Three industries to watch in the Arab world’s fastest-growing startup ecosystems

Three industries to watch in the Arab world’s fastest-growing startup ecosystems
The Global Startup Ecosystem Report — which tracked more than 1.27 million companies from over 250 ecosystems — recognizes the support for startups offered by Bahrain and Sharjah. (Supplied)
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Updated 17 October 2020

Three industries to watch in the Arab world’s fastest-growing startup ecosystems

Three industries to watch in the Arab world’s fastest-growing startup ecosystems
  • Startup Genome has named Bahrain and Sharjah among the world’s best places for tech startups to prosper
  • Both kingdoms launched stimulus programs for SMEs to help them survive and grow amid the COVID-19 crisis

DUBAI: Bahrain and the UAE city of Sharjah offer the best ecosystems in the Middle East for startups in the areas of financial technology (fintech), education technology (edtech), and digital media, according to policy advisory and research organization Startup Genome.

The two locations ranked in the top five fastest-growing activation phase startup ecosystems globally, meaning that founders can “build on local economic strengths and develop focused programs to accelerate ecosystem growth and develop pockets of success leading to sizable exits.”

The Global Startup Ecosystem Report — which tracked more than 1.27 million companies from over 250 ecosystems — recognizes the support for startups offered by these two ecosystems in the wake of the coronavirus disease (COVID-19) pandemic.

Both Bahrain and Sharjah launched stimulus programs for small- and medium-sized enterprises (SMEs), either by way of equity-free grants or exemptions on a number of fees.

Thanks to its standards on crowdfunding and open banking, Bahrain leads the Middle East and North Africa (MENA) region as a fintech ecosystem. The regulatory sandbox operated by the Central Bank of Bahrain (CBB) allows players to test new concepts before they go public — perhaps an indicator of why the island nation is host to 90 active and diverse startups.

Ebrahim Janahi, chief executive officer of labor fund Tamkeen, said: “Bahrain has established itself as an innovative fintech hub, home to regulations designed to enable and encourage entrepreneurship.”

A recent success is Fasset, a CBB sandbox company that offers global investors digital tokens for fractional investment in sustainable infrastructure. Currently in beta-stage trials, its Fasset Exchange (FEX) aims to handle tokens — essentially digital coins — that are backed by virtual currencies such as bitcoin and ethereum, as well as real world assets such as gold.

“To date, accessing digital assets — whether cryptocurrencies or real asset-backed tokens — in the MENASA (MENA and South Asia) region has been an onerous process,” said Fasset CEO Mohammed Raafi Hossain.

“FEX brings to the GCC (Gulf Cooperation Council) the accessibility, variety, and ease of use which increasingly characterizes digital asset markets elsewhere in the world. It is our belief that every investor should have a healthy, risk-assessed allocation in digital assets,” he added.




Co-founder of The Tempest, Mashal Waqar (L) and co-founder and CEO of Lumofy Ahmed Faraj (R). (Supplied)

The move follows the launch of Rain, the Gulf’s first cryptocurrency exchange. The startups are capitalizing on a global virtual currency market forecast to reach $1.48 billion by 2025, growing at an annual rate of 6 percent over the next five years.

One of the most visibly affected sectors of recent times has been media, where traditional business models have been hard hit.

Against this backdrop, several startups have established themselves to serve niche audiences, such as The Tempest, defined as a “next-generation women’s media company.” Founded in 2016, the startup was admitted to an accelerator program run by Sheraa, a Sharjah-based incubator.

“The best part about the program was the mentoring aspect and the opportunities you get as a startup once you’re a part of Sheraa’s ecosystem,” said co-founder of The Tempest, Mashal Waqar.

“They created such a supportive and encouraging environment that allowed us to work through the business and revenue side of things, and fine tune our sales process.”

Startup Genome has identified Sharjah as a center for digital media startups, with two dedicated free zones. Sheraa, meanwhile, has run programs dedicated to book and digital content ventures. Overall, the digital content market is expected to expand by 18.7 percent in 2020, growing by $519.83 billion over the five years to 2024, market research company Technavio has forecast.

Whether catering to school students or adult learners seeking to upskill, education technology companies have seen an increased demand for their services since the COVID-19 outbreak.

Worldwide, edtech startups have attracted $4.8 billion in 2020, or more venture capital investment in the first nine months of the year than in 2019, according to data from market intelligence firm CB Insights. The sector is on track to set a new record this year.

Overall, the edtech and smart classroom market will more than double over the next five years, growing 16 percent per year from an estimated $85.8 billion in 2020 to $181.3 billion in 2025.

Bahrain-based Lumofy is among the regional players making it to the head of the startup class in recent months. The provider of e-learning-focused solutions has helped accelerate digital transformation for corporates and institutions in the country since the COVID-19 outbreak, beginning with a free two-month subscription to its gateway products.

Co-founder and CEO Ahmed Faraj, said: “The COVID-19 situation has allowed us to witness a major change in the way we view technology’s relationship with education.

“The shift to the digital world has been accelerated, and we as innovators have the adaptability to allow corporates, institutions, and governmental entities to pivot quickly with our suite of tools.”

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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 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.


Saudi Arabia aims to help SMEs expand their export potential

Saudi Arabia aims to help SMEs expand their export potential
Updated 22 April 2021

Saudi Arabia aims to help SMEs expand their export potential

Saudi Arabia aims to help SMEs expand their export potential
  • Saudi bank offers 17 credit solutions to small exporters to help them expand their operations worldwide

RIYADH: The Saudi Export-Import (EXIM) Bank has approved nearly SR8 billion ($2.13 billion) in lending to non-oil exporters since it was launched early last year, helping them to distribute their goods to more than 45 countries around the world.

The lender was established as part of the government’s Vision 2030 goal to raise the share of exports in the non-oil economy from 16 percent at present to 50 percent by the end of the decade.

“We at Saudi EXIM are mandated to serve all Saudi-based exporters of non-oil content, be it goods, services or intermediate value-added products, irrespective of their enterprise size. We do so by ensuring that our role complements that of commercial lenders instead of eroding it or competing with it,” Dr. Naif Al-Shammari, acting CEO of Saudi EXIM, said in an interview with Arab News.

“We pay special attention to small and medium enterprises given the limited access they have to commercial funds. This extends even to those that do not have an export track record, provided that they have valid on-hand orders from the export market,” Al-Shammari said. 

Dr. Naif Al-Shammari, acting CEO of Saudi EXIM

To boost the performance of exporters in the non-oil sector, the Saudi EXIM Bank offers 17 different credit solution products, which were developed in accordance with best international practices and based on the needs of Saudi-based exporters and their foreign clients, Al-Shammari said.

Meshari Alrajih, an assistant professor of marketing at the King Saud University, said small and medium-sized exporters can benefit from the new “Made in Saudi” program, which offers several solutions to promote the development of local products. There are many forms of support that can be used, such as fee exemptions for starting industrial enterprises of up to five employees, he explained. He pointed to other programs related to Vision 2030 that can help small and medium enterprises (SMEs), including the National Industrial Development and Logistics Program, the Local Content and Government Procurement Authority and the Industrial Development Fund.

FASTFACTS

• The Saudi Export-Import Bank has approved nearly $2.13 billion in lending to non-oil exporters since it was launched early last year.

• It provides export financing, guarantees and export credit insurance services with competitive advantages.

To become one of the companies helping to achieve the targets set by the Vision 2030 program, Alrajih said, entrepreneurs should contact the relevant authorities with experience in this area, such as the Saudi Exports Development Authority and the chambers of commerce. He also recommended that small companies participate in international exhibitions and conferences, to build up their overseas networks.

Alrajih urges SMEs to market their products outside the Kingdom through a number of channels such as the Ministry of Investment, which has overseas offices specializing in helping such companies.

Design and branding consultant Fawaz Al-Otaibi said the “Made in Saudi” initiative comes at a critical time. “During the past years, many Saudis have received their education in the most prestigious universities in the world and studied design, branding, industrial design and other specializations,” he said, adding that this new skillset among young Saudis will lead to “a significant transformation within a short period.”

As Saudi SMEs become more experienced at marketing their products to a wider global audience, agencies such as the Saudi EXIM Bank will be on hand to help them to finance the logistics needed to become exporters, helping the government to achieve its ambitious Vision 2030 targets.


New partnership aims to boost Saudi Arabia’s electric vehicle sector

New partnership aims to boost Saudi Arabia’s electric vehicle sector
Updated 22 April 2021

New partnership aims to boost Saudi Arabia’s electric vehicle sector

New partnership aims to boost Saudi Arabia’s electric vehicle sector
  • The Kingdom has been taking serious steps to boost its EV sector, a fundamental part of its Vision 2030 program

JEDDAH: Schneider Electric Saudi Arabia and GREENER by IHCC have signed a partnership agreement to develop e-mobility infrastructure in the Kingdom’s nascent and fast-growing electric vehicle (EV) sector.

Schneider, a French energy management and automation solutions company, and GREENER, a sustainability and energy efficiency services provider, will work on a strategy to boost the number of EV charging facilities in the Kingdom.

GREENER is part of IHCC, a Jeddah-based turnkey solutions provider specializing in healthcare, education and mixed-use projects.

Schneider is already a leader in this area thanks to its EVLink range of charging solutions installed throughout the Kingdom.

“GREENER by IHCC sees the potential for electric vehicle infrastructure, and we’re delighted that we can partner with them to help Saudi Arabia build a world-class network of chargers that will power this transition,” said Mohamed Shaheen, Schneider’s cluster president for the Kingdom and Yemen.

This partnership is in line with the recently announced Saudi Green and Middle East Green initiatives, which aim to reduce carbon emissions, combat pollution and land degradation, and preserve nature.

The Kingdom has been taking serious steps to boost its EV sector, a fundamental part of its Vision 2030 program.

In 2020, commercial imports of EVs and their charging stations were allowed in Saudi Arabia under specific procedures.

A committee has been created — headed by the Energy Ministry, in coordination with government and private agencies and research centers — which aims to study all aspects related to establishing infrastructure for EVs.

Saudi Arabia’s Public Investment Fund (PIF) is an anchor investor for US-based EV manufacturer Lucid Motors.

The sovereign wealth fund announced its first investment of $1 billion in Lucid in September 2018.

The investment was made to “provide the necessary funding to commercially launch Lucid’s first electric vehicle, the Lucid Air, in 2020,” the PIF said.

Lucid is scouting out locations for retail sales outlets in the Kingdom, and aims to get them up and running by the end of 2021 or early 2022, CEO Peter Rawlinson told Arab News earlier this year.


Britain’s driverless car ambitions hit speed bump

Britain’s driverless car ambitions hit speed bump
Updated 22 April 2021

Britain’s driverless car ambitions hit speed bump

Britain’s driverless car ambitions hit speed bump
  • Insurers worry over drivers misunderstanding limits of technology

LONDON: Britain’s goal to be a leader in adopting self-driving cars could backfire unless automakers and government regulators spell out the current limitations of the technology, insurance companies warn.

Insurers are key players in the shift to automated driving, with some investing in a technology they believe will slash accidents and deaths, and save them billions in payouts.

But they are worried drivers might equate today’s lower levels of automation with fully self-driving vehicles, potentially causing more accidents in the short term and permanently damaging public confidence in the technology. “What you describe things as is incredibly important, so people don’t use them inappropriately,” said David Williams, managing director of underwriting at AXA Insurance, whose parent AXA SA made €17 billion in revenues from property and casualty insurance, including motor insurance, in 2020.

“I genuinely believe the world will be a safer place with autonomous vehicles and I really don’t want that derailed.”

In what would be a world first, Britain is considering regulating the use of Automated Lane Keeping Systems (ALKS) on its roads, possibly even on motorways at speeds of up to 70 miles (113 km) per hour. It is also deciding whether to describe them to the general public as “automated” systems.

It is that one word — automated — that has stirred controversy and put the country at the center of a global debate about self-driving terminology at a sensitive moment in its evolution.

The technology is evolving rapidly and there is no consensus on how to deploy it or what to call some features. Regulations in the Americas, Europe and Asia lag far behind technical developments and issues over accident liability are unresolved.

ALKS use sensors and software to keep cars within a lane, accelerating and braking without driver input. Some experts say ALKS should be called “assisted-driving technology” to avoid potentially misleading consumers into believing they can let their attention wander at the wheel.

The dangers of drivers apparently misunderstanding the limits of technology has already become an issue in the US, where regulators have been looking into about 20 crashes involving Tesla’s driver assistance tools, such as its “Autopilot” system — a “Level 2” technology that requires the driver’s constant attention.

Britain’s Thatcham Research said it had tested cars with the technologies underpinning ALKS and found they cannot swerve out of lane to avoid obstacles, see pedestrians emerging from cars at roadside, or read road signs. The car can alert the driver to resume control, but with a potentially fatal lag at high speeds.

Britain’s Transport Ministry said its primary concern was public safety and it had not decided to permit the use of ALKS at high speeds or whether to call the technology “automated.” Its decisions are expected later
this year.

The World Health Organization estimates road accidents globally kill around 1.35 million people a year.

With human error estimated to cause around 90 percent of accidents, insurers have shown considerable interest in automated driving technologies.

There is potentially a big economic boost too from embracing the new technology.

Britain’s Transport Ministry forecasts by 2035 around 40 percent of new UK cars could have self-driving capabilities, creating up to 38,000 new skilled jobs.


UAE’s Diamond Group considers fresh investment opportunities in Egypt

UAE’s Diamond Group considers fresh investment opportunities in Egypt
Updated 22 April 2021

UAE’s Diamond Group considers fresh investment opportunities in Egypt

UAE’s Diamond Group considers fresh investment opportunities in Egypt
  • The UAE company has already started its first project in the new administrative capital with investments of EGP 4 billion

CAIRO: Mohamed Abdel Wahab, CEO of the Egyptian General Authority for Investment and Free Zones (GAFI), discussed increasing investments in Egypt with Saleh Mohammed bin Nasra, owner of the Diamond Group, and Abdel Rahman Agamy, CEO of the Diamond Group and Sky Abu Dhabi Real Estate Development.

An official statement said that they presented promising investment opportunities in several sectors, and covered the facilities and measures taken by the Egyptian government to encourage foreign investment.

The meeting comes during Abdel Wahab’s tour of the Gulf region, where he is engaging with a number of major Emirati companies to discuss investment opportunities.

Nasra said the Diamond Group aimed “to contribute to the implementation of the state’s directives to achieve comprehensive urban development that accommodates the increase in population and contributes to the continued growth of the Egyptian economy.”

Agamy said that the group began taking steps to pump EGP 15 billion ($960 million) worth of investments into Egypt over the next two years. 

Despite only announcing its entry into the Egyptian market two months ago, the UAE company has already started its first project in the new administrative capital with investments of EGP 4 billion.

Agamy said that the group is studying new opportunities and praised GAFI’s efforts in attracting foreign businesses to the country.


World’s top sovereign wealth fund earns $46bn in Q1

World’s top sovereign wealth fund earns $46bn in Q1
Updated 22 April 2021

World’s top sovereign wealth fund earns $46bn in Q1

World’s top sovereign wealth fund earns $46bn in Q1
  • It invests the Norwegian state’s revenues from oil and gas production into 9,100 companies worldwide

OSLO: Norway’s $1.3 trillion sovereign wealth fund, the world’s largest, posted a first quarter profit thanks to strong stock markets, it said on Wednesday.

The fund had a 4 percent return on investment, earning 382 billion crowns ($45.7 billion) between January and March, beating its own benchmark index. “The rise of the equity market was to a great extent driven by the finance and energy sectors,” the fund’s deputy CEO Trond Grande said in a statement.

While stocks earned a return of 6.6 percent, the fixed income portfolio had a loss of 3.2 percent while unlisted real estate had a positive return of 1.4 percent.

The fund invests the Norwegian state’s revenues from oil and gas production into 9,100 companies worldwide, owning 1.4 percent of all listed shares globally, and also invests in bonds, property and green infrastructure.

The fund, which generated $123 billion in returns last year, used a previous strategy update to shift its equity exposure toward US stocks and away from Europe. Much of last year’s performance was driven by the fund’s holdings of US technology stocks.

A recent Bloomberg report quoted Grade as saying, “the fund still has room to add risk within its current investment framework.”

The fund’s mandate gives it a so-called risk budget that lets it veer 125 basis points from its benchmark. For now, it’s tended not to exceed 30-50 basis points, according to Grande.