The global fintech industry is estimated to be worth at least $300billion, making significant strides in MEA and contributing to financial inclusion for both unserved and underserved individuals and small and medium enterprises (SMEs).
Sub-Saharan Africa (SSA) sees fintech contributing $150billion to its gross domestic product (GDP), while Israel’s fintech sector contributes around 11 per cent to its GDP. In Türkiye, the industry is valued at least $15billion, growing annually by approximately 14 per cent. Similarly, the Arab World’s fintech sector is estimated to be worth at least $15billion.
Despite challenges facing the global economy, which are felt across MEA, the fintech sector continues to play a crucial role in the region’s economic growth and development. While global venture capital (VC) funding has seen a downturn, fintech remains one of the most funded sectors in MEA, with countries like Saudi Arabia (which impressively last year raised almost $1billion for the first time ever) and Francophone African nations experiencing positive growth patterns in fundraising.
Islamic fintech
MEA also dominates in Islamic fintech markets, with Saudi Arabia, Iran, UAE, Kuwait, Malaysia, and Indonesia emerging as the top six markets by transaction value and assets under management, accounting for 85 per cent of the global market.
MEA’s ecosystems are also conducive to Islamic fintech, with countries like Malaysia, Saudi Arabia, Indonesia, UAE and the UK listed as the top five in the Global Islamic Fintech (GIFT) Report 2023/24. It even saw Oman make it to the top 10 list for the first time as well. The global Islamic fintech market is forecasted to reach $306billion in transaction volumes by 2027, an increase from $138billion in 2022/23, according to the Global Islamic Fintech (GIFT) Report 2023/24.
Success stories
MEA has seen a positive spotlight in unicorn creation, with Türkiye and the UAE producing notable fintech unicorns like Papara and Tabby, respectively. Saudi Arabia and Egypt have also added to the unicorn count with companies like Tamara and MTN Halan, showcasing a growing ecosystem supported by government initiatives and organic growth.
What often goes unnoticed is MEA’s growing influence in the global fintech landscape, despite not reaching the same scale as European or American solutions. Historical successes, such as the widespread adoption of mobile money through platforms like M-Pesa, have transcended beyond East Africa to become popular not only in Africa but also in regions like Southeast Asia.
More recent examples include South Africa’s TymeBank, which operates beyond MEA, extending its services to countries like the Philippines. Additionally, the wealthy Gulf Cooperation Council (GCC) nations, as highlighted in the previous chapter, are expanding their investments and portfolio activities beyond MEA, contributing to the region’s growing presence in fintech. Financial institutions in regions like the GCC, where markets are becoming saturated, are also exploring opportunities beyond their borders or are in the process of doing so.
According to our research, nearly two-thirds of fintech solutions in MEA, totalling over 3,700, fall into categories such as payments, money transfer, and remittances (comprising about a third of all fintech solutions), lending (constituting around 20 per cent of total fintech solutions), and wealthtech and investing (making up approximately 10 per cent of total fintech solutions).
Sources: Richie Santosdiaz and The Fintech Times
Diversity
This diversity indicates a shift in the MEA fintech landscape beyond just payments, which historically dominated the sector. At its peak, payments accounted for 85 per cent of all fintech solutions in the MENA region. It’s important to note that the +3,700 fintech solutions include both native-born MEA solutions and those from non-MEA countries that have expanded through foreign direct investment (FDI). Additionally, this count may include some double counting of companies operating in multiple countries within the region.
Unicorns in the Middle East and Africa 2024 – Sources: Richie Santosdiaz and The Fintech Times
Nevertheless, this explains the growing interest and expansion into other aspects and subsectors of fintech, such as open finance (particularly open banking) and embedded finance. Although embedded finance is still in its early stages in the MEA region compared to other parts of the world, there appears to be significant potential for its acceptance and adoption.
Sector growth
According to various sources, MEA’s embedded payment industry is projected to grow and exceed $5.8billion by 2022, with a compound annual growth rate (CAGR) of 26.7 per cent from 2022 to 2029. By 2029, revenues are expected to surpass $21billion.
Other topics and enablers, such as environmental, social, and governance (ESG) considerations, are also gaining traction in the wider financial services space in the region, albeit still in its infancy. Despite the burgeoning fintech activity and growth across various metrics, such as VC funding and the number of fintech companies, the geography of this activity tends to remain concentrated mainly in the affluent GCC countries, Israel, Türkiye, and the ‘Big Four’ of Africa – Nigeria, Kenya, Egypt and South Africa.
Key subsectors of fintech in MEA, as what was highlighted in The Fintech Times: Middle East and Africa 2024 Report, are: 1. Payments, money transfer and remittances, 2. Digital, challenger and neobanks, 3. Gametech, 4. Wealthtech and investing, 5. Regtech, 6. Digital currencies, 7. Open finance, 8. Lending, 9. Insurtech.
The rise of superapps
Superapps in the Middle East and Africa 2024 – Sources: Richie Santosdiaz and The Fintech Times
Many companies in MEA have expanded beyond their initial focus to become superapps, offering a range of services beyond traditional fintech offerings. The growth of superapps in MEA can be categorised into two main groups.
■ Traditional non-fintech or non-financial institutions: These companies originated outside the fintech space, often in industries such as telecommunications, transportation, or delivery. Examples include M-Pesa, owned by Safaricom and Vodafone, which started as a telecommunications company but expanded into fintech, and Safeboda in Uganda and Yassir in Algeria, which began as ride-hailing apps but evolved into superapps offering services like ecommerce, delivery, and payments.
■ Fintech companies that expanded their offering: Some fintech startups initially focused on specific areas like payments, money transfer, or remittances but later expanded their services or moved into entirely different sectors. For instance, Livbank, a digital lifestyle bank in the UAE, began incorporating gametech and other components in 2020 to diversify its offerings and appeal to a younger audience beyond its core banking services.
This is an excerpt from The Fintech Times: Middle East and Africa (MEA) 2024 Report.
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