alternative fuels is hydrogen, which can be produced using solar photovoltaic technology. This will be showcased at Expo 2020 by the use of fuel-cell vehicles that run on hydrogen generated at a solar-driven hydrogen electrolysis facility at Mohammed bin Rashid Solar Park.
Using AI to make the most of VR and AR
Initially gaining popularity through the gaming industry, augmented and virtual reality (AR and VR) are increasingly being used for training, marketing and problem-solving. VR systems can have powerful applications when combined with artificial intelligence (AI). For example, it could be possible to develop a microscope that can highlight cancerous cells or the dashboard of a vehicle that can detect hazards and alert the driver using signals on the dashboard.
Electrification of transport
Electric Vehicles (EVs) potentially are among the most transformative of all emerging technologies, delivering a change as significant as the move from horse-drawn carts and internal combustion engines in the early 2oth century. While electric milk floats and golf buggies have been widely used since the middle of the 20th century, huge leaps forward in battery capacity and materials technology have brought EVs to the edge of becoming mainstream modes of transport.
Their benefits in terms of reducing carbon emissions and energy conservation could be huge. Technical challenges ranging from development of electricity charging infrastructure through to battery capacity and safety capabilities remain to be overcome however before EVs they will become our primary mode of transport.
3D printing
By 2025, the global 3D printing market is expected account for an annual spend of over $20bn.The Middle East is recognising the potential of additive manufacturing, with Dubai leading the trend with its3D printing strategy, announced in April 2016, which set the ambitious target of all constructing 25 per cent of new buildings using additive manufacturing. The sectors that could see the most benefit from the technology are healthcare – for joints, teeth, medical and training equipment, aerospace, consumer manufacturing and construction.
Food security – Vertical farming and hydroponics
Increasing population, extreme climate conditions and political and economic instability are putting food security in the Middle East high on the political agenda. With the region importing over 50 per cent of its food, governments are looking to boost local production using soil-free methods of farming that are 70 per cent more water efficient than traditional methods and use fewer chemicals. New, vertical farming techniques that require less space can be adopted in urban areas to bring production closer to the consumers.
With these new technological trends disrupting the market, Meed has introduced the third edition of the MEED awards, assessing companies on their initiatives in becoming more technologically advanced. Powered by Parsons (strategic construction partner) and Acwa Power (official power & water partner) the MEED awards is due to close its submission deadlines by the end of this week. – TradeArabia News Service
There is a global standoff going on about who stores your data. At the close of June’s G20 summit in Japan, a number of developing countries refused to sign an international declaration on data flows – the so-called Osaka Track. Part of the reason why countries such as India, Indonesia and South Africa boycotted the declaration was because they had no opportunity to put their own interests about data into the document.
‘Digital colonialism’: why some countries want to take control of their people’s data from Big Tech
With 50 other signatories, the declaration still stands as a statement of future intent to negotiate further, but the boycott represents an ongoing struggle by some countries to assert their claim over the data generated by their own citizens.
Back in the dark ages of 2016, data was touted as the new oil. Although the metaphor was quickly debunked it’s still a helpful way to understand the global digital economy. Now, as international negotiations over data flows intensify, the oil comparison helps explain the economics of what’s called “data localisation” – the bid to keep citizens’ data within their own country.
Just as oil-producing nations pushed for oil refineries to add value to crude oil, so governments today want the world’s Big Tech companies to build data centres on their own soil. The cloud that powers much of the world’s tech industry is grounded in vast data centres located mainly around northern Europe and the US coasts. Yet, at the same time, US Big Tech companies are increasingly turning to markets in the global south for expansion as enormous numbers of young tech savvy populations come online.
Accusations of ‘digital imperialism’
Take, for example, the case of Facebook. While India is the country with the biggest amount of Facebook users, when you look at the location of Facebook’s 15 data centres, ten are in North America, four in Europe and one in Asia – in Singapore.
This disconnect between new sources of data and the location of data centres has led to accusations from countries such as India of “data colonisation” and “digital colonialism”.
The economic argument for countries in the global south to host more data centres is that it would boost digital industrialisation by creating competitive advantages for local cloud companies, and develop links to other parts of the local IT sector.
Many countries have flirted with regulations on what sort of data should be stored locally. Some cover only certain sectors such as health data in Australia. Others, such as South Korea, require the consent of the person associated with the data for it to be transmitted overseas. France continues to pursue its own data centre infrastructure, dubbed “le cloud souverain”, despite the closure of some of the businesses initially behind the idea. The most comprehensive laws are in China and Russia, which mandate localisation across multiple sectors for many kinds of personal data.
Countries such as India and Indonesia with their massive and growing online populations arguably have the most to gain economically from such regulations as they currently receive the least data infrastructure investment from the tech giants relative to the number of users.
The economics aren’t clear cut
Supporters of data localisation cite developing countries’ structural dependency on foreign-owned digital infrastructure and an unfair share of the industry’s economic benefits. They dream of using data localisation to force tech companies into becoming permanent entities on home soil to eventually increase the amount of taxes they can impose on them.
Detractors point to the high business costs of local servers, not just for the tech giants, but also for the very digital start ups that governments say they want to encourage. They say localisation regulations interfere with global innovation, are difficult to enforce, and ignore the technical requirements of data centres: proximity to the internet’s “backbone” of fibre optic cables, a stable supply of electricity, and low temperature air or water for cooling the giant servers.
Attempts to measure the economic impact of localisation are extremely partisan. The most cited study from 2014 uses an opaque methodology and was produced by the European Centre for International Political Economy, a free trade think-tank based in Brussels, some of whose funding comes from unknown multinational businesses. Not surprisingly, it finds gross losses for countries considering localisation. Yet, a 2018 study commissioned by Facebook found that its data centre spending in the US had created tens of thousands of jobs, supported renewable energy investments and contributed US$5.8 billion to US GDP in just six years.
Like the equivalent arguments for and against free trade, taking a dogmatic position for or against the issue masks other complexities on the ground. The economic costs and benefits depend on the type of data stored, whether it’s a duplicate or the only copy, the level of government support for wider infrastructure subsidies, to name just a few factors.
India has been the most vocal supporter for localisation, promoting its own regulation as “a template for the developing world”, but it’s in a strong position to do so given the country’s relatively advanced digital industrialisation and technical manpower. Other emerging economies with large online populations, such as Indonesia, have vacillated on their localisation regulations under pressure from the US government which has threatened to pull preferential trade terms for other goods and services if they went ahead with restrictive regulations.
What governments do with the data
While the international economics of personal data may follow some of the same general dynamics as oil production, data is fundamentally different from oil because it does a double duty – providing not just monetary value to businesses, but also surveillance opportunities for governments. Some civil society activists I’ve met as part of my research in India and Indonesia told me they were sceptical of their own governments’ narratives about data colonialism, worrying instead about the increased access to sensitive personal information that localisation gives to governments.
It’s not just large corporations and states that have roles to play in this bid for “data sovereignty”. Tech developers may yet find ways to support the rights of individuals to control their own personal data with platforms such as databox, which gives each of us something akin to our own personal servers. These technologies are still in development, but projects are springing up – mostly around Europe – that not only give people greater control over their personal data, but aim to produce social value rather than profit. Such experiments may yet find a place in the developing world alongside what states and large corporations are doing.
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 $42 million for Egypt’s Swvl, a transportation app.
There is still a disconnect, however, between the growing demand for funds at all levels and the capital currently available to satisfy it, industry insiders say. Money is expected to keep pouring in, as an increasing number of international institutions enter the region. Big names like Endeavor Catalyst (US), Vostok New Ventures (Sweden), MSA Capital (China), Global Founders Capital (Germany) and Kingsway Capital (UK) already make up a third of the Middle East’s investor list.
Aiming to attract even more foreign capital, countries including Bahrain, Saudi Arabia and the United Arab Emirates (UAE) have also started establishing funds of funds.
Company
Activity
Country
Funding ($ Mil.)
EPMG
Real Estate
UAE
100
Yellow Door Energy
Energy
UAE
65
Swvl
Transport
Egypt
42
AWOK
e-commerce
Jordan
30
Mawdoo3
e-commerce
Jordan
23.5
Jamalon
e-commerce
Jordan
10
Noon Academy
e-learning
Saudi Arabia
8.6
Sprii
e-commerce
UAE
8.5
JustClean
Services
Kuwait
8
yallacompare
Fintech
UAE
8
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.”
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