August 23, 2021United Arab Emirates
United Arab Emirates Fintech ecosystem
Located in the MENA region, The United Arab Emirates is characterized by being one of the most important economies in the region. It is actually the fourth largest in the Middle East (after Turkey, Saudi Arabia and Iran) and the country heavily relies from petroleum and natural gas, as well as Dubai (tourism). Also, although, Covid-19 pandemic affected the UAE economy, causing a contraction of 5.8% in 2020, it is expected that in 2021 the economy will grow 2.5%. (Reuters, 2021).
Nevertheless, it is important to note that the top 1% of Emiratis constitute about 22.8% of total income in the UAE, while the bottom 50% of Emiratis make up only 5.8%. As for wealth, the top 1% of individuals in the UAE holds over 50% of the entire country’s wealth. (World inequality Database, 2020)
In terms of SME´s, they represent 94 per cent of the total number of companies operating in the country and provide jobs for more than 86 per cent of the private sector’s workforce. Just in Dubai, SME make almost 95 per cent of all companies. This employs over 42 per cent of the entire workforce and contributes almost 40 per cent to Dubai´s GDP.
Fintech in UAE
The United Arab Emirates have been growing strongly in the Fintech sector and since 2018 are home to almost 50% of all companies in the MENA region. It also highlights that the United Arab Emirates obtained 47% of the investment in financial technology of the entire region in 2019.
Future looks promising for the UAE, since it is estimated that by 2022, about 465 Fintech firms in the UAE will generate about $2 billion in investment capital funding in comparison to the $80 million in tinted investment capital raised in 2017. Moreover, subscription for mobile broadband and mobile cellular telephony has increased to approximately 243% and 211%, respectively. Also, around 91% of the country’s population is internet users, facilitating full adoption of Fintech. (Finextra, 2021)
The main Fintech sector in UAE is payments; in fact the Mena region is considered the hub for tech-related payments. In terms of Lending Fintech, Beehive has become one of the biggest hits in the Mena region. Beehive directly connects smart investors and creditworthy companies to build mutually beneficial partnerships for growth. Beehive is also MENA’s first regulated online marketplace for peer-to-peer lending. (Fintech news, 2021)
It is observed that there are many opportunities for UAE to continue consolidating in the Fintech world, not only at the regional level, but also at the global level. Government support in supporting this new industry will be essential for development. For now, Fintech companies should focus on serving as many people as possible, taking advantage of the favorable conditions that exist.
