Finextra is at Davos this year, covering global insights into the impact fintech has on wider issues such as responding to Covid-19, restoring economic growth and advancing a new social contract.
Speaking to the role of the supply chain and logistics sector has played in mitigating the Covid-19 crisis during the ‘Implementing Stakeholder Capitalism in the Middle East and North Africa’ session, moderator Lara Habib, senior presenter, Al Arabiya, questions whether the pandemic changed the perspective of the private sector on stakeholder capitalism across the MENA region.
Henadi Al Saleh, chair of the board of directors, Agility, explains that “from my perspective it is critical that the private sector is deeply engaged throughout this process, not simply from strategy formation but also into execution. However, it is going to need a cultural and mindset shift on both sides.”
“If you ask me about the [MENA] agenda, something close to my heart is the private and public cooperation which has a huge impact on the SME agenda, and empowering SMEs through digital skillsets is a vehicle for growth and diversification for our long-term future.”
El Saleh continues that in order to promote and support the strength of SMEs across the MENA region, it is vital to tackle the underlying issues which face the sector. Namely, the lack of access finance.
“According to the IMF, closing this gap will contribute to the creation of around 15 million new jobs in the Arab region by 2025.”
She explains that the private sector plays a fundamental role in helping SMEs scale up via venture funding, incubations, training, mentorship, or even directly plugging these firms into supply chains.
Commenting on Agility’s partnership with the Kuwait National Fund, El Saleh explains that where they had previously provided investment lines to support startups, during the pandemic they also worked to provide free digital toolkits to SMEs which needed to pivot their offline stores online.
“This private and public sort of collaboration is not new to us. We’ve been working on it for years and we believe this is an area which makes sense for business, our economy, and our society.”
Khalid Humaidan, CEO, Bahrain Economic Development Board, furthers the argument, raising the essential role that fintech will play in the region into the future.
Humaidan explains that to better understand the nature of adoption of digital solutions, Bahrain takes two key factors into consideration. First, the number of people who have opened an account with a digital bank, and second, the adoption rate of digital payment solutions.
“Because of Covid-19 the number of people using e-payment solutions has accelerated threefold. We knew there was going to be adoption but not at this rate. Importantly, we laid the groundwork for this many years ago which enabled us to cope and mitigate the effects of the pandemic.”
“While it is difficult to isolate which subsector of fintech is going to do well, one thing is clear, Covid-19 is probably spelling the death of cash.”
Humaidan adds that the fact that the Government of Bahrain no longer accepts cash payments (only electronic payments) is also significant as it will contribute to the transparency of the system.
He notes that with a cashless society and cashless economy comes the prevalence of data. “This data is going to be analysed and used by the government help target its policies and regulations toward the segments of society most in need.”
Rejecting the question that Bahrain plans on ‘nationalising data’, Humaidan explains that if countries or governments take this approach to data ownership it will become very difficult to live in a global world.
“Not only will it be difficult, but it will also inhibit us from being able to scale up. Many of the solutions available today have become cost effective because they are deployed in multiple countries. If every country is going to be protective over its data and what is available, we’re unlikely to have platforms or solutions deployed in each country. In order to scale up there needs to be cooperation between governments.”
Anas Alfaris, president, King Abdulaziz City for Science and technology (KACST) echoes Humaidan’s comments noting that “data is no doubt the future of the new economies.”
Drawing attention to the “technology and innovation context that is currently enabling the fourth industrial revolution in the Kingdom,” Alfaris says that “it is no secret that Saudi Arabia holds ambitions to be the tech hub of the region and beyond.”
Citing a suite of AI, ML, IoT, blockchain projects and regulatory frameworks bolstering the Kingdom’s technology endeavours, he notes that the Saudi Crown Prince Mohammed bin Salman recently announced a new five-year Public Investment Fund (PIF) strategy focusing on “cutting edge technologies and knowledge with the very strong objective of partnering with innovative, transformative and disruptive companies around the world. We are today seeing progress on the ground.”