Throughout 2023, a variety of different themes emerged from the Middle East and Africa (MEA) region. From government involvement, to new partnerships and collaborations, to the adoption of new technologies; the region has seen it all. In light of this, what can we expect from fintech in MEA in 2024?
MEA following global fintech trends
Despite the explosion of fintech growth across the world, the current global economic challenges have hindered fintech’s development. Venture capital (VC) funding has been lighter due to the evolving regulatory landscapes. Specifically within the MEA region, VC funding declined by 13 per cent in 2023.
Nonetheless, emerging trends seen globally have been mirrored in MEA. This includes an increased usage of artificial intelligence (AI) and machine learning, further advancements in open banking and open finance, digital currencies and virtual assets, and cybersecurity.
Looking specifically at open banking, 2024 will see more news on this front. Notably, in countries like Saudi Arabia, Bahrain and the United Arab Emirates (UAE). In 2023, Saudi Arabia announced its Open Banking Lab by the Saudi Central Bank (SAMA), not even a year after SAMA launched its Open Banking Framework.
MEA has historically been dominated by payments, money transfers and remittances. However, due to a growing interest in diversification, the fintech sector is bound to change in the coming year.
Both from fintech and non-fintech standpoints, superapps will continue to grow globally in 2024. MEA is already home to some prominent superapps. For example, MPesa from Kenya has brought financial inclusion to much of the African continent, especially with mobile money. This will see future non-fintech apps get into fintech or fintechs further expanding – giving its superapp growth.
Other notable superapps in the MEA region include JumiaPay in Nigeria, Safeboda in Uganda and Halan in Egypt. In the Gulf, they include the UAE’s Careem, Talabat from Kuwait and Noon.com from Riyadh, Saudi Arabia and Dubai, UAE.
Other trends impacting fintech include environmental, social and governance (ESG) and wider sustainability. A spotlight for the MEA region was the UAE as it hosted the United Nations Climate Change Conference COP28. There, sustainable finance was a main topic of discussion.
While the MEA region generally has followed key trends globally, it will also have its own unique aspects as well.
Further government led initiatives helping drive fintech
When looking at what is driving change in the region, you have to look at those in charge. From the rich oil-rich Arabian Gulf region to more middle and low-middle income economies, many across MEA have been implementing their own national economic development and diversification strategies. As a result, many have looked towards fintech as a means of achieving their set goals. One example is Saudi Arabia launching its fintech strategy.
Other strategies include the Egypt Vision 2030, Qatar Vision 2030, Mauritius Vision 2050, Saudi Vision 2030. All have a strong focus on developing fintech.
In 2024, we will continue to see the region supporting ways that will boost the sector. For example, accelerator and incubator programs will promote fintech through the further facilitation of licenses. In turn, this will help invite more market-driven players to also be part of the ecosystem. Especially since, historically, much of the funding has come from VC investors outside the region.
Partnerships and collaboration will continue
In a region as diverse as Africa with 54 countries and the Arab World encompassing at least 20 nations, ongoing partnerships and collaborations are set to propel the growth of the sector well into 2024 and beyond.
The coming year, especially within economic blocs and free trade agreements, promises to yield substantial benefits for fintech, particularly in areas like cross-border payments. For instance, in the Gulf Cooperation Council (GCC) region within the Arab World, the Central Bank of the UAE (CBUAE) recently joined the AFAQ Payments System at the end of 2023.
This strategic step aims to enhance financial integration among GCC nations. AFAQ, overseen by the Gulf Payments Company (GPC) and collectively owned by GCC Central Banks, stands as a significant milestone in this direction.
Similarly, in Africa, the African Continental Free Trade Agreement (AfCFTA) has paved the way for the Pan-African Payment and Settlement System (PAPSS), anticipated to commence operations in early 2024. PAPSS’s objective is to facilitate instantaneous, cross-border payments in local currencies among AfCFTA member nations.
In essence, 2024 emerges as a compelling period for fintech advancements. Despite potential regional and global hurdles, it holds vast potential to bolster financial inclusion for marginalized populations and drive innovation across both developed and developing regions within the Middle East and Africa (MEA).
Image and article originally from thefintechtimes.com. Read the original article here.