FinTech helps DIFC outpace economic growth

The FinTech sector has emerged as a main contributor to the Dubai International Financial Centre’s growth and has helped it to outpace the emirate’s economic expansion over the past few years, the governor of the DIFC has said.

The DIFC, one of the top financial centres in the Middle East, Africa and South Asia region, has become a “major engine of growth” for Dubai’s economy and a significant contributor to its gross domestic product, Essa Kazim told delegates at the FinTech Summit in Dubai yesterday.

The DIFC has been expanding fivefold faster than the emirate’s average gross domestic product growth over the past 10 years, contributing about 6 per cent to its GDP, Mr Kazim said.

“A key growth driver over the past three years has been FinTech and innovation companies contributing over 27 per cent to the centre’s overall client growth.”

The sharp growth in the emirate’s FinTech industry is in line with Dubai’s D33 economic agenda, which aims to double the size of Dubai’s economy, with financial, trade and investment targets of Dh32 trillion ($8.71 trillion) over the next decade.

The overarching growth road map also aims to propel the emirate into the world’s top four financial centres.

Dubai’s economy expanded by 4.6 per cent on an annual basis in the first nine months of 2022, according the emirate’s statistics centre. Emirates NBD expects Dubai to grow by 3.5 per cent this year.

The DIFC’s growth hit a record last year, with the number of active registered companies climbing by 20 per cent while the financial centre’s annual revenue exceeded Dh1 billion for the first time. The number of active registered companies in the DIFC rose to 4,377, almost doubling from the 2019 pre-coronavirus level of 2,431.

New companies registered in DIFC last year surpassed 1,000 for the first time since its inception.

FinTech and innovation was the fastest-growing sector in the DIFC last year, with the number of companies in the sector increasing by 36 per cent to 686.

Mr Kazim attributed the fast growth of the FinTech industry to the “proactive approach taken by policymakers”.

With demand for digital payments and other FinTech services continuing to grow, DIFC FinTech and innovation companies raised more than $615 million in funding last year, Mr Kazim said.

The industry is expected to double in size to about $270 billion in 2027, from more than $135 billion in 2021, in the Middle East, Africa and South Asia region. Globally, digital payments are expected to grow to $8.26 trillion by 2024, from $4.4 trillion in 2020, according to Statista.