Fintech
The rise of the fintech hawk in MENA
I recently made a couple of interesting visits to the Middle East and Africa, particularly Riyadh and Cairo. Both are keen to highlight advances in fintech, which is interesting as they are two cities that have been on my radar but a little behind others like Dubai and Lagos. So, I was interested in what would happen and was not surprised that both are developing rapidly.
Saudi Arabia has been particularly active. Since His Eminence Salman bin Abdulaziz Al Saud became king in 2015, rapid changes have occurred in the Kingdom. Women can drive, people can go to the movies, and a huge new city is being built on the north coast called Neom. Launched by Crown Prince Bin Salman in 2017, the city will house 26,500 square kilometers of the smartest technologies ever deployed in new construction.
There is also the Line, a two trillion dollar project to build a new city.
The Line is one of Neom’s first developments, and is a linear smart city already under construction in Tabuk province. The line is designed to have no cars, roads or carbon emissions.
The line, expected to be 170 kilometers (110 miles) long, is just one of nine announced regions of Neom and it is part of the Saudi Vision 2030 project, which aims to create 460,000 jobs and add $48 billion to the country’s GDP.
I was aware of these things and was fascinated to see how fintech has grown in the country since I last visited. Fintech wasn’t really mentioned back then. It was about rules, regulations and relationships between central banks and commercial banks. Today it’s all about fintech.
This is recognized in a new report published by Arthur D. Small. In the report, titled “Realizing Potential of Fintech in Kingdom of Saudi Arabia,” the consultancy highlights rapid growth and innovation in the sector, driven by initiatives such as Fintech Saudi. Fintech Saudi was launched in April 2018 by the Central Bank of Saudi Arabia, also known as SAMA, and the Saudi Capital Markets Authority, and has already seen over $1 billion invested in local fintech companies.
It’s worth reading.
Similarly, the Central Bank of Egypt has promoted fintech by creating a platform: fintech Egypt. Recently they too published a report, While analyzing developments in the region, a key part of the report came to mind.
The report revealed that Egyptian fintech investments reached a milestone in 2022, with a total of $796.5 million invested, including $437.7 million of private equity investments and another $358.8 million of venture capital investments. This represents an increased multiple of 28.7x over the last 3 years.
Currently, there are 177 fintech and fintech-enabled startups and payment service providers (PSPs) offering innovative solutions in the Egyptian market. Of these, 139 startups provide pure FinTech solutions, while 38 provide technology solutions, along with integrated finance.
To put this in perspective, in 2014 there were only two fintech startups in Egypt, which rose to 112 in 2021.
Both Saudi Arabia and Egypt are rapidly growing as fintech hubs, as are other countries. Indeed, I can create a thriving alliance of fintech centers in the MENA (Middle East and North Africa) region, from Riyadh to Dubai, to Cairo, to Nairobi, to Cape Town, to Lagos. In other words, we could see the day when these financial centers work together to provide a global innovation platform for the MENA region.
That would be a good thing.
This is something explored by FT Partners, a serial investor in fintech startups, which has just produced a truly extraordinary account (218 pages) on the fintech landscape in Africa as a whole. Their conclusion.
In the meantime, you can download all three reports using the links embedded above.