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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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Pure Harvest Aims to Change the Face of Fresh Food

7 June 2021 Comments (0) Business, Featured

Having secured $60 million in funding, Pure Harvest Smart Farms is looking to expand its operations into Saudi Arabia and Kuwait, using advanced technology to bring food security to the arid Middle Eastern climate.

Year-round Local Fresh Food

Pure Harvest is a farming startup using hi-tech, fully climate-controlled greenhouses and a coconut shaving hydroponic solution. Their aim is to provide year-round fresh food in a region where nearly 90% of food is imported. Having secured $60 million in funding, with a further $100 million earmarked by Kuwait’s International Investment Company (Wafra), Pure Harvest Smart Farms is looking to expand its operations into Saudi Arabia and Kuwait, using advanced technology to bring food security to the arid Middle Eastern climate. CEO and co-founder Sky Kurtz described their pilot project in Abu Dhabi as showing promising results with the “potential for year-round local production at very high quality and at a very good cost structure.”

Taming the Desert with High Tech Solutions

Farming consumes huge amounts of water, leading to water scarcity even in temperate regions such as Europe and America. In the arid, dry desert wasting even a drop of water is inconceivable, and Pure Harvest Smart Farms claims their self-contained greenhouses offer a level of efficiency 30 times greater than traditional field farms.

This model of controlled-environment agriculture (CEA) uses greenhouses that go far beyond glass walls to isolate plants. A climate chamber removes heat and humidity from the outside air; this humidity is condensed and fed to the plants inside. There is no soil as plants are grown inside a nutrient rich solution and monitored by sensors to keep the plants healthy. Triple-paned smart glass windows and over-pressurized airflow help manage temperatures to within a 1 degree Celsius margin and carbon dioxide is added to optimize plant growth. 

Kurtz claims that Pure Harvest is expecting a yield of six to eight times more food per meter than other greenhouse farms, while using only one-seventh the amount of water. It will produce 17 to 23 times more food per meter than a traditional field farm.

A Large Market but Pure Harvest struggles to Gain Funding

Despite the success of the pilot, Pure Harvest has a long way to go. According to Kurtz, once they are producing at a scale of 30,000 square meters the produce should be 20-40% cheaper than imported fresh food giving them a very promising market.

But even with the investment of $60 million, and the $100 million soon to follow, Pure Harvest has struggled to secure the funding to expand. The industry is extremely capital intensive, and the Middle East venture capital market is less developed than in other countries. The company has managed to raise $50 million through bonds known as “Sukuk,” Shariah law compliant Islamic bonds, with a further $10 million investment from a January fundraising round led by Sancta Capital.

With the additional $100 million from Wafra, the total sum might appear to be significant, but compared to comparable ventures it is low. Recently a vertical farming firm in the U.S., Plenty, raised more than $500 million in funding.

A Promising Future for Local Food

With global supply chains heavily disrupted by the Covid-19 pandemic and further shaken by the blockage of the Suez Canal by the Ever Given in March 2021, the UAE region has become increasingly concerned about securing a food supply. If Pure Harvest can deliver on their promises, they stand to benefit handsomely. At the moment there is no reason to suspect otherwise as the company moves forward with expansion plans. Already the Pure Harvest has reached a $35 million agreement with The Sultan Centre in Kuwait to build a farm stretching across 80,000 square meters that can produce millions of kilograms of fresh fruit and vegetables, well past the size that Kurtz marks for profitability.

Photos : findwonder.abudhabi / agfstorage.blob.core.windows.net

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Innovation and flexibility allowed MENA startups to raise over $1 billion in 2020

20 March 2021 Comments (0) Business, Featured

Innovation and flexibility allowed North African and Middle Eastern startups to raise over $1 billion in 2020

Despite the ongoing Covid-19 pandemic, investors continued to believe in the potential of North African and Middle Eastern tech start-ups. The growth in venture capital investments in MENA countries in the latter portion of 2020 speaks volumes about the expected high returns in the coming years. While the total number of investment transactions in 2020 decreased 13% overall from numbers in 2019, a record breaking first half of 2020 and a rebound in late Q3 led to a year that, despite a global pandemic, shattered expectations for investment numbers.

The sectors benefiting most from high investment

While the total number of deals may have dropped, several key industries have experienced major growth throughout 2020:

  • Fintech, or financial tech did very well. Despite losing 19% of the number of deals, total funding for this industry shot up to $162 million.
  • eCommerce was a sector that lost 23% in deals but managed to come out with 24% more funding than the sector received in 2019.
  • Healthcare and Healthtech was an obvious winner given the public health crisis, and investment in Healthcare start-ups soared by 280% compared to 2019 for a total of $72 million in funding

Big winners of the year included the digital healthcare agency Vezeeta, securing a staggering $40 million in series D funding in early 2020, shortly after moving their headquarters to Dubai, and Dubai-based used car marketplace, Sellanycar.com that raised $35 million to expand the number of branches across the country.

United Arab Emirates takes the lion’s share of investment funding

The UAE maintained its powerful lead in total funding, taking 56% of the total of venture capital funding raised within the Middle East and North Africa for the year of 2020. Egypt and the Kingdom of Saudi Arabia follow with 17% and 15% of the total funding, respectively. As a percentage of the deal share, very little changed compared to 2019. Most changes were only 1 or 2% of the deal share, with the exception of Saudi Arabia. The Kingdom of Saudi Arabia increased the share of the number of deals by 6%, likely because of the large shift towards ecommerce and Fintech within Sauda Arabia during 2020.

Seed rounds and series A receiving the biggest boost in funding

Despite the increase in funding overall, the investment landscape does seem to have been altered by the Covid-19 pandemic. Pre-seed and early stage venture funding decreased in 2020, while Seed funding and Series A investments exploded, potentially reaching up to $3 million of funding. While exact numbers are still being confirmed, it suggests investors are less willing to expose themselves to risk on companies that are yet to bring a product to market, and instead focused on those with a promising outlook for rapid growth. Given the impact the global economy has seen from Covid-19 and the many countries facing a harsh recession, this change of tactics could be seen as a more cautious approach from investors.

A promising outlook for tech start-ups in the Middle East and North Africa

Although Covid-19 is far from over and many of the long-term economic impacts are still to hit home, raising over $1 billion of funding in 2020 is an incredible achievement for MENA start-ups. Chief Operating Officer at 500 Startups Courtney Powell, among others, have said that the outlook for 2021 is positive, and if the Fintech, eCommerce and Healthtech industries can innovate and succeed through the challenging year of 2020, then there is every reason to expect they will succeed in 2021.

Sources: ventureburn.com – gccbusinessnews.com

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Mashal Waqar: Beyond the Glass Ceiling

13 November 2020 Comments (0) Leaders

Mashal Aqar is another female leader breaking the glass ceiling and showing the way for the next generation of female leaders. 

In the last two decades, we have seen a dramatic and heartening increase in the number of women breaking through the corporate glass ceiling to take up top executive positions within many of the world’s leading companies as well as female entrepreneurs building their own companies. 

Two sectors where we are seeing lots of strong women executives are the fields of technology and digital media. Within digital media, many of the sites and companies are not only women-led, but also women-focused, and one such company is The Tempest, an American company aimed at millennial and Gen Z women. And sitting close to the top of The Tempest’s corporate tree is Mashal Waqar, co-founder (with Laila Alawa) and COO. 

Background

Waqar was born in Saudi Arabia on 18th January, 1995. Her parents are Pakistani and she is the oldest of three children. She majored in computer security and international business at Rochester Institute of Technology and was awarded a BS (Bachelor of Science) degree.

While at Rochester, she founded the WRITERS magazine and acted as editor-in-chief for the duration of her time at the university. She was also the president of the student government and acted as a tutor and mentor to younger students. Waqar co-authored a research paper examining the challenges faced by female entrepreneurs. 

Her primary residential base is Washington D.C., but she also spends time in Dubai and Toronto. 

Career

Along with Laila Alawa, Waqar co-founded The Tempest in August 2016. They state that their purpose is to be: “…the destination for diverse women to share, inspire, and celebrate life through storytelling, experiences, and a global community.”

Their target audience is the female leaders, entrepreneurs, and creators of tomorrow. The team comprises more than 30 full time staff based around the world as well as a contributory team of more than 1,500 writers. The company has a presence in several major cities, including New York, Dubai, London, and Toronto. Waqar has served as COO since the company was founded. 

Since January 2018, she has served as a mentor for the Techstars Startup Weekend events, a 54-hour event held in many cities where everyone from developers to designers to marketers come together to network, discuss innovative ideas and products, and even form startups during the event. 

Since March 2018, she has also worked as a mentor for Sheraa, a civic organisation in Sharjah, United Arab Emirates, aimed at creating the city’s next wave of entrepreneurs. 

Achievements

Waqar was named as ‘Young Leader of the Year’ at the 19th Global WIL (Women in Leadership) forum in 2017. In 2019, she was named in Forbes’ Middle East ’30 under 30’ list. She regularly gives talks on the cyberbullying and trolling women experience online and is also an active disability rights advocate. 

With women like Mashal Waqar not only breaking through the glass ceiling but guiding and mentoring the next generation of female leaders and entrepreneurs, the future’s looking bright. 

Photos : moose-jaguar-7xk3.squarespace.com and Facebook

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Forbes Identifies the Best Businesses in the Arab World

16 September 2020 Comments (0) Business, Middle East

2020 is not looking like a good year for most businesses. Covid-19 is affecting every stock market around the world and profits and forecasts are becoming major victims of the global pandemic. 20202’s Q1 results are what many people are looking at as indicators of how companies could perform once the current crisis is over. Forbes’ recent list of the Top 100 Companies in the Middle East is a good reflection of not only what companies have been doing well (and will do in the future), but is also a good indicator of how the region itself is performing.

Regional Financial Health

Generally speaking, it comes as no surprise that an oil-rich region does well financially. But in recent years, the oil-producing nations have sought to diversify interests and investments as they keep one eye on a finite and dwindling resource that has for so long provided a steady revenue stream.

Looking at the Top 100 Companies listed, they have total aggregate assets of $3.5 trillion and a value of around $2.3 trillion in terms of market cap over 2019/2020. The total sales amassed by the businesses was $670 billion which represented $148 billion of net profits.

Who and What?

Saudi Arabia dominates the Top 100, with 33 of the 100 companies listed there. Behind them is the United Arab Emirates (U.A.E.) with 21 companies, and Qatar in third place with 18. So those three countries alone have 72% of the list.

As far as business sectors are concerned, the burgeouning financial sector dominates the list with 46 entries. Far behind them in second place is industrial companies with nine entries, then real estate/construction and telecoms companies with eight each.

Top Spot

Despite the increasing diversification happening across the region, it is an oil giant that holds the No. 1 spot and they would hold that spot in most lists whether regional or global. Saudi Aramco is not only the world’s most profitable company, but also the world’s most valuable listed company. It produced the biggest IPO in history and on it first day of trading in December, its market value soared to $1.9 trillion. $0.7 trillion above Apple’s market value on the same day.

To put Aramco in a global context, they pump more than 10% of the world’s crude oil supplies and produce more than twice the oil of all of Canada. Of course, being (prior to the IPO) a government-owned entity and the only oil producer in Saudi Arabia has given it a unique advantage.

Aramco covers several areas of the energy sector, including exploration, transportation, and sales of not only crude oil but also natural gas and chemicals. While other companies may focus on diversification, Aramco focuses on innovation. In 2017 alone, they were granted 230 patents by the U.S. Patent and Trademark Office.

As far as the Top 100 List is concerned, Aramco accounted for 59.6% of the net profits, 11.4% of assets, 69.6% of market cap, and 49% of aggregate sales.

The Other Contenders

While dominating the list, Aramco is surprisingly the only energy company in the Top 10. The other nine companies represent banking and financial, with six out of the ten positions, two telecommunications companies, and one industrial company. The gap between first and second is telling, however. Aramco had profits of $88.2 billion, while the second-placed company – QNB of Qatar – had profits of only $4 billion.

However long the Covid-19 situation lasts, some business sectors may take considerable time to completely recover. But there will be a constant need for most of the sectors covered in the Top 100 list. While oil prices may fluctuate, the sheer size and diversity of a company like Aramco will ensure that they will not suffer too much. And for businesses such as financial and telecoms, the need for their services may grow if anything. One thing is for sure; the Middle East continues to see many companies continue to thrive and grow at both regional and global levels.

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Can Bahrain’s Fintech Bay hub lead the region?

12 May 2020 Comments (0) Business, Middle East

The Fintech (Financial Technologies) market is a huge one and one that continues to grow. It consists of products, such as apps, platforms, and other technologies, catering to the financial sector. It can cover anything from bank to bank transfer technology through to consumer contactless payment apps. In 2018, the global fintech market had a value of around US$127.66 billion and that value is forecast to grow to $309.98 billion by 2022, an impressive annual growth rate of 24.8%. 

More and more companies are looking to cashless payment systems to pay for goods bought online or in the physical world. One of the industry giants, PayPal, had reached 267 million active users by the end of 2018 and there are many other competitors looking to increase their market share. 

It was perhaps inevitable, in a long evolutionary chain from Silicon Valley and other such sites, that small areas dedicated to companies working in Fintech would emerge. They offer ideal locations for Fintech startups – and some already established companies – to work in close proximity and to encourage tech development. In February of 2020, there were 8,775 such startups in America, 7,385 in Europe, the Middle East, and Africa, and 4,765 in the Asia Pacific region.

Sao Paulo, Bangalore, Mumbai, and New Delhi are challenging the traditional financial fiefdoms 

In recent years, countries in the Middle East have been investing heavily in the future of various sciences and technologies. With Dubai leading the way with the region’s first Fintech hub – now 15 years old – other countries in the region have looked to join a lucrative and booming sector that offers many opportunities and creates new jobs. 

The Findexable Global Fintech Index City Rankings identifies that the growth of these Fintech hubs marks a movement away from the traditional financial centres of the past. While no Fintech companies have yet to make the Fortune 500 or the S&P 500, that could be in part to the very nature of many Fintech companies. They tend to be young and ambitious and often focusing on niche markets such as cashless payments within a small geographical area. And while the traditional centres of the financial industry still feature in any Top 20 list of Fintech hubs, it is the new entries that are most interesting. Cities such as Sao Paulo, Bangalore, Mumbai, and New Delhi are challenging the traditional financial fiefdoms of old and Dubai and Bahrain are not far behind. 

Successful Fintech Hub: Bahrain Is an Attractive Choice

Deloitte believes there are four essential factors needed for a successful Fintech hub: capital, talent, demand, and policy & regulation. Capital is something that is not lacking in the region and the Bahrain hub is aiming to attract talent not only from the Middle East and Africa but from anywhere in the world. By also attracting existing experts in the field, they hope to nurture their own and regional talent. As far as demand is concerned, the demand for new and better Fintech products continues to grow, even in the midst of a global pandemic, and in some ways that crisis has increased need. 

Finally, Bahrain Fintech hub offers many incentives and positive policies that makes choosing Bahrain as a location an attractive choice. With access to international partners and a global network, Bahrain Fintech Hub offers attractive potential to new startups. Its geographical location is also a major advantage as it is ideally situated to not only serve the Middle East and Africa, but also Europe and Asia. Bahrain has also introduced fast track regulatory frameworks that allows it to bring in regulations quickly for newly emerging ideas and products, something other hubs do not always offer. 

Bahrain’s Fintech Hub Can Only Grow 

In January 2020, the Bahrain Fintech Hub announced a major partnership with Standard Chartered, the British multinational financial institution that operates in more than 70 countries. This will not only allow startups access to one of the world’s leading banking group but will also allow Standard Chartered potential access to new ideas as they happen. 

Fintech is an area that will continue to grow, and Bahrain is positioning itself to take advantage of that growth and to challenge the current Top 10 Fintech hubs. Even with a pandemic causing disruption in most business sectors, Fintech experts and entrepreneurs continue to develop new ideas and systems. With the financial backing and strong policies they have in place, Bahrain’s Fintech hub can only grow and grow. 

Photos : bahrainedb.com – bibf.com – unfoldbrics.art – bizbahrain.com

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Tourist numbers to Dubai continue to grow in 2019

4 March 2020 Comments (0) Business, Featured

When you look at most cities in the world that serves as major tourist destinations, they tend to have long and illustrious histories. London and Hong Kong both have histories dating back 2,000 years or more, Luxor dates back over 5,000, and Athens some 3,500 years. But Dubai is very much a modern city in every way with little in the way of history, so it was very much a sandy tabula rasa for the rulers to write their ideas and dreams on. 

Although Dubai has brief mentions in the annals of travellers and traders as far back as the 11th century, it was little more than a waypoint though the general area was popular for pearl fishers. The Al Abu Falasa dynasty founded Dubai proper in the early years of the 19th century and one early historical footnote of interest is the signing of the “General Maritime Peace Treaty” between several of the regions sheikhs and the British government which was the first formal denunciation of slavery in history. 

In 1892, Dubai became a British protectorate, with tax exemption granted to foreign traders in 1894. By the early years of the 20th century, the Sheikh of Dubai had convinced a British steamship company to make Dubai a port of call, perhaps the first real hint of the city’s future. The merchant class gained strength with Dubai cementing its position as the main – and busiest – port in the Gulf, and they continue to be at the heart of the city’s political and power structures.

Dubai had a lean period between 1920 and the late 1960s with economic blows from the collapse of the pearl industry, the Great Depression, and World War II. This period was marked not only by poverty but by political unrest and instability. 

Sheikh Rashid bin Saeed Al Maktoum : the Modernisation and Revitalisation of Dubai

Sheikh Rashid bin Saeed Al Maktoum became ruler of Dubai in 1958 and it was he who was the driving force behind the modernisation and revitalisation of the city. The United Kingdom’s announcement in the late 1960s that they were withdrawing protection led to the foundation of the United Arab Emirates in 1971 in order for the small kingdoms to work together in defence and economically. 

But it was oil that was the real game-changer for the area but for Dubai in particular. With the discovery of oil in 1966 and the first shipment in 1969, the ruling family now had the funds to start realising their visions for the city.

Emirates Airlines has played a big part in the growth of Dubai. It operates over 3,600 flights a week from Dubai and the geographical location of Dubai has helped it become the major hub for many long-haul flights. The government saw that people looking to break up 15-25 hour flights offered huge potential tourism wise and billions of dollars were pumped into that area. They also realised that as oil production slowed down in the early 1990s – not to mention the constantly fluctuating prices – they need to diversify in order to survive and grow. 

A New Record of 16.73 Million of Tourists

That diversification has seen Dubai become not only a major tourist destination but also a regional centre for finance and real estate. Its diversity is perhaps underlined by the fact that some 90% of its population are foreigners, with many seeing the rich emirate as an ideal hub for many types of businesses.

2019 was a record year, with visitor numbers rising 5.1% from the previous year to a new record of 16.73 million. India keeps its top spot of providing the most visitors, with just under two million tourists, and Saudi Arabia and the UK stay 2nd and 3rd respectively. Omani tourists saw the biggest jump with a 24.3% increase in visitors from 2019. 

So why do so many tourists continue to flock to Dubai? As mentioned, a major factor is the city’s location combined with the routes flown by Emirates Airline. Many people initially chose to just have a one-day layover in the city to break up their long haul flights and to reduce the effects of jet lag. But now, the average length of stay is 3.5 to 4 nights, giving visitors an opportunity to sample some of Dubai’s many attractions. 

The Magnificence of the Burj Khalifa and the Splendour of the Burj Al-Arab

And this is where Dubai excels. They have taken a hot and arid desert with average temperatures that range from 25 degrees Celsius to the low 40s and turned it into an air-conditioned paradise for tourists and expats. The magnificence of the Burj Khalifa and the splendour of the Burj al-Arab (the world’s tallest hotel) continues to wow visitors. The Dubai Mall offers a cornucopia of shopping and entertainment choices and the Dubai Aquarium attached to the mall is one of the city’s most popular tourist spots. 

But not all the attractions are modern. The beauty of the Jumeirah Mosque is a must-see and the souks of Deira give a glimpse into Dubai’s merchant past. Ras Al Khor Wildlife Sanctuary is perfect for nature lovers and Kite Beach is ideal for those looking to soak up some rays or watch the spectacular kite-surfing. 

Dubai is a destination that offers something for everyone – if you can afford it – and numbers will likely continue to grow throughout the coming decade. 

Photos : gulfnews.com/ arabianbusiness.com/ thenational.ae

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Bringing tourism back to the Middle East

27 November 2017 Comments (0) Middle East

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Long heralded as the must-see tourist destinations of the Middle East, Egypt, Tunisia, Morocco and Turkey are feeling the blow to their once prosperous tourism sector, as holidaymaker’s head to safer shores. Terrorist attacks, kidnapping and political unrest has seen a decline in tourism in the region, however, some countries are finding ways to bring the people back.

Saudi Arabian Islands Make-over

The recently announced Red Sea Project will see Virgin airlines founder and entrepreneur Richard Branson invest in turning 50 Saudi Arabian islands into luxury tourist destinations. This comes as Saudi Arabia announced its plans to turn 13,127 square miles of coastline into luxury resorts in early August. “This is an incredibly exciting time in the country’s history,” Branson said in a statement released by the Information Ministry. As one of the world’s most conservative countries, where alcohol is prohibited and women have only just been given permission to drive, Saudi Arabia is determined to change its image in the international community.

According to Arabian Business, since the appointment of Prince Mohammed bin Salman as successor to his father’s empire in June, the country has launched a media offensive aimed at pulling the country out of its dependence on oil and diversifying its revenue. The Saudi Public Investment Fund, which is headed by Prince Mohammed, will provide the initial investment to the Red Sea Project, with plans to start construction in 2019. Branson is the first international investor to commit to the project in what the ministry called “a clear sign that Saudi Arabia is opening its doors to international tourism.”

Egypt Partners with CNN

Egypt is also set to launch a tourism media campaign with cable television channel CNN, after visitor numbers fell dramatically due to the Arab Spring uprising, which overthrew President Hosni Mubarak in 2011, and the Russian passenger jet which crashed in Sinai in 2015, killing all onboard. Russia, which was the number one source of tourists to Egypt, suspended flights to the country pending tighter security measures at Egyptian airports. In order to lessen the impact of these reports, Egypt will launch an advertisement to be aired on CNN’s weather forecasts in Europe, the Middle East, and Africa to attract tourists during the winter season. International advertising and marketing agency J. Walter Thompson, said the aim of the campaign was to attract tourists in winter to Egypt’s consistently warm weather.

According to Egyptian news site Ahram Online, Egypt was receiving as many as 14.7 million visitors back in 2010. Before the Arab Spring, tourism represented 13% of the country’s gross national product, bringing in some $20 billion a year in revenue, according to government figures. In contrast, the first seven months of 2017 have seen just 4.3 million tourists visit the country’s historic sites and arid landscape. Although tourism revenue has increased in Egypt, for the same period, by 170%, reaching $3.5 billion, it is still nowhere near the pre-2011 figures.

Future of Middle Eastern Tourism

While travel and tourism sectors of the regions usually popular destinations have suffered, not all the Middle East has been badly affected. Certain ‘safe haven’ destinations have actually profited in recent years. According to figures from the UN World Tourism Organization, visitors from the UK have increased in the UAE. Dubai saw a 5% increase in UK tourists in 2016, and Abu Dhabi was up 3%. Russian tourists have also flocked to the country after visa-on-arrival was implemented, which saw a rise of 14%. Oman has also seen a steady growth in numbers from Europe, with Britain and Germany among the top five tourism generating source markets, followed closely by India.

According to Trade Arabia, London’s World Travel Market event, to be held in November, will expect to see a strong contingent of exhibitors from the Middle East. WTM Senior Director Simon Press said according to figures from the World Travel and Tourism Council, in 2016 the total contribution to GDP from travel and tourism in the Middle East was $227.1 billion. This figure is forecast to rise by 5.2% in 2017, and 4.8% per annum to make $381.9 billion by the year 2027. “There are exciting times ahead for the Middle East,” Press said.    

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StartUps Flourish Across the Middle East

25 September 2017 Comments (0) Economy, Technology

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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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