Welcome to the first edition of the Monthly Middle East Digest. Each month we will bring to you the top digital business news from the past month: investments in startups, latest policy changes, growing sectors and more. April has been a vibrant month with significant growth in digital adoption due to the curfews and lockdowns in different cities across the Middle East (and the world):
It’s been a busy month for the Emerging Markets Property Group (EMPG). The UAE-based classified website group, which owns real-estate portals: Bayut in UAE, Zameen in Pakistan, and Mubawab in North Africa, acquired Kaidee, Thailand-based classified website, in it’s first move outside the MENA region. EMPG later announced it raised USD 150 million from South Africa’s OLX Group at a USD 1 billion post-investment valuation. With this move OLX consolidates it’s grasp on the classified business in the Middle East, as it already owns Dubbizle, which it acquired for USD 400 million in January 2019.
Gaming and Entertainment
This month witnessed a boon in gaming and entertainment across the Middle East!
Developers are rushing to launch big titles to Middle East players: Tencent Holdings launched ‘Arena of Valor’ mobile game to Middle East players; Play3arabi and Wafa Games (China) partner to arabize Swords of Glory for regional players; Tamatem, the Jordan-based game publisher, also announced a partnership with Nanobit, a Croatia based game developer, to localize their mobile games into Arabic for publishing in MENA. Meanwhile, Maysalward, Jordan-based game developer, joined global game developers like Zynga, Unity, PocketGames, and Twitch together with the World Health Organization to promote social distancing through online gaming.
Virtual reality startup 360VUZ announced a Series A raise of USD 5.8 million led by Shorooq Partners, and joined by KBW Ventures, Media Visions, Vision Ventures, Hala Ventures, and 500Startups. It is marking the biggest round of investment in a VR startup in the Middle East so far.
In Entertainment, both Disney+ and Warner Bros signed exclusive partnerships to expand into the Middle East. DISNEY+ content launched exclusively through Orbit Showtime Network (OSN), the regional leader in paid traditional TV. Interestingly this is the only region Disney+ content will be available on a third-party platform instead of Disney’s own. Meanwhile, Warner Bros studios signed an exclusive multi-year content partnership with STARZPLAY, a subscription video-on-demand (SVOD) platform for the North Africa, Middle East, and Pakistan.
Music streaming apps Anghami and Deezer have shared that their users behavior changed significantly due to lockdowns in the Middle East. Anghami witnessed a 30% growth of TV app usage, while Deezer reported a 66% increase in usage on Android TVs. Both platforms’s users shifted listening peak hours from early morning to noon.
According to Bulkwhiz, the UAE-based bulk grocery platform, less than 1% of groceries in the Middle East are purchased online, while the total market is valued at USD 175 billion. The heightened demand for online sales has strained all eCommerce sellers in the region, including the market leaders: Noon.com and Amazon (previously souq.com) who have reported delays in delivery from days to multiple weeks. Even traditional retail chains like Danube supermarket, part of BinDawood Holding in Saudi, reported that their online sales grew by 200% in just two weeks of curfew, while order value grew by 50%. Wamda published a very useful diagram mapping all grocery startups in MENA that shows the breadth of the landscape, but the lack of dominant players in the space, still.
Two key investments in the space this month are: Cartlow, a resale-platform, which raised an early stage investment from Arzan VC and Vision Ventures, and Sary, Saudi-based wholesale grocery platform, which raised USD 6.6 million in funding from Raed Ventures, MSA Capital (China) and Derayah Ventures.
The region also witnessed a surge in consumers shopping online for the first time. According to ITCAN online sales of skin care and make-up products witnessed growth of over 100% in one month driven by first-time consumers.
Global Ventures shares with us a comprehensive overview on the state of policy and market of fintech in the Middle East region. Meanwhile, according to the Arab Monetary Fund, digitally enabled financial inclusion can help bring 63% of the Arab region’s individuals and small and medium sized businesses into the formal financial sector, especially the youth, which constitute 79% of the regional population.
Governments of the UAE, Saudi Arabia, and Bahrain are competing on building a nurturing environment through sandboxes, reglabs, partnerships and incubators. This month the Saudi Arabian Monetary Authority (SAMA) announced permits for 9 fintech companies: Circlys, Taameed, Manafa, Hakabah, Founding Souq, Nayifat, Wafeer, Money Loop, and Sahlah, under the” Electronic Saving Societies Platforms for individuals” license and “Crowdfunding Platforms for SMEs and Entrepreneurs” license. With that the total number of SAMA regulated fintech companies in Saudi reaches 30 companies, with more in incubation.
This month we saw the launch of a fintech focused fund in Egypt: Disruptech, which also announced investments in two Egypt-based startups: Khazna, Egypt-based salary cash-advance app, and Brimore, distribution technology platform. In the UAE, Hubpay, a remittance wallet, and MamoPay, a P2P payment wallet, also raised funding. MamoPay’s fundraise included international VCs like Global Founders Capital (Germany) and MSA Capital (China).
The growth opportunity for fintech in the Middle East is massive: BenefitPay, a Bahrain-based national digital payment platform, has witnessed a 1,257% growth in transactions in March 2020 compared to March 2019, which equated to USD 273 million in value for local processed transactions. For context, Bahrain’s population is estimated at 1.6 million (2018).
In other notable fintech news: Transferwise, the global leader in remittances, is launching their operations in UAE after acquiring a license from Abu Dhabi Global Market (ADGM).
The Abu Dhabi Investment Office (ADIO) in the UAE launched a USD 275 million AgTech Incentive Programme to invest agricultural projects and has already deployed a USD 100 million in 4 companies: AeroFarms (US), Madar Farms (UAE), RNZ and Responsive Drip Irrigation (RDI). AeroFarms operates warehouse-sized vertical farms in the US, and under this investment it will build out a 8,200 sqm R&D center in Abu Dhabi focused on developing solutions for desert-friendly agriculture. Responsive Drip Irrigation is a US-based startup, that has received the “Best Innovation” Award through Abu Dhabi’s Future Agro Challenge (FAC) in 2019, and will be using the current investment to develop water irrigation systems suitable to the UAE’s non-arable land.