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MENA Seeing Rise In Startups By 24% in 2022

29 June 2023 Comments (0) Business

Startups are roaring in the Middle East and North Africa (MENA) region. Compared to 2021, a rise of 24 percent was seen in investment value. Fueled by rapid growth, the United Arab Emirates and Saudi Arabia are seeing a new group of well-heeled investors. 

Top three markets by region

The top three markets in the region that dominated the venture capital scenery were the United Arab Emirates, Saudi Arabia and Egypt. Having the most investments, UAE took the lead with a total amount of $1.85 billion across 250 deals (a rise of 5 percent in investment value) followed by Saudi Arabia with $907 million raised across 153 deals (a 40 percent rise in investment value).   Even though Egypt ranked third place with $736 million, they secured the second-highest number of new deals totaling 180 (a staggering 70 percent rise compared to 2021).

This rise in investments and deals was felt in nearby countries such as Algeria, Bahrain, Palestine, Oman, Iraq, Qatar, Yemen, Sudan and Tunisia.  On the contrary, Kuwait, Lebanon and Morocco saw a downward trend in terms of deal value.  The Jordanian startups dropped by 76 percent compared to 2021.

Value of investments by sector

Attracting $1.1 billion in investment, almost double compared to 2021, the fintech sector remains the favorite within the startup world in Mena.  A rise in funding was seen in top sub-sectors such as neobanks, crowdfunding, open banking, and corporate and personal lending.  Not to mention the cleantech sector is following closely behind with a whopping 101 percent rise from 2021, thanks to Yellow Door Energy’s $400 million rise in October 2022.  Bringing in $362 million in funding, logistics was the third-highest funded sector.

Quarterly investment activity fluctuated over the course of last year.  Quarter one recorded $1.04 billion which then dropped down to $997 million in quarter two.  Quarter three saw a severe decline with only $696 million raised and only to rise again to $1.21 billion in quarter four.  

Value of investment by gender, education and experience

Women-founded startups only made up 1.3 percent of the $3.94 billion raised last year whilst startups co-founded by both men and women performed far better, attracting $3.7 billion of the total amount raised. A hefty 94 percent of the total amount was raised.

The women-led startups that did raise investment were largely based within the UAE and Egypt.  They focused mainly on the healtech, edtech and e-commerce sectors.  

With regards to educational background, last year 1,186 co-founders successfully raised investment.  Between them were 694 first-time founders, 312 second-time founders, 124 third-time founders, 39 fourth-time founders and 17 fifth-time founders.  

Over half of the VC-backed founders have a bachelor’s degree as their highest educational level coming in at 53 percent whilst 34 percent have a master’s degree and 4 percent have a Ph.D. The more educated founders tend to be women, a third of them have a bachelor’s degree, 10 percent have a Ph.D. and 20 percent have a master’s in business administration (MBA).  The MENA region has certainly never been short on talented entrepreneurs.

Fadi Ghandour, founder of Aramex and executive chairman of Wamba stated “Saudi and UAE and Egypt are the three markets of size and significance of government and private and institutional support. That is where the entrepreneurs are coming and where they are trying to solve the digitization of bricks and mortar companies.”

Photos : .wamda.com – arabnews.com

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Kenya’s central banker urges firms to invest after surprise rate cut

20 March 2018 Comments (0) Actualites, Africa, Economy

NAIROBI (Reuters) – Kenya’s central bank hopes its surprise interest rate cut this week will encourage firms to invest more to spur lagging economic growth, Governor Patrick Njoroge said on Tuesday.

Growth slid to an estimated 4.8 percent last year from 5.8 percent the year before, mainly due to a drought, a prolonged presidential election and a sluggish private sector credit growth.

The finance ministry expects growth to rebound to 5.8 percent this year but pressure to rein in the fiscal deficit could see the government scale back on ambitious infrastructure projects, weighing down economic output.

“It really has to be the private sector that picks that up,” Njoroge said. “We will have to re-balance away from public sector driven to private sector driven economic growth.”

Kenya’s total debt has risen to about 50 percent of GDP, from 42 percent in 2013, as it borrowed locally and abroad to build infrastructure including a new railway line from Nairobi to the port of Mombasa.

The government has pledged to cut the fiscal deficit to 7 percent of GDP at the end of this fiscal year in June, from 8.9 percent in 2016/17, and to less than 5 percent in three years.

Monday’s 50-basis-point cut in the benchmark lending rate to 9.5 percent took much of the market by surprise, with seven of 11 analysts polled by Reuters having forecast no change.

Njoroge said a cap on commercial interest rates could interfere with the aim of the easing stance of boosting credit, as banks lock out borrowers who are deemed too risky.

“We may have a perverse reaction, where indeed, the lowering of the CBR rate leads to a reduction in the level of credit,” he told a news conference. “We will stand ready to take any action to counter if it actually began to manifest itself.”

Private sector credit increased by 2.1 percent in the year to February, well below the central bank’s target of 12-15 percent.

Njoroge said the central bank is pushing commercial banks to be less careless in their lending and correctly asses the risk profiles of borrowers when writing loans.

“The point here is not just having low interest rates … the fundamental issue is to have risk-based pricing of loans,” Njoroge said.

 

(By Omar Mohammed; Additional reporting by George Obulutsa; Editing by Duncan Miriri and Andrew Heavens)

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New Reforms in Nigeria to Attract Foreign Investment

21 November 2017 Comments (0) Africa, Politics

Oluyemi Osinbajo Nigeria

Foreign investment dropped in Nigeria with the fall of oil prices three years ago, but they have started to return thanks to reforms made recently by the Nigerian government. Earlier this year, Nigerian Vice President Oluyemi Osinbajo, acting for President Muhammadu Buhari during his medical leave, signed several executive orders aimed at improving business processes under the acting authority of the Presidential Enabling Business Environment Council (PEBEC). As part of a government bid to bring back foreign investment, changes to port procedures, business registration, and certificates for importing capital, have been declared.

Port Procedures

According to the Oxford Business Group, a key factor of the reforms was a move to tighten operations at Nigeria’s ports by reducing the number of agencies needed to clear cargo, creating single checkpoints for goods in transit, and banning non-official workers from the area. In the past 14 agencies were required to clear cargo at the port, but this has been reduced to seven. Now these seven agencies must act as a single task force, at a central location, and payments must be made through the Corporate Affairs Commission website (CAC). Only on-duty personnel will now be allowed in secure areas at ports and airports. The government hopes these reforms will quicken processes at entry points, and curb bribery and corruption.

Business Registration

Another way in which the reforms hope to dissuade corruption in the country is by making processes more transparent. Business registration will now be automated through the CAC website, via an online payment transfer, and all state agencies are required to publish a list of fees and conditions for business registration and license applications online. These agencies must also publish a set time-line for applicants, and if a response is not given in time, the application will be approved by default. In the past, new applications had to be made by visiting the country. These changes to the system mean investors can now register their business without having to come to Nigeria, saving both time and money.  

Electronic Certificates

According to Reuters, the central bank of Nigeria recently announced plans to issue electronic certificates for capital imported into the country, which will also save investors a lot of hassle. The electronic certificate will replace the hard copy issued previously, which investors or companies were required to get in just 24 hours, according to a 1995 law. The certificate is a declaration that the company has invested foreign currency in Nigeria and is necessary for the company to repatriate returns on those investments. Investors have complained in the past, that they have struggled to meet the one-day deadline.   

World Bank Doing Business Ranking

With a population of 180 million, Nigeria is still an attractive place for investment, however implementation and operating costs are high, and security within the county remains an issue. The country ranked 169th out of 190, in the 2017 World Bank ‘Doing Business’ survey, an improvement of one place from 2016, but a drop of 50 places in the last eight years. For starting a business, the country ranked 138th, for getting a construction permit, 174th, and for registering property, 182nd. The World Bank listed eight areas for improvement: starting a business, construction permits, getting electricity, getting credit, registering property, trading across borders, paying taxes, and the entry and exit of people across borders.  

Approval for Reforms

The International Monetary Fund (IMF) which said much more needed to be done to raise Africa’s biggest economy out of recession in March, has praised the new reforms. According to the Oxford Business Group, the IMF lauded Nigeria’s commitment to improving business transactions and investment inflows, and noted that the central bank’s foreign exchange trading window was a boon for investors. Investors needing to settle trade-related requirements in US dollars could now do so by phone, and at rates set by the buyers and sellers themselves, rather than by the bank or the market. The IMF said the moves would curb the market premium and push foreign reserve levels above the $30 billion mark. As dollars have been in short supply in Nigeria since the oil price drop, the country has had to look at new ways to attract foreign investment.

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StartUps Flourish Across the Middle East

25 September 2017 Comments (0) Economy, Technology

middle-east-startup

The Middle East is overcoming cultural barriers, and political and financial challenges, to become a paradise for potential investors. Emerging local technology companies are flourishing and giants from the US, Europe and Asia are taking notice. From the arrival of business angels, to the sale of Souq.com to Amazon, the region is showing greater creditability for investment projects and successful business ventures.

Growing Markets

Although there are huge obstacles facing the business markets of some countries across the region, the six Gulf Cooperation Council countries (UAE, Qatar, Oman, Saudi Arabia, Bahrain and Kuwait) plus Egypt, Lebanon and Jordan are emerging as an economic hub. According to venture capital site Beco Capital, there are over 160 million people in the region, 85 million who are online, and 50 million who are adult digital consumers with disposable income. These countries have the highest value consumers, enterprises and entrepreneurs, as well as, the youngest populations and high smartphone and broadband usage. This largely untapped market, is becoming the breeding ground for local technology startups, and big players from abroad, who wish to tap into it.

So far, only 8% of businesses in the Middle East and North Africa (MENA) have digital presence (as opposed to 80% in the United States) and only 1.5% of the region’s retail sales are digitally transacted, meaning there is still plenty of growth to come. According to Beco Capital, each digital job is estimated to create two to three more jobs in the economy, meaning the digital market could add up to $95 billion in annual gross domestic product by 2020. The business landscape of the region therefore, shows a lot of promise to foreign investment.

Emerging Startups

According to research house MAGNiTT, there are now over 3,000 startups across the region, with $870 million spent in startup investment last year. The top 100 startups raised over $1.42 billion in funding and each startup has raised over $500,000 individually. Some 68% of startup founders come from the Middle East, although many hold dual citizenship, 12% of successful startup founders are female, and the UAE hosts 50% of the most funded startups in the region. These figures have attracted foreign investment from abroad.  

According to Bloomberg, Amazon’s recent acquisition of Dubai based, online market retailer Souq.com, shows that e-commerce in the Middle East is set to take off. Out-bidding Emaar Malls PJSC, which owns the world’s largest shopping center, at $800 million, Amazon is actively looking for new areas of growth, and seems to have found it in the Middle East. According to Bloomberg, Souq.com has 23 million online visits a month, employs over 3,000 people and sells more than 400,000 products, from electronic goods to household products and clothes.    

Business Angels

An angel investor is usually an affluent individual or professional investor who provides startup capital for a new venture in return for shares in the business. In a report drafted by Harvard Business School experts, angels increase creditability to projects and increase possibilities for success. The report found possibilities for success increased by 10 to 17% when initial investment was done outside the US. According to the National back in 2012, enthusiasm for angel investment was growing across the Middle East. High speed internet connections enable the regions businesses to reach a global audience, meaning companies can grow without need for crippling overheads previously associated with foreign investment.

Executive chairman of Oasis500, a Jordan based investment program, Usama Fayyad said the Middle East was a unique opportunity for investors to participate in companies who could easily grow in value two to ten times over in a matter of months. Business angels may also have valuable knowledge and experience to help struggling startups. Serial entrepreneurs, who have started their own business can mentor local companies to ensure successful management strategies.

Startup Ecosystem

Despite the war and poverty stories emanating from across the region on the nightly news, the Middle East is well on its way to becoming a global hub for investment. Even with numerous challenges, this has not stopped the region, as a whole, from overcoming the first phases of business development to build a promising startup ecosystem.  

Sources: (1), (2), (3), (4).

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Nigeria signs $80 bln of oil, gas infrastructure deals with China

1 July 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria has signed oil and gas infrastructure agreements worth $80 billion with Chinese companies, the West African country’s state oil company said on Thursday.

Nigeria, an OPEC member which was until recently Africa’s biggest oil producer, relies on crude sales for around 70 percent of national income, but its oil and gas infrastructure is in need of updating.

The country’s four refineries have never reached full production because of poor maintenance, causing it to rely on expensive imported fuel for 80 percent of energy needs.

These problems have been exacerbated by a series of attacks on oil and gas facilities by militants in the southern Niger Delta energy hub which pushed production down to 30-year lows in the last few weeks.

Oil minister Emmanuel Ibe Kachikwu, who also heads the Nigerian National Petroleum Corporation (NNPC), has been in China since Sunday for a roadshow aimed at raising investment.

“Memorandum of understandings (MoUs) worth over $80 billion to be spent on investments in oil and gas infrastructure, pipelines, refineries, power, facility refurbishments and upstream have been signed with Chinese companies,” said NNPC in a statement.

NNPC added the China roadshow was “the first of many investor roadshows intended for the raising of funds” to support the country’s oil and gas infrastructure development plans.

Earlier this week, NNPC said oil production had in the last few days risen by around 300,000 barrels per day (bpd) to 1.9 million bpd, due to repairs and no attacks having been carried out since June 16.

Goldman Sachs, in a report published on Wednesday, said a “normalization” in Nigerian oil production would put pressure on global oil prices and may mean prices will average less than $50 a barrel during the second half of 2016.

 

(Reporting by Alexis Akwagyiram; Editing by Mark Potter)

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