How Fintech Delivers Economic Growth and Social Impact in MENA

This article was originally published by SME10X

In MENA, financial technology is revolutionizing the way money flows and fundamentally altering the region’s economic fabric and that’s a good thing.

With innovation at its core, MENA’s fintech sector, 800 companies strong, is rapidly dismantling the hurdles faced by millions who have been outside the periphery of traditional banking, providing a lifeline to small and medium-sized enterprises (SMEs), and facilitating a digital shift that promises inclusivity and prosperity for all.

Fintech's promise of social impact ensures that financial services are no longer a gated privilege but a universal right.

Digital transactions are projected to surge in the coming years. The digital payments market is estimated to grow from USD 226.53 billion in 2024 to USD 380.86 billion by 2029, at a CAGR of 10.95 percent. The tangible benefits of fintech are already palpable in the MENA region's bustling economic landscape. The unbanked are finding their foothold with mobile wallets and a plethora of consumer finance options, like buy now pay later (BNPL), entrepreneurs are accessing vital capital through streamlined lending platforms, and cross-border payments are being executed with unprecedented ease.

This transformation is not occurring in a vacuum.

The sector is significantly driven by Gen Z, with recent surveys showing that almost half of the respondents in the UAE (51 percent), Saudi Arabia (48 percent), and Egypt (43 percent) reported using mobile wallets for daily payments. This demographic shift is influencing the adoption and integration of digital payment methods across various industries. The transformation is also fueled by a strategic convergence of government support, regulatory evolution, and technological innovation.

The MENA region's fintech ecosystem is a testament to what can be achieved when innovation is harnessed to meet the needs of a diverse and rapidly growing population.

The true power of fintech lies in its dual role as an economic catalyst and a beacon of social progress. It's not only reshaping how businesses operate and grow but also how individuals engage with their finances, fostering a culture of financial literacy and independence.

A Catalyst for SMEs in MENA

SMEs are pivotal to the economy of the MENA region, representing the lion's share of businesses and providing substantial employment opportunities. Yet, their growth has often been hampered by limited access to essential financial services. Fintech is revolutionizing this status quo by democratizing financial access and offering solutions that address the specific challenges faced by SMEs.

Through innovative lending platforms and financial services, fintech is filling the void left by traditional banking constraints, providing SMEs with easier access to funds, financial management tools, and pathways to new markets. These efforts are in lockstep with government initiatives aimed at fortifying the SME sector, from regulatory frameworks designed to encourage innovation to financial incentives that support business expansion.

This strategic focus not only improves SMEs' operational efficiency but also nurtures an ecosystem ripe for entrepreneurship and innovation.

By promoting financial inclusion, fintech plays a crucial role in ushering SMEs into the digital age, ensuring their central place in the MENA region's agenda for economic diversification and long-term sustainability.

A Pathway to Positive Social Impact

The social dimension of fintech's alignment with ESG standards in the MENA region is profound and multi-faceted. Fintech's most immediate and tangible contribution is in driving economic prosperity through financial inclusion.

• Bringing the Unbanked into the Digital Fold: A significant proportion of the MENA population remains unbanked or underbanked. Fintech is radically changing this landscape by providing accessible financial services through mobile technology due to the region’s high mobile penetration rates. This inclusion represents a fundamental shift in enabling economic participation for all segments of society.

• Impact on GDP and National Development: The integration of the unbanked into the digital economy has direct implications on GDP growth. Access to financial services enables individuals to contribute more effectively to the economy, whether it's through starting a business, investing, or simply having safer and more efficient means to manage their finances. This integration aligns with and supports national development agendas across the region, fostering overall economic growth.

• Empowerment through Microfinance and SME Support: Fintech platforms are increasingly providing microfinance options and support to SMEs a sector that is often overlooked by traditional banking. This support is crucial for the growth of SMEs, which are key drivers of economic diversification and job creation in emerging markets.

• Enhancing Financial Literacy and Independence: With the proliferation of fintech apps and services, individuals are gaining more control and understanding of their financial health. This empowerment is a crucial step towards building a financially literate and independent population.

The Road Ahead

As fintech continues to grow in the MENA region, its contribution to social progress and economic prosperity is expected to deepen. Beyond facilitating digital transactions and financial services, fintech stands as a cornerstone for the growth of SMEs, a driver of financial literacy, and a champion of inclusive development.

Its impact on the region's socio-economic landscape is a testament to the transformative power of innovation when applied with a vision for a more equitable society.

About the author

Dima Zalatimo is the Global Head of PR & Corporate Communications at regional fintech company, Paymob. A seasoned communications professional, she has over 20 years of storytelling experience in broadcast television, public relations and corporate communications. She is passionate about using technology for good and a firm believer in the potential of MENA's youth to create an inclusive, equitable and sustainable future.