Spanning three continents and 21 countries, the Middle East is one of the world’s most heterogeneous regions with a population of 600 million. The economically, politically, and culturally diverse region of the Middle East (ME), is associated with North Africa (NA) to form MENA, and in the Fintech landscape, MENA is a rising star.
Unlike mature markets such as the US and Europe, the MENA region offers immense scope. More than 60% of the MENA demographics are under the age of 30, and more than 50% of MENA’s population are using digital wallets that signify their tech-savviness. In fact, the Fintech venture capital scene is shockingly booming in the MENA region with a rise of $819M in the first half of 2022 (i.e. 2x the previous record).
MENA Fintech landscape on the brink of rapid expansion
Fintech startups, brand-new funding, and increasing support for both old and new businesses have all expanded in the Middle East. Statista projects that the number of fintech businesses in the area will rise from 30 in 2017 to 465 this year. Wamda said that companies in the Middle East and North Africa raised $176 million in May of this year across 42 deals, a 62.7 percent increase over the same month last year. Egypt raised $81 million, a 135 percent increase. Additionally, thanks to HyperPay’s $36.7 million round, which was led by Mastercard, Saudi Arabia received $46 million across nine agreements. UAE-based businesses came in second with $45 million across eight deals.
Trading tips for the MENA traders
There is still a long way to go for greater trade integration, even if the MENA region has made major reforms to boost trade and investment, including cutting tariffs, increasing infrastructure, preserving minority interests, and institutional investment reforms. For the MENA region:
- Invest extensively in logistics and infrastructure related to trade.
- Increase regional trade by trade facilitation
- Invest in expanding the hype of digital trade.
- Utilize GCC nations as catalysts for economic unification
- In new trade and investment agreements, take into account the change in trading partners.
- To assist the expansion and diversity of the private sector, and improve the legal and institutional framework.
- Undergo a digital transformation to boost trade and investment across all industries, including government, banking, and the financial sector (Fintech), e-commerce, health, and agriculture (Agrytech);
- Make frequent, timely, comparable, and high-quality statistics available, harmonized, and disseminated, as these are necessary for implementing sound trade and investment policies.
Jumping on the top fintech trends in MENA
Since 2016, payment startups have led MENA fintech funding, raising around $1.9B. In addition, crypto, mortgages, and lending are following the numbers with about $0.4B. The Buy Now Pay Later (BNPL) model has become the strongest trend in the region with around $500M raised in the VC finding. The payment solutions for merchants and SMBs and cross-border payments have also become vital to the financial ecosystem in the MENA region. What’s more interesting? The MENA region is catching up in terms of open banking regulation, and the open banking system has also become a key enabler for the growth of the fintech MENA biosphere.