Vol­ume of Fin­Tech deals in Mena re­gion reaches new high

The National - News - - BUSINESS - Fa­reed Rah­man

More Fin­Tech deals have been agreed in the first nine months of 2019 than in any pre­vi­ous 12-month pe­riod, a new re­port from tech­nol­ogy plat­form Mag­nitt found.

So far this year, 51 Fin­Tech deals have been fi­nalised, ex­ceed­ing the 48 over the whole of last year, ac­cord­ing to Mag­nitt’s Mena Fin­Tech Ven­ture

2019 re­port. The UAE and Egypt ac­count for 74 per cent of the deals done this year.

How­ever, the value of deals done at $26 million (Dh95.4m) is 30 per cent lower year-on-year than in the first nine months of 2018, sug­gest­ing that more early stage com­pa­nies are be­ing backed. To­tal ven­ture deals in­volv­ing Fin­Techs for the whole of last year reached $42m last year, down from $109m in 2017.

“Fin­Tech has be­come some­what of a buzz­word in the re­gion. Ev­ery­where you go, Fin­Tech is the hot sub­ject – this wasn’t his­tor­i­cally the case,” Mag­nitt’s founder and chief ex­ec­u­tive Philip Ba­hoshy said in the re­port.

“As with any emerg­ing startup ecosys­tem, in­fra­struc­ture in­dus­tries are the first to get dis­rupted. The Mid­dle East and North Africa re­gion is no dif­fer­ent, as tech­nol­ogy al­lows for ef­fi­ciency in what have his­tor­i­cally been in­ef­fi­cient sec­tors.”

The key driv­ers for the growth of the Fin­Tech in­dus­try in the

Mena re­gion in­clude con­sumer de­mo­graph­ics, with a pop­u­la­tion of more than 300 million, wide­spread smart­phone and money trans­fer use, con­sumer at­ti­tudes and in­no­va­tion-friendly reg­u­la­tors of­fer­ing sand­boxes.

The re­port pointed to wide­spread gov­ern­ment sup­port for the sec­tor, with five funds to­talling $1.4 bil­lion and sev­eral gov­ern­ment-backed ac­cel­er­a­tor pro­grammes on of­fer to start-ups. There is also plenty of private sec­tor com­pe­ti­tion, with the num­ber of in­vestors fund­ing re­gional Fin­Techs ris­ing to 163 so far this year, up from 70 in 2015.

A to­tal of $237m has been in­vested in 181 Mena Fin­Techs since 2015, with 2017 be­ing the peak year for fund­ing due to sev­eral large-scale in­vest­ments in­clud­ing $30m for Net­work In­ter­na­tional, $20m for PayTabs and $10m for Souqal­mal, the re­port said.

In 2018, Fin­Tech over­took more tra­di­tion­ally in­vested in­dus­tries, such as e-com­merce and trans­port, to be­come the most pop­u­lar sec­tor by num­ber of deals.

“In 2018 and 2019, [the] UAE is Mena’s largest Fin­Tech hub ac­count­ing for the high­est amount of fund­ing in the field,” said Ahmed Al Sayegh, UAE min­is­ter of state and ex­ec­u­tive chair­man of Abu Dhabi Global Market, at Fin­Tech Abu Dhabi yes­ter­day.

ADGM was the first fi­nan­cial free zone to launch a dig­i­tal bank­ing frame­work in the re­gion and to in­tro­duce one of the world’s first com­pre­hen­sive reg­u­la­tory frame­works for crypto as­sets, dig­i­tal se­cu­ri­ties and pay­ments, he said.

“To­day we are open­ing ADGM dig­i­tal sand­box, a cloud-based en­vi­ron­ment for Fin­Tech, banks and oth­ers to co-cre­ate and test prod­ucts with reg­u­la­tors’ guid­ance to de­liver bet­ter ser­vices for clients.”

The dig­i­tal plat­form will re­place ADGM’s cur­rent RegLab pro­gramme, which has been run­ning for three years, he added.

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