Saudi fintech industry rakes in $1bn in revenues, says top SAMA official

Special Khaled Al-Dhaher, vice governor for supervision and technology at the Saudi Central Bank, speaks at the event in Riyadh. Photo/Supplied
Khaled Al-Dhaher, vice governor for supervision and technology at the Saudi Central Bank, speaks at the event in Riyadh. Photo/Supplied
Short Url
Updated 01 October 2024
Follow

Saudi fintech industry rakes in $1bn in revenues, says top SAMA official

Saudi fintech industry rakes in $1bn in revenues, says top SAMA official
  • Khaled Al-Dhaher sees sector to sustain strong growth momentum in line with Kingdom’s goals
  • He said ‘since 2019, the number of fintech companies operating in Saudi Arabia has grown from 14 to more than 230’

RIYADH: Saudi Arabia’s fintech sector has become a major player in the country’s financial services landscape, with companies generating over SR3.75 billion ($1 billion) in revenues and reaching millions of customers daily.

“The Saudi fintech sector has made substantial progress over the past five years to the point where it is now firmly established as the leading regional hub for fintech with an increasingly prominent global role,” Khaled Al-Dhaher, vice governor for supervision and technology at the Saudi Central Bank, told Arab News on the sidelines of the 24 Fintech Conference.

He added: “Since 2019, the number of fintech companies operating in Saudi Arabia has grown from 14 to more than 230.”

Saudi fintech firms are not only transforming the financial landscape with innovative solutions but are also prompting traditional financial institutions in the country to rapidly adopt digital services. Many of these institutions are partnering with fintech companies to enhance their offerings and better serve their clients, contributing to a more digitized and innovative financial sector.

 

 

“We expect this strong momentum in Saudi fintech to be sustained,” Al-Dhaher said, emphasizing the Kingdom’s ambitious goals, which include increasing the number of active fintech companies to 525 by 2030. This growth is driven by the entry of new and innovative business models into the market, improving the overall sophistication of the financial sector.

Al-Dhaher also sees potential for international fintech companies to deepen their involvement in Saudi Arabia, further boosting the sector’s contribution to employment and gross domestic product.

Drivers of growth

Several factors have fueled the rapid expansion of fintech in Saudi Arabia. Al-Dhaher highlighted the Kingdom’s young, tech-savvy population, which boasts high mobile penetration and a strong preference for digitally delivered services. This demographic advantage has naturally driven the growth of fintech firms in the region.

In addition to these socio-economic factors, government initiatives have played a crucial role in fostering a supportive environment for fintech development. The Financial Sector Development Program under Vision 2030 and the National Fintech Strategy have both provided clear roadmaps for the sector’s growth.

“Over the last several years, SAMA has undertaken a number of proactive steps to support the development of the Saudi fintech ecosystem," Al-Dhaher said.

One such initiative is the regulatory sandbox launched in 2018, which allows emerging fintech companies to test their ideas in a controlled environment. This has attracted substantial interest, with over 500 applications from companies wanting to participate in the sandbox since its inception.

Beyond SAMA’s efforts, other regulatory bodies, including the Capital Market Authority and the Insurance Authority, have established their own fintech incubators. These collaborative efforts have created a dynamic and supportive regulatory environment, spurring growth in areas such as Insurtech, Buy Now Pay Later, and Open Banking.

Another pivotal initiative is Fintech Saudi, which serves as a catalyst for developing the infrastructure and talent needed for fintech companies to scale.

Al-Dhaher highlighted the Makken program, launched by Fintech Saudi with support from SAMA and CMA, as a key enabler of the fintech ecosystem. The program offers essential support in technology, cloud computing, and cybersecurity, ensuring that fintech entrepreneurs have the tools they need to succeed.

 

 

Challenges in sustaining growth

While the outlook for Saudi Arabia’s fintech sector is positive, Al-Dhaher acknowledged that challenges remain. One major challenge is ensuring sufficient sector diversification and maintaining fair market competition.

He noted that early fintech companies in the Kingdom primarily focused on payments, which significantly increased the electronic transaction ratio to 70 percent, ahead of the target date. However, as the sector evolves, there is a growing need for diversification into other fintech segments.

Al-Dhaher pointed out that emerging areas like crowdfunding, robo-advisory, BNPL, and Open Banking are gaining traction and will be crucial in meeting evolving customer needs. Regulators like SAMA must ensure that fintech companies represent a broad range of business models catering to diverse consumer demands.

Another significant challenge is ensuring the long-term sustainability of the fintech ecosystem while maintaining financial system stability and consumer protection.

“A main focus of our mandate is to make sure the fintech ecosystem will effectively co-exist with traditional financial institutions and complement each other, without disruption to the broader financial system,” Al-Dhaher said. Balancing these elements will be critical to the sector’s future success.

A collaborative approach

In a dynamic sector like fintech, the regulatory environment must be flexible and responsive to emerging trends.

Al-Dhaher emphasized SAMA’s commitment to evolving its regulations and processes to support sustainable fintech growth while safeguarding the broader financial system.

“We are engaged in an ongoing dialogue with key stakeholders within the sector to ensure we fully understand their needs,” he said, noting that Saudi regulators closely monitor global trends and adapt their frameworks as needed.

The regulatory sandbox remains a vital tool in this process, allowing SAMA to stay updated with the latest fintech developments and adjust regulations accordingly. Other entities, such as the CMA and the Insurance Authority, also play crucial roles in maintaining a regulatory framework conducive to fintech innovation.


Oil Updates – crude retreats but heads for weekly climb on potential Mideast supply disruption

Oil Updates – crude retreats but heads for weekly climb on potential Mideast supply disruption
Updated 5 sec ago
Follow

Oil Updates – crude retreats but heads for weekly climb on potential Mideast supply disruption

Oil Updates – crude retreats but heads for weekly climb on potential Mideast supply disruption

SINGAPORE: Oil eased on Friday after a rally the previous day, but prices remained set for a second straight weekly gain as investors weighed the impact of hurricane damage on US demand against any broad supply disruption if Israel attacks Iranian oil sites.

Brent crude oil futures fell 29 cents, or 0.4 percent, to $79.11 a barrel by 7:30 a.m. Saudi time. US West Texas Intermediate crude futures dropped 21 cents, or 0.3 percent, to $75.64 per barrel.

For the week, both benchmarks were headed for a 1 percent-2 percent gain.

“Oil prices continue to extend (their) run week-on-week, with geopolitical risks fueling the rebound,” said Yeap Jun Rong, market strategist at IG. But he added that reservations over high crude inventories and a possibly more gradual easing of the US Fed rate have put the recent rally on hold.

In the US, Hurricane Milton plowed into the Atlantic Ocean on Thursday after cutting a destructive path across Florida, killing at least 10 people and leaving millions without power. The destruction could dampen fuel consumption in some areas of the world’s largest oil producer and consumer.

“Investors are evaluating how hurricane damage might impact the US economy and fuel demand,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities.

“Oil prices are likely to hover around the current 200-day average levels, with the primary concern being whether Israel will retaliate against Iranian oil facilities,” he said.

The 200-day average for Brent is at $81.68 a barrel and for WTI it’s at $77.36.

Crude benchmarks spiked this month after Iran launched more than 180 missiles against Israel on Oct. 1, raising the prospect of retaliation against Iranian oil facilities. Israel has yet to respond, and crude benchmarks have eased and remained relatively flat through the week.

Israeli Defense Minister Yoav Gallant, however, has said that any strike against Iran would be “lethal, precise and surprising.”

Iran is backing several groups fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen.

In Lebanon, Israeli strikes on central Beirut on Thursday night killed 22 people and wounded at least 117, Lebanon’s health ministry said. Lebanese security sources said at least one senior Hezbollah figure was also targeted in the attacks.

Gulf states, meanwhile, are lobbying Washington to stop Israel from attacking Iran’s oil sites, out of concern their own oil facilities could come under fire from Tehran’s proxies if the conflict escalates, three Gulf sources told Reuters.

On the supply side, Libya’s National Oil Corporation  said on Thursday it has restored production close to levels before the country’s central bank crisis, reaching 1.22 million barrels per day. 


Saudi Arabia, Oman sign MoU to further strengthen economic ties

Saudi Arabia, Oman sign MoU to further strengthen economic ties
Updated 10 October 2024
Follow

Saudi Arabia, Oman sign MoU to further strengthen economic ties

Saudi Arabia, Oman sign MoU to further strengthen economic ties

JEDDAH: Saudi Arabia and Oman have signed a memorandum of understanding aimed at bolstering economic and planning cooperation based on mutual interests.

The agreement was finalized on Thursday in Riyadh, with Saudi Minister of Economy and Planning Faisal Al-Ibrahim and his Omani counterpart, Said bin Mohammed Al-Saqri, signing a five-year commitment focused on enhancing medium- and long-term economic planning, studies, and modeling, alongside monetary policies and strategies.

The pact highlights a commitment to promoting a green and circular economy, as stated by the Saudi Ministry of Economy and Planning.

Trade between Saudi Arabia and Oman reached SR36.8 billion ($9.81 billion), with Saudi exports accounting for SR22.5 billion, reflecting the growing economic ties between the two nations.

Implementation of the cooperation outlined in the memorandum will involve the exchange of information, experiences, and studies, as well as mutual visits by experts and specialists. The agreement also includes plans for hosting conferences, seminars, and workshops.

The Saudi ministry emphasized that such memorandums would enhance cooperation among Gulf Cooperation Council countries and strengthen bilateral relations between Saudi Arabia and Oman.

On Oct. 9, Saudi Commerce Minister Majid Al-Qasabi welcomed Al-Saqri and his delegation, discussing ways to enhance trade and economic partnerships while addressing various economic topics to boost intra- and external trade among GCC members.

Al-Qasabi underscored that the nation’s economic reforms, guided by Crown Prince Mohammed bin Salman as part of Vision 2030, are designed to implement structural changes that promote sustainable economic growth, leveraging significant developmental opportunities within the Kingdom.

He noted that these reforms have improved the business environment and elevated Saudi Arabia’s global competitiveness, as evidenced by positive international economic indicators.

In April, a MoU was signed between the Kingdom and Oman during a meeting between Sultan bin Salem Al-Habsi, Oman’s minister of finance, and Sultan Abdulrahman Al-Marshad, CEO of the Saudi Fund for Development. Discussions during that meeting focused on cooperation mechanisms between Oman and the fund, as well as updates on collaborative development projects.

The primary objective of these efforts is to enhance the industrial and logistical sectors in Oman, providing essential services to encourage private sector investment in line with the country’s Vision 2040, as reported by the Omani News Agency.

The memorandum is part of broader initiatives aimed at supporting developmental efforts in Oman, including infrastructure, higher education, vocational training, and projects in industry, mining, transportation, communications, and energy sectors.


Closing Bell: Saudi main market closes in green at 11,995.22

Closing Bell: Saudi main market closes in green at 11,995.22
Updated 10 October 2024
Follow

Closing Bell: Saudi main market closes in green at 11,995.22

Closing Bell: Saudi main market closes in green at 11,995.22

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Thursday, gaining 66.89 points, or 0.56 percent, to close at 11,995.22. 

The total trading turnover of the benchmark index was SR5.85 billion ($1.56 billion) with 185 of the listed stocks advancing and 39 declining. 

The MSCI Tadawul Index also gained 8.14 points to close at 1,504.4.

Similarly, Saudi Arabia’s parallel market gained 69.81 points to close at 24,522.95. 

The primary driver behind the main index’s positive performance was Arab Sea Information System Co., whose share price surged by 9.9 percent to SR7.44. 

On Oct. 9, the company announced the resignation of board member Turki bin Nasser Al-Dahmash, effective immediately. 

Al-Dahmash stepped down for personal reasons after serving on the board for just over a year. 

This comes amid other strategic shifts within the firm, as Arab Sea continues to focus on expanding its technological services, particularly through its newly established cloud computing unit, Era Data, which launched in 2023 with a capital of SR5 million.

Other top performers in the main market include Thob Al Aseel Co. and Al-Baha Investment and Development Co., as their share prices soared by 9.09 percent and 7.69 percent to SR4.80 and SR0.42, respectively. 

Thob Al Aseel Co., a prominent Saudi company specializing in traditional clothing, has been making significant financial strides in 2024. For the first quarter of the year, the firm reported a net profit increase of 44 percent, reaching SR40.1 million. 

This growth was driven by a rise in sales and improvements in profit margins, particularly from high-demand items. Revenue grew by 10.9 percent, and gross income jumped by 21.3 percent, reflecting the company’s strong performance amid increasing market demand.

The worst performer on the benchmark index was Herfy Food Services Co. The firm’s share price dropped by 4.11 percent to SR26.8. 

Recently, Herfy Food Services Co. has been in the spotlight due to internal corporate tensions. The company’s largest shareholder, Savola Group, which holds a 49 percent stake, has requested a shareholder vote to dismiss a board member, Mohammed Abdulaziz Al-Shetwey.

This move is part of an ongoing dispute between Savola and Herfy’s management, raising concerns about governance issues within the company. The shareholder meeting, scheduled for November, will address this matter alongside other significant agenda items.


Middle East conflict poses risk to regional sovereign credit ratings: S&P

Middle East conflict poses risk to regional sovereign credit ratings: S&P
Updated 10 October 2024
Follow

Middle East conflict poses risk to regional sovereign credit ratings: S&P

Middle East conflict poses risk to regional sovereign credit ratings: S&P
  • Increased instability could impact regional governments’ economic outlook and financial stability
  • Although Lebanon remains in default, its economic and recovery prospects have further deteriorated

RIYADH: The ongoing conflict in the Middle East threatens to undermine sovereign credit ratings across the region if it escalates, according to S&P Global. 

The agency warned that increased instability could impact regional governments’ economic outlook and financial stability, with broader implications for creditworthiness depending on the conflict’s trajectory. 

While the immediate effects have been largely contained to specific areas, there are growing concerns that prolonged geopolitical tensions could lead to broader economic disruption across the region, it added. 

“So far, the sovereign credit impact of the conflict has been confined to the two rated sovereigns directly involved in the conflict: Israel and Lebanon. However, we now foresee several potential pathways via which the conflict could have a more material credit impact on the rest of the region,” said S&P Global. 

Its rating on Israel is now two notches lower than on Oct. 7, 2023, reflecting weaker fiscal and growth expectations through 2025, along with significantly heightened security risks. 

The agency also indicated that, although Lebanon remains in default, its economic and recovery prospects have further deteriorated. 

The report said that key areas of vulnerability include energy prices, trade route security, and capital flows, all of which could face heightened pressure if the conflict continues into 2025 as expected. 

The agency also said that the persistent uncertainty is likely to weigh on investor confidence, potentially leading to capital outflows and increased volatility in regional markets. 

While the geopolitical tensions have so far had a limited direct impact on the credit metrics of most Middle Eastern sovereigns, S&P said the potential for wider regional economic stress is growing. 

The conflict could affect key economic indicators such as growth, tourism revenues, remittances, and fiscal balances, depending on how the situation evolves. 

Countries more dependent on stable energy prices or vulnerable to trade disruptions, such as energy importers, could face more pronounced fiscal risks, while oil exporters in the Gulf may benefit from rising oil prices in the short term, it added. 

“Such trade disruptions could be a key challenge for the region, with the potential to increase oil prices and pose fiscal risks to energy importers, although higher oil prices could mitigate the risk for Gulf exporters particularly if the risks of export routes being blocked or oil production facilities being disrupted, remain contained,” added S&P. 

It said sovereign credit ratings in the region are already factoring in elements of geopolitical risk, but the current conflict could amplify these risks and lead to further rating downgrades. 

“Further, we now view the conflict as more complex and unpredictable and consider it more likely to persist well into 2025, with potentially lingering aftereffects,” added S&P. 


Oman’s public revenues see annual rise of 2.3%

Oman’s public revenues see annual rise of 2.3%
Updated 10 October 2024
Follow

Oman’s public revenues see annual rise of 2.3%

Oman’s public revenues see annual rise of 2.3%
  • Net oil revenues reached an estimated 4.65 billion by the end of August
  • Average achieved oil price reached $83 per barrel

RIYADH: An increase in Oman’s net oil revenues drove a 2.3 percent year-on-year rise in public earnings, reaching 8.12 billion Omani rials ($21.07 billion) between January and the end of August, according to new figures. 

The monthly bulletin issued by the Ministry of Finance said that net oil revenues reached an estimated 4.65 billion rials by the end of August, reflecting a 12 percent surge compared to the same period last year.  

The growth in figures suggests vibrant and expanding economic activity, with more funds circulating within the country. 

Oman’s public revenue saw an annual decline of 2 percent year on year in the second quarter, reaching $16.1 billion, the country’s news agency reported in August.  

The sultanate’s economic landscape is heavily influenced by its reliance on oil and gas revenues, making it vulnerable to global price fluctuations.  

The government has been actively working to diversify the economy and reduce dependence on hydrocarbons as part of its Vision 2040 plan. 

The bulletin further showed that the average achieved oil price reached $83 per barrel, while the average oil production amounted to about 1.1 million barrels per day. 

The increase in net oil revenues is attributed to the methodology used by the government-owned firm Energy Development Oman to collect crude earnings and manage cash liquidity.

Net gas revenues reached 1.43 billion rials, reflecting a 15 percent drop by the end of August compared to the corresponding period in 2023. This is due to the change in the methodology for collecting gas revenues.

Current earnings collected until the end of August also decreased by 104 million rials compared to the same period last year to reach about 2.23 billion rials.

The bulletin also revealed that public spending until the end of August amounted to 7.66 billion, an increase of 7 percent compared to actual expenditure during the same period of 2023.

The most prominent expense is the current civil ministry fees, which amounted to 5.43 billion rials, down by 30 million rials compared to the same period in 2023.

Development expenditures of ministries and civil units amounted to 735 million rials by the end of August, with a disbursement rate of 82 percent of the total development liquidity allocated for 2024, which amounted to 900 million rials.

Total contributions and other expenditures amounted to 1.44 billion rials, up by 58 percent year on year. This is primarily owed to the implementation of the social protection system this year.

Support for the social protection system, electricity sector, and petroleum products until the end of August amounted to about 373 million rials, 295 million rials, and 191 million rials, respectively, while the transfer to the debt repayment provision amounted to 266 million rials.

With regard to global and local economic performance, the bulletin explained that the Organization for Economic Co-operation and Development indicated in its interim outlook report issued in September that global growth is expected to stabilize at 3.2 percent in 2024 and 2025, in line with the average increase rate observed during the first half of this year.

The organization also suggested that the delayed impact of tightening monetary policy in the economies of advanced countries has begun to moderate, in addition to easing monetary policies and lower inflation that will support interest rates in 2025. It also disclosed that the inflation rate decline will provide additional support to the growth of real per capita income and private consumption in many economies.

Regarding global oil markets, the bulletin stated that according to the US Energy Information Administration’s Short-Term Energy Outlook report in September, the average price of Brent spot crude is expected to reach about $83 per barrel in 2024, while the average price of Brent spot crude is expected to reach $84 per barrel in 2025.

As for the local economy, S&P raised its credit rating for the Sultanate of Oman to “BBB-” with a stable outlook in its report issued in September, placing it in the first degrees of the investment worthiness index after seven years.

This is due to the continued measures to improve public finances through development initiatives and efforts in the financial and economic sectors and government restructuring. This contributed to restoring the monetary balance between revenues and public spending as intended in the medium-term plan.

This comes in addition to the government’s commitment to reducing the state’s public debt, managing government companies, and decreasing indebtedness.

The agency expected that Oman would achieve moderate financial surpluses of 1.9 percent during the period from 2024 to 2027, growth in real gross domestic product of about 2 percent annually, and record financial surpluses in the current balance of 1.2 percent of GDP.