Dubai launches Mideast’s first government-backed blockchain platform

Gitex Technology Week in Dubai. Dubai — a blockchain pioneer — aims to have the world’s first fully digitized government by 2021. (Shutterstock)
Updated 31 October 2018

Dubai launches Mideast’s first government-backed blockchain platform

  • IBM will deliver the new service aimed at speeding up transaction processing times

LONDON: Dubai has partnered with technology giant IBM to launch the first government-backed blockchain platform in the Middle East, with the aim of digitizing the provision of day-to-day services for the emirate’s residents and businesses. 

The platform is part of the government’s Smart Dubai initiative  to use technology to improve happiness and ensure government services are paperless by 2021. 

Blockchain technology promises to speed up transaction processing times, for example making it quicker and easier to pay water bills or apply for business licenses. 

The IBM-powered system will process transactions through the IBM Cloud environment, enabling organizations to keep their data in-country and lower costs by conducting transactions locally. 

“Dubai has been a pioneer in blockchain technology since its inception, while other major cities around the world were reluctant to embrace it for city-wide implementation,” said Aisha Bin Bishr, director-general of the Smart Dubai Office.

“The Dubai Blockchain Strategy set a clear path for the emirate to have the world’s first fully digitized government by 2021,” she said.

In the last few years Dubai has launched various proof-of-concept and pilot blockchain initiatives across different government agencies including roads and transport, energy, health and education, said Amr Refaat, general manager at IBM Middle East and Pakistan. 

“Through the new service, these organizations will have the ability to transition their blockchain developments into full-scale production,” he said. 

The first project to be launched on the new platform will be the “Dubai Pay Blockchain Settlement and Reconciliation System.” 

This allows government entities to conduct transactions with other official bodies, banks or financial institutions in real-time rather than the 45 or so days it used to take to process payments. Previously department of finance staff had to go through payments collected via various portals to manually reconcile and settle them.

The Dubai Electricity and Water Authority (DEWA) and the Knowledge and Human Development Authority were the first government agencies to trial this system. 

IBM has also recently worked with Dubai’s Department of Economic Development (DED) to launch its unified corporate registry using IBM Blockchain, said Refaat. 

“The aim of the registry is to digitize the process of issuing business licenses and exchanging commerce information for business owners, investors, entrepreneurs and startups, enabling them to conduct transactions digitally in real-time and in a trusted and secure environment,” he said. 

“We have also worked with Dubai Airport Freezone Authority (DAFZA) to transform and automate the freezone commercial licensing and renewal process. 

“Through IBM Blockchain, they can manage digital blockchain transactions and accurately and quickly verify documents, enabling businesses to establish operations in the UAE in a time efficient manner,” he said. 

Adopting blockchain technology could save Dubai 5.5 billion dirhams ($1.17 billion) a year in document processing costs alone, according to Smart Dubai’s website. 

The emirate is aiming to become the “global benchmark” for the city-wide implementation of blockchain services, the government body said. 

A female entrepreneur brings crowdlending to Saudi Arabia

Updated 25 January 2020

A female entrepreneur brings crowdlending to Saudi Arabia

  • Shariah-compliant peer-to-peer lending platform called Forus to be launched this year
  • Founder Nosaibah Alrajhi aims to help businesses and small investors in the Kingdom

RIYADH: It is no secret that small businesses struggle with obtaining funds to expand, with one avenue being particularly tricky in the region: Trying to rely on a national bank for help.
While things are improving, they are not doing so quickly enough. These longstanding problems have inspired Nosaibah Alrajhi, a former investment banker, to launch Forus, a Shariah-compliant peer-to-peer lending platform that she hopes can help bolster Saudi Arabia’s economic growth and enrich both business owners and small investors.
“It’s very straightforward: We bring together investors and SMEs (small and medium enterprises). Crowdlending will provide a steadier and safer return than say, investing in stocks or investment funds,” said Alrajhi, who serves as co-founder and chief executive.
“If you compare it to real estate, for example, you need a lot of cash upfront to invest in property, but with P2P (peer-to-peer) lending it provides almost everyone with the opportunity to invest and get a return.”
Having received a special license in July 2019, Forus will launch its platform in early 2020. For investors, it is quick and easy to register: You just need to complete a standard know-your-customer (KYC) process, and you will then be able to lend SR500 ($133) to SR10,000 to whichever companies you choose.
For would-be borrowers, Forus will undertake a credit and risk analysis that usually takes about 10 days.
“We do all the due diligence, and once companies meet our benchmarks, they’re listed on the platform, giving investors — individual and institutional — the opportunity to lend them money,” said Alrajhi. “We call it income investments — investors get their money back, plus fees.”
Companies listed on the online platform are rated according to risk — the bigger the risk, the larger the return for lenders. Companies can borrow up to a maximum of SR2 million.
“Investors can look at the companies’ financial reports, their strategy, their team, their products, as well as specific financial ratios that will help them make their decision,” said Alrajhi.
A company will request to borrow a certain amount, and once this is fully pledged by investors, it will receive the loan. Forus, in turn, earns a small commission. Loans are for six to 48 months.
“Our marketplace is providing investors with diversified alternative options (for) investing, while businesses are empowered with an opportunity to grow and scale,” said Alrajhi.
“We achieve this by minimizing friction, streamlining the customer experience and providing a seamless, secure and transparent platform.”
Alrajhi holds an MBA from Madrid’s IE Business School, where her research led her to spot a gap in the market for a fintech-based, P2P lender in Saudi Arabia.
“If you look at the market today, there’s only a few banks who are willing to lend to SMEs, which banks see as quite high risk,” said Alrajhi. “In Saudi, there are roughly 16,000 SMEs looking for loans.”
Forus uses a murabaha — cost plus financing — structure for its loans, which are not interest-bearing and so are Shariah-compliant.
In English, Shariah-compliant lending will refer to a profit rate rather than an interest rate, although in Arabic there is no such linguistic distinction.
Nevertheless, Forus’s loans are Islamic. “In Saudi, the biggest market is for Shariah-compliant financial services,” said Alrajhi.
She hopes her platform will provide a win-win for investors and SMEs — investors can earn a bigger return on their money, while SMEs can obtain the funds needed to expand their operations and increase profits.
In the longer term, Forus plans to expand to Egypt and Pakistan, but for now Alrajhi’s focus is firmly on her native Saudi Arabia.
“One of the main impacts we aim to have is transparency, which will then enable financial inclusion and help increase GDP (gross domestic product),” she said.
“We’ve talked to so many SMEs, and we found that almost all are facing challenges when it comes to borrowing.”
She leads a team of 10 staff at Forus, and is a female trailblazer in the Kingdom’s male-dominated financial services sector and more broadly in Saudi Arabia, where women constitute less than 25 percent of the workforce.
“Within the next five years, Saudi’s financial sector will look completely different,” said Alrajhi.

This report is being published by Arab News as a partner of the Middle East Exchange, which was launched by the Mohammed bin Rashid Al Maktoum Global Initiatives and the Bill and Melinda Gates Foundation to reflect the vision of the UAE prime minister and ruler of Dubai to explore the possibility of changing the status of the Arab region.