Fintech and Tech Talent: Migration and Remittances in The Middle East and Africa Region by Richie Santosdiaz for The FinTech Times
Asia Fintech Middle East & Africa Weekend read

Fintech and Tech Talent: Migration and Remittances in The Middle East and Africa Region

The Middle East and Africa (MEA) region is home to some of the world’s richest countries in the world, as well much of the world’s poorest. Talent in highly skilled and knowledge-based industries, such as fintech, wider tech and digital, remains a challenge for MEA, which has experienced its fair share of brain drain, migration and remittances. 

The MEA region is generally young and educated. It has been both a source and recipient of talent looking for greener pastures (a combination of factors ranging from economic, unemployment or political). Many have immigrated to other parts of more established economies – in particular in the Gulf Cooperation Council (GCC) region countries of Saudi Arabia, Bahrain, United Arab Emirates (UAE), Kuwait, Qatar and Oman, as well as in Israel.

The economic development of the GCC in the previous century, much in part to its discovery of oil and gas, has attracted talent and all skillsets from across the world – both blue-collar work as well as highly-professionally skilled roles, such as in tech and fintech.

For instance, 80 per cent of the UAE population is comprised of expatriates. In other words, only 20 per cent are local Emirati. In addition, Israel has quickly become a leader in tech and other highly-skilled industries, earning its nickname as the Startup Nation.

The Middle East and Africa region is both a source and recipient of overseas workers from across the world
The Middle East and Africa region is both a source and recipient of overseas workers from across the world  SOURCE: GETTY

Many migrant workers come from various parts of the world, such as South Asia, South East Asia, Latin America, parts of Eastern Europe, as well as much of MEA. In the GCC region, many migrant workers who live and work there come from South Asia, such as India, Pakistan and Bangladesh; South East Asia, in particular the Philippines and Indonesia; and many parts of Africa – both from lower-income African countries to even those in the middle-income bracket, such as Egypt.

Remittances are important for the countries that receive them, as they play a large part in the country’s gross domestic product (GDP). India, the world’s largest recipient of remittances and one of the largest communities living abroad at nearly 16 million, according to the United Nations (UN) Department of Economic and Social Affairs, received $80billion in 2018 from remittances. There were more than 30 million non-resident Indians (NRIs) and persons of Indian origin (PIOs) residing outside of India the same year.

Another top source of migrant workers is the Philippines, which in 2019 sent remittances back totalling more than $30billion – approximately 8.5 per cent of the country’s GDP. They are even referred to in the Philippines as ‘overseas Filipino workers’ – or the acronym OFW.

An example of a MEA country that relies heavily on remittances is Egypt and its 100 million population. Despite overall being relatively more affluent than much of Africa, many Egyptians do go overseas. In 2019, Egypt received more than $26billion in remittances – many Egyptian workers go the GCC, as well as Jordan – to name a few.

The money from workers from countries, such as India, the Philippines and Egypt (all three have significant populations in MEA, mainly in the GCC), has allowed many families back in their home countries to help pay for an array of necessities – from education tuition fees to food to even buying their own house or setting up their own business.

It is worth noting that even those wealthy countries in MEA that attract talent from across the world immigrate as well. For instance, the Leaving the Promised Land — A look at Israel’s Emigration Challenge, report, released by the Shoresh Institution for Socioeconomic Research, revealed that for every Israeli with an academic degree who returned to the country in 2014, 2.6 Israeli academics emigrated (in 2017 that figure went up to 4.5). The Startup Nation has often seen much of that talent and innovation go to the United States, in particular.

A challenge with many blue-collar migrant workers with respect to financial services is that many of them are unbanked (both in their current country of residence and their country of origin) and often have to send money back home regularly to support their families. Going abroad in the first place to support their families is almost always the main reason for lower-skilled migrants workers.

As millions of migrants workers are often reliant on traditional money exchanges houses, especially in a pre-Covid world, digital disruption of the remittances industry showcases a strong example of where fintech can help. Even for those who are expatriates and not in the blue-collar worker category, transferring one’s hard-earned money via banks has been historically expensive.

In terms of remittances and fintech, it is clear that it is growing in the MEA region. For instance, it is important to note that 85 per cent of the fintech firms in Middle East and North Africa (MENA) region operate in the payments, transfer and remittances sectors. In the UAE, expatriates form the majority of the population – coupled with being home to Dubai and Abu Dhabi hubs, known for their growing fintech and wider tech ecosystems.

Another example is Kenya – both as a source of immigrants but also attracting talent due to its growing fintech and tech ecosystem. Notably Nairobi, the capital and largest city of Kenya, is also the hub for East Africa. Nairobi, as well as Johannesburg and Cape Town of South Africa and Lagos in Nigeria, in addition to Cairo in Egypt, Kampala in Rwanda and Accra in Ghana, are often referenced and known as key fintech hubs in Africa. With Kenya, their fintech strengths lie in payments, remittances, bank and lending technologies. Nevertheless, mobile money and lending platforms dominate Kenya’s fintech industry both in terms of subscription numbers and financial performance.

Nevertheless, this heavy migration – both leaving and also receiving – showcases the uniqueness of MEA in respect to mainly remittances. Fintech technology has been aided to help both the working class and more affluent professionals can be felt across MEA – particularly with the former.

Finally, with 2020, it is projected that hundreds of thousands of expatriates in GCC countries have left due to Covid-19 – some estimate that up to 10 per cent of expats have left. Countries, such as the United States, which from 20 March to 20 April 2020 at the start of the Covid-19 lockdowns, saw its unemployment skyrocket from 4.4 per cent to 14.7 per cent. Therefore, most countries – whether rich or poor – have not been immune to the effects of the coronavirus.

A recent World Bank’s Migration and Development Brief has revealed that, due to the Covid-19 pandemic cascading down across the global economy, the amount of money migrant workers plan to send home is projected to decline 14 per cent this year compared to the pre-coronavirus levels in 2019. All regions globally will be affected, but with respect to MEA, those declines in 2020 and 2021 will be MENA (eight per cent and eight per cent) and Sub-Saharan Africa (nine per cent and six per cent).

Nevertheless, as prior to Covid-19, fintech solutions in remittances will play a large role. This will help current and potential customers find an effective and cost-saving way of getting their hard-earned money back to their families in their home countries. This has been evident with a growing number of companies from MEA that offer these solutions, such as the UAE’s RISE and Qatar’s C Wallet and Kenya’s M-Pesa.

Despite 2020’s surging global unemployment, salary cuts and uncertainly as a whole due to Covid-19, MEA – home to some of the world’s largest percentage per population of expats and also a source of immigrant workers – plays a unique front with remittances and will help continue to do so. In parallel, finding innovative and digital solutions will also carry on.


  • Executive Economic Development Advisor (Emerging Markets) | Contributor

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