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North Africa takes lion’s share as fintech and sustainability lead MENA startup scene

Startup owners attend a workshop organized by Nomow Incubator in Saudi Arabia. (Twitter)
  • Fintechs remain popular with investors mainly due to their scalability, rapid market growth and dependency of people on technology, says Theresa Doan of SEE Institute.
  • A total of $230 million in funds are focusing on MENA-based businesses and an additional $60 million for female investors in Africa, a report highlights

Dubai, UAE—Fintech and sustainability have led the Middle East and Africa startup scene in 2022, although the Middle East would need to ramp up the efforts to catch up with Africa which accounted for the bulk of investments.

A total of 275 investments have been made in fintech startups until now this year, a 16 percent increase compared to 2021. In the Middle East- Africa-Pakistan-Turkey (MEAPT) region, the growth was higher at 18 percent, according to the startup data platform MAGNiTT.

Philip Bahoshy, MAGNiTT CEO, says fintech is, by far, the leading industry in 2022 that is ahead both in terms of the number of deals and the total amount of capital raised.

Theresa Doan, Business Incubation Manager at SEE Institute, told TRENDS that fintechs remain popular with investors mainly due to their scalability, rapid market growth, dependency of people on technology, high-profit rate, low maintenance cost, low risk and high return on investment.

Doan said, “To be specific, fintech has a firm hold on the attention of most investors, especially where coin base, cryptocurrencies and digital assets are embedded in the solution.”

A total of $230 million in funds are focusing on MENA-based businesses and an additional $60m for female investors in Africa, according to a report released by “Digital Digest.”

In September, investors put $176 million into 33 startups in the MENA countries. This is 7.5 times the money invested in September 2020 and nearly half as much as in September 2021 (a globally great year). Forbes reported last year that there were at least 2,800 FinTech startups in the Middle East and Africa.

Read here: Fintech fuels MENA startup scene

The momentum has led Dubai to announce that it will be organizing the Dubai Fintech Summit in May 2023. More than 5,000 experts are expected to participate.

Also Read: Dubai sets up $100m fund to support fintech startups and Saudi fintech cashes in on startups, investments.

Yet, the MENA region needs to work hard to expand its fintech investments since the African region accounted for 60 percent of the total funding raised across the MEAPT region, according to a MAGNiTT report.

Sustainability gains

Since 2021, investors have been increasingly interested in environmentally-responsible companies and ventures.

The exponential growth of Sustainable Development Goals (SDGs), Environmental, Social, and Governance (ESG) and the Circular Economy may be contributing factors.

These developments may have been influenced by external factors such as those discussed at COP26, where government commitments and the increasing skepticism of financial investment institutions were also discussed.

Sumaya Algabbass, a Business Incubator Specialist at Nomow Business Incubator, told TRENDS several factors drive the trends in sustainable business investments and perceptions of these can vary widely.

“We focus on building and re-inventing smart city infrastructure because we believe it is essential in achieving our goal to contribute to the Hajj &Umrah ecosystem. That is why Nomow has a wide open eye on projects playing within this domain,” she said.

Algabbass considers that global events pushed governments to re-evaluate the entrepreneurial system and, naturally, the startup investment scene.