Feature Stories Fintech Ecosystems Middle East & Africa

Fintech Hubs In The Middle East and Africa

What are key fintech hubs of a region that nearly one in four people call home? The region in question is of course the Middle East and Africa (MEA).

For a region that is home to nearly 70 countries, MEA’s diversity offers a range of social, economic, and cultural backgrounds that are home to some of the richest and poorest countries in the world. As a result, when ranking these hubs, you must consider wider economic development indicators. Namely, ones pertaining to tech and wider digital, as well as those that relate to fintech.

Through understanding that, you can categorise fintech hubs by country across MEA through the following tiers:

  • Tier-one – Premier Global Fintech Hubs
  • Tier-two – Emerging Fintech Hub
  • Tier-three – Early-Stage Fintech Hub

The following from The Fintech Times highlights twenty-three MEA countries according to a tier-three category per fintech hubs IMAGE AND SOURCE: Richie Santosdiaz and The Fintech Times

What are tier-one premier global fintech hubs in MEA?
Israel and the UAE

Israel and the UAE share similarities that would consider them to be tier-one fintech hubs:

  • Strongly developed economies – both are developed economies with a high standard of living. In turn, this has attracted talent from across the world.
  • Home to major commercial, financia
  • l and tech hubs – the two countries host respective hubs in other sectors. In particular, those related to fintech such as financial and tech, with Tel Aviv in Israel being a hotbed for innovation (in addition to other parts of the country) and UAE home to both Dubai and Abu Dhabi.
  • Entrepreneurial hub and business-friendly – this can be seen from the number of fintechs and tech companies they have. The UAE has over half of the fintechs from the Middle East and Africa (MENA) region (minus Israel and Turkey). Israel alone outnumbers the rest of the MENA region. Additionally, it has also produced quite a few of the world’s unicorns just in fintech alone.
  • Innovation-friendly policies – both governments have prioritised innovation, with Israel being a major investor in R&D and the UAE envisaging a world of blockchain and the metaverse.
What are tier-two emerging fintech hubs in MEA?

Saudi Arabia and Turkey (Tier-Two – Higher Range), Bahrain, Qatar, Kuwait, Egypt, Oman, Nigeria, Mauritius, South Africa, Kenya, Jordan and Tunisia (Tier-Two – Middle Range), Lebanon and Ghana (Tier-Two – Lower-range)

The Tier-Two category – whether it be in the higher, middle or lower range, shares similar characteristics:

  • Large populations or small ones with an outward vision – Many on this list, such as the Big Four in Africa (Nigeria, South Africa, Kenya and Egypt), Turkey, Saudi Arabia have large populations. There are also the small ones such as Mauritius that, despite being small, have strong outward visions to be a regional hub. In many ways, it already has.
  • Government aspirations with fintech in mind and pro-business policies– Many on this list have seen fintech play a strong part in their economic development prosperity. They’ve witnessed what wider digital development can bring to their GDPs and overall quality of life. This has also seen them overall promoting business as a whole and fintech is playing a part of that – through foreign direct investment (FDI) attraction and boosting entrepreneurship to name a few. Some historically have been and still are financial or commercial hubs. Namely, Bahrain, Kuwait and Lebanon, as well as Turkey and South Africa.
What are tier-three early-stage fintech hubs in MEA?  

The remaining countries in MEA not mentioned would be considered to be tier three fintech hubs. This is divided into two subcategories:

Morocco, Rwanda, Senegal, Uganda (Higher-level ‘Markets to Watch’) and the rest of MEA (general tier-three – examples include Ethiopia and Tanzania)

Tier three nations share similar traits:

  • Lack of fintech-specific and financial services derivatives or infant – Some of those on the list have fintech-specific derivatives or aspirations and/or financial services, whereby the government aims to support the growth of those sectors and create the ecosystem. However, these sectors are still very much in their infancy not just in comparison to the world but also amongst their other higher-ranked MEA peers. For instance, many in this category still lack some specific strategic government vision and implementation of it to take the sectors in overdrive, such as with Ethiopia and Tanzania.
  • Middle or lower middle income or low income economies –their economic development of course has an impact on their infrastructure and current situation that shows a lack of technology nor accessibility that either limits innovations in fintech or makes it completely inaccessible to begin with, which many on this fintech categorise can relate with each other.
  • Aspirational with future economy – There are aspirations, despite having various challenges, that are seeing the countries in the long-term to convert their income status, whereby they can alleviate poverty but use tech and digital to help do so. On a final note, the ‘Markets to Watch’, such as with Rwanda in particular, will, should their growth trajectory continue, to see them as Tier-Two fintech hubs in the foreseeable future.

To read more check The Fintech Times – Fintech: Middle East and Africa Report 2022.

Author

  • Executive Economic Development Advisor (Emerging Markets) | Contributor

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