Saudi fintech firms mobilize economic change in the Kingdom

Special Saudi fintech firms mobilize economic change in the Kingdom
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Updated 19 April 2022

Saudi fintech firms mobilize economic change in the Kingdom

Saudi fintech firms mobilize economic change in the Kingdom
  • In 2021, KSA witnessed a 37% rise in new fintech launches over the previous year

RIYADH:  With the pandemic abating, a new crop of fintech companies is heralding the winds of change in the way businesses are run in Saudi Arabia.
From facilitating cashless payments to offering financial data analytics to providing loans, these firms are coming out with simpler and customized alternatives to traditional banking.
“The GDP in Saudi Arabia is just impressive. You have much bigger potential for what you do in Saudi Arabia. You have 10 times the potential in Egypt and at least five times the potential in the UAE,” Ahmad Coucha, co-founder and CEO of FlapKap, told Arab News.
FlapKap, an Egypt-based company, provides AI-based insights and financial data analytics and is planning to set shop in the Kingdom.
The company offers e-commerce firms cutting-edge insights to optimize their advertising spending and maximize profits. It also provides these businesses with flexible payment terms on advertising spending to ensure sustainable growth without cash constraints.

Another innovative fintech company making its presence felt in the Kingdom is HyperPay, a Jordan-based online payment company.
The company recently obtained a technical permit from Saudi Payments, a wholly owned subsidiary of the Saudi Central Bank, or SAMA.
The technical permit allows e-payment service providers to activate Mada services, a central payment scheme connecting all ATMs and sales points across the country.
“After years of hard work to establish a proper digital infrastructure, Saudi Arabia is now ready to adopt digital payments. And that is why they are way ahead of anyone in the region,” said Muhannad Ebwini, co-founder and CEO of HyperPay.

Muhannad Ebwini, co-founder and CEO of HyperPay

Of late, there has been a lot of traction in the fintech space thanks to SAMA’s role in promoting the sector’s development by allowing the entry of new players and new products as part of its Fintech Saudi program launched in 2018.
The initiative, aimed at pushing fintech companies to compete locally and globally, is now bearing fruits with an increasing number of innovative companies enhancing financial stability and supporting the economic development in the Kingdom.
According to a Fintech Saudi report, fintech transaction values between 2017 and 2019 increased by over 18 percent year-on-year, reaching over $20 billion in 2019.
With an increasing number of first-generation entrepreneurs competing with large financial institutions, the report stated that the transaction value will surpass $33 billion by 2023.
Additionally, there is also ample room for growth, with the average investment deal size at $2.7 million compared to the global average of $7.3 million, the report revealed.
Also noteworthy is the drastic change in the financial industry, which was earlier governed by a complex set of rules and regulations to ensure monetary safety. Fintech Saudi has tackled the problem by taking the bull by the horns.
The financial authority is now supporting these startups by walking them through the regulations and providing a more straightforward way to obtain an operating license from SAMA.
The result: The Kingdom witnessed a massive jump in venture capital investments in the fintech sector, hitting 16 deals in the first eight months of 2021, totaling $157.2 million. In 2021, it witnessed a 37-percent rise in new fintech launches over the previous year.

Factoring this instant rise in fintech companies, the Saudi Central Bank and the Capital Markets Authority launched the first-of-its-kind Financial Technology Center last month in Riyadh.
Located in Riyadh’s King Abdullah Financial District, the center aims to provide these fintech startups with investment opportunities. There’s no doubt that the prospects of fintech companies based in the Kingdom are far brighter now.
Last month, Saudi-based digital broker for personal loans Arib raised $2.3 million in a seed round investment led by venture capital firm Merak Capital.
The fintech will use its acquired funds to meet the requirements set by the Saudi Central Bank to finalize its licensing process and introduce new services to its portfolio.
Founded in 2019, Arib provides its users with auto financing options to match their credit profiles and get easy access to loans.
“The Kingdom is witnessing a huge technological revolution and a remarkable acceleration in digital transformation, especially in the financial technology sector,” said Arib CEO Walid Talaat, confirming the warm winds of change sweeping the Kingdom.

Qatar’s first Green Guarantee issued for a solar project 

Qatar’s first Green Guarantee issued for a solar project 
Updated 12 sec ago

Qatar’s first Green Guarantee issued for a solar project 

Qatar’s first Green Guarantee issued for a solar project 

RIYADH: Standard Chartered Bank and Siemens Energy have issued Qatar’s first Green Guarantee – an initiative designed to increase sustainable and responsible banking practice in the country. 

The Green Guarantee was granted for a solar power project that is projected to play a significant role in the country’s national climate change action strategy and its goal of reducing its carbon footprint while enhancing its energy independence.

This Green instrument is intended to aid in the project’s completion and long-term sustainability. 

Green guarantees can serve as a powerful de-risking mechanism, accelerating the flow of private financing into climate mitigation and adaptation projects in developing nations. 

“The road to net zero requires partnership, innovation, as well as decarbonization. This is highlighted in the development of this innovative Green Guarantee as a trading instrument with Standard Chartered, which will support the development of an important solar power project in Qatar,” Daniela Schoeppner, vice president of Finance Hub Middle East at Siemens Energy said. 

The collaboration between Standard Chartered Bank, Qatar, and Siemens Energy creates an entirely new benchmark for sustainable finance in Qatar and serves as a model for companies and institutions interested in promoting responsible and sustainable finance practices. 

The announcement is the latest move by countries in the region to push ahead with sustainable investments.

In February, Saudi Arabia’s Ministry of Industry and Mineral Resources also signed a memorandum of understanding with Standard Chartered Bank to evaluate the requirements for sustainable investment in the mining sector in the Kingdom, in line with its Vision 2030 objectives. 

The MoU focuses on promoting knowledge transfer, technological enablement, job creation and executing the outcomes of the Future Minerals Forum. 

It will also encourage local and foreign businesses to discover investment potential in Saudi Arabia’s mining and mineral sectors. 

Saudi Arabia’s Public Investment Fund announced in February that it has raised $5.5 billion through its second green bond sale. This follows the PIF’s initial green bond issuance amounting to $3 billion in October 2022.  

The money will be used to fund sustainable investments by the sovereign wealth fund through its Green Finance Framework. 

The first offering was more than eight times oversubscribed, with a subscription request totaling $25.9 billion. 

The most recent bond issuance was more than six times oversubscribed, with books surpassing $33 billion, and it was offered in three tranches – $1.75 billion for 7 years, $2 billion for 12 years, and $1.75 billion for 30 years. 

Alistithmar Capital inks agreement with Safa Investment Co. to launch $292.9m real estate fund 

Alistithmar Capital inks agreement with Safa Investment Co. to launch $292.9m real estate fund 
Updated 18 min 2 sec ago

Alistithmar Capital inks agreement with Safa Investment Co. to launch $292.9m real estate fund 

Alistithmar Capital inks agreement with Safa Investment Co. to launch $292.9m real estate fund 

RIYADH: Alistithmar Capital, the investment arm of Saudi Investment Bank, has signed an agreement with Safa Investment Co. to launch several real estate funds – with the first estimated to be worth $292.9 million.   

Both companies will cooperate to help support the Kingdom’s growth in the real estate sector through funds that target the residential space in main cities with particular focus on Riyadh.  

The funds aim to enhance the growth of the invested capital through the acquisition of land in the targeted geographical areas to develop high-quality residential complexes and sell them ready for habitation.  

Khalid Al-Rayes, CEO of Alistithmar Capital, explained that the company’s cooperation with Safa Investment will open opportunities to achieve greater returns.  

According to Safa Investment Co., the agreement aims to bridge the gap between demand and supply in the real estate market in all its sectors through projects that target strategic and vital areas in the most prominent neighborhoods in Riyadh and other cities.  

In March, Alistithmar Capital received approval from the Capital Market Authority for its Alistithmar Capital Quarterly Dividend Fund.  

Saudi Arabia’s real estate sector is witnessing massive traction and development with a huge increase in property values.  

Real estate prices in Saudi Arabia increased by 1.6 percent in the fourth quarter of 2022, compared to the same period in 2021, primarily driven by a rise in residential property values  

The price of residential properties increased by 2.6 percent in the fourth quarter of 2022, mainly fueled by a 2.7 percent rise in land plot prices.  

Moreover, Saudi Arabia is planning to relax its property ownership laws for foreigners as the Kingdom eyes attracting investments into the real estate sector as part of its strategy to diversify its economy. 

Global growth to hit three-decade low: World Bank  

Global growth to hit three-decade low: World Bank  
Updated 43 min 54 sec ago

Global growth to hit three-decade low: World Bank  

Global growth to hit three-decade low: World Bank  

RIYADH: The global economy is set for a “lost decade” according to the World Bank as it forecasts that economic growth is set to hit a 30-year low.

A report from the organization warns average global domestic product growth will drop to 2.2 percent a year between 2022 and 2030 – down from the 3.5 percent rate that prevailed in the first decade of this century.

According to its latest forecast, the decline for developing economies will be especially steep – with growth shrinking from 6 percent a year between 2000 and 2010 to 4 percent a year up until 2030.  

 “A lost decade could be in the making for the global economy. The ongoing decline in potential growth has serious implications for the world’s ability to tackle the expanding array of challenges unique to our times—stubborn poverty, diverging incomes, and climate change.” said the World Bank’s Chief Economist and Senior Vice President for Development Economics Indermit Gill.  

He added: “But this decline is reversible. The global economy’s speed limit can be raised—through policies that incentivize work, increase productivity, and accelerate investment.” 

Analysts from the World Bank theorized that if the world embraced sustainable and growth-oriented policies, potential GDP growth could be raised by 0.7 percentage points to an annual average rate of 2.9 percent. 

“The global economy’s “speed limit”— the maximum long-term rate at which it can grow without sparking inflation — is set to slump to a three-decade low by 2030. An ambitious policy push is needed to boost productivity and the labor supply, ramp up investment and trade, and harness the potential of the services sector,” stated the report.  

Aligning monetary, fiscal, and financial frameworks is the first World Bank recommendation that could be used to moderate the fluctuations of business cycles, therefore instilling investor confidence. 

The report also suggested ramping up investments, cutting trade costs and increasing labor force participation as ways to enhance potential growth in the national economies.  

Additionally, capitalizing on the services sector could become the new engine of economic growth.

The World Bank concluded: “International economic integration has helped to drive global prosperity for more than two decades since 1990, but it has faltered. Restoring it is essential to catalyze trade, accelerate climate action, and mobilize the investments needed to achieve the Sustainable Development Goals.” 

Bahrain GDP grows close to 5% in 2022; fastest pace in almost a decade 

Bahrain GDP grows close to 5% in 2022; fastest pace in almost a decade 
Updated 28 March 2023

Bahrain GDP grows close to 5% in 2022; fastest pace in almost a decade 

Bahrain GDP grows close to 5% in 2022; fastest pace in almost a decade 

RIYADH: Bahrain posted a real gross domestic product growth rate of 4.9 percent in 2022, the highest economic growth pace since 2013, its Ministry of Finance and National Economy announced in its annual economic report.  

The report also highlighted that Bahrain is steadily progressing in its economic diversification journey, as its non-oil real GDP witnessed 6.2 percent growth in 2022, the highest since 2012.  

The growth of Bahrain’s non-oil GDP in 2022 also surpassed the 5 percent annual target set by its economic recovery plan.  

Bahrain launched its multi-year five-pillar economic recovery plan in 2021, aiming to enhance the strength of the Kingdom’s economy, its long-term competitiveness, and its recovery post-pandemic.  

“The positive results posted today are the cumulation of many years of hard work and careful planning by the Government of Bahrain to lay the foundations for a sustainable, diverse, and prosperous economy,” said Bahrain’s Minister of Finance and National Economy Shaikh Salman bin Khalifa Al Khalifa. 

According to him, central to these efforts has been the comprehensive Economic Recovery Plan, launched in 2021, “which is an investment in our nation’s people, our businesses, and the future of Bahrain.” 

The program is touted to be Bahrain’s largest-ever reform program, with over $30 billion catalyzed for investment and significant labor market and regulatory reforms to improve the ease of doing business. 

Al Khalifa added: “These results are a statement of our intent to secure a balanced budget by 2024, provide long-term fiscal sustainability and create an economy that delivers for everyone across the Kingdom.”  

The annual report also revealed that Bahrain reported a drop in deficit to GDP to -1.1 percent, a drop in debt to GDP to 100 percent, and a primary surplus of 3.3 percent.  

In October 2022, speaking exclusively to Arab News, Khalid Humaidan, CEO of Bahrain’s Economic Development Board, said that the country is benefitting from a high level of foreign direct investment, securing $921 million in the first nine months of 2022.  

He also added that the board has identified six priority sectors which include manufacturing, logistics, tourism, information and communications technology, financial services, and oil and gas.  

“We think if we focus on our priority projects, our priority sectors will be achieved, and we will be able to achieve other goals that we have in the economic recovery plan. Fiscal balance by the end of 2024 — we’ve committed to that target as a government, and that will happen by growing the non-oil GDP in the country,” said Humaidan.  

Alibaba to split into six units, explore IPOs

Alibaba to split into six units, explore IPOs
Updated 28 March 2023

Alibaba to split into six units, explore IPOs

Alibaba to split into six units, explore IPOs

RIYADH: Alibaba Group Holding Ltd is planning to split its business into six main units covering e-commerce, media and the cloud, the company said on Tuesday, adding that each of the units will explore fundraising or initial public offerings.

US-listed shares of Alibaba rose 3.5 percent in trading before the bell.

The six units will include Cloud Intelligence Group, Taobao Tmall Commerce Group, Local Services Group, Cainiao Smart Logistics Group, Global Digital Commerce Group and Digital Media and Entertainment Group.

Each of the six will be managed by its own CEO and board of directors.

Daniel Zhang will continue to serve as chairman and CEO of Alibaba Group, which will follow a holding company management model, the company said in a statement.

Zhang will also serve as CEO of Cloud Intelligence Group, as previously announced.