MENA Fintech: A Golden Rush in the Making!!

The Middle East and North Africa (MENA) region has witnessed a surge in fintech investments in recent years, indicating the region’s growing thirst for innovative financial solutions. The MENA area is becoming a more attractive destination for investors and startups alike as the global financial industry continues to develop.

Fintech, stands for “financial technology” which refers to innovative technology that aims to enhance and automate the delivery of financial services. Fintech is primarily used to help organizations, entrepreneurs, and customers manage their financial operations, procedures and lives more effectively. It is composed of specialized software and algorithms that are used on computers and smartphones. When fintech emerged in the 21st century, it was a term used to describe the technology found in the backend systems of reputable financial organizations, such as banks. There was a movement toward consumer-oriented services between 2018 and 2022. Nowadays, fintech encompasses a wide range of industries and companies, such as retail banking, investment management, education, fundraising for nonprofits, and fundraising.

Fintech services in the Mena region are an essential sector within the financial industry. Globally, there are already 3.8 billion users of digital payment services; by 2025, the number is expected to rise to nearly five billion.

Saudi Arabia, the UAE, and Egypt keep playing a dominant role in leading Fintech growth in the MENA region, due to their strong infrastructures, supportive regulatory frameworks and thriving start-up ecosystems, making them attractive destinations for fintech investment and entrepreneurship.

In the Middle East and North Africa, digital payments were the most widely utilized direct banking service. Younger and tech-savvy banking customers in the region have been particularly strong users of fintech due to rising smartphone usage and internet penetration over the past several years.

COVID-19 has also brought to the MENA region a change in the character of labor and education which has made people more dependent on Internet connectivity and forced local and regional market players to prioritize the digital economy.

Fintech firms in the MENA region raised $1.02 billion in funding across 201 deals in 2022, according to the 2023 MENA Fintech Venture report released by MAGNiTT, a top data platform for emerging venture markets. This number indicates a 37% increase from the previous 

year, demonstrating the fintech sector’s strong growth in the area. 

The United Arab Emirates (UAE) has been at the forefront of this fintech boom, accounting for 55% of the total fintech funding in the MENA region in 2022. A strong fintech ecosystem has been fostered by the nation’s strategic projects, such as the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC).

An important participant in the MENA fintech landscape, Saudi Arabia, has also witnessed a notable uptick in investment activity. In 2022, the kingdom attracted $304 million in fintech funding, a 54% increase from the previous year. This rise can be attributed to the government’s efforts to diversify the economy and promote the digital transformation of the financial sector.

Recent years have seen a notable rise in Egypt’s fintech industry, driven by significant investments. In 2022, a significant milestone was reached as fintech  firms raised a total of $796.5 million in investment. Comparing this to previous years, there has been a noticeable increase, highlighting the rising investor confidence in the Egyptian fintech scene.

Significant statistics for MENA FinTech investments in Q1–Q3 2023:

• The United Arab Emirates (UAE) was the most active fintech country in the MENA

 region, accounting for 51% of deals.

• Fintech companies in the region raised $428 million in Q1-Q3 2023, a 75% decrease from the same period in 2022.

• Fintech deal activity in the MENA region reached 89 deals in Q1-Q3 2023, a 50% reduction from the same period last year.

The Middle East and North Africa (MENA) region experienced a 50% decrease in finTech activity from Q1-Q3 2023, with 89 transactions, similar to Europe’s 56% decrease. FinTech companies in the region secured $428 million  in funding in Q1-2023.

Egyptian digital lender MNT-Halan secured the largest fintech deal in the MENA region with a $200m private equity round led by Chimera Investment, bringing it to unicorn status with a post-money valuation above $1billion. The company plans to expand internationally.

The fintech industry is positioned to significantly contribute to financial inclusion, better access to financial services, and economic growth as the MENA region continues to embrace digital change. The sustained investment activity in the region suggests that the fintech industry in the MENA is on a trajectory of continued expansion and innovation.