Opportunities for New Tech Entrants & the KSA’s Dream of Economy Revival

Startups in the MENA region have undoubtedly brought about much-needed change and reform especially when it comes to the average consumer. However, as with any other initiative on the startup front, this initiative hasn’t been without its challenges. 

Startup Funding and Trends

Saudi Arabia is becoming a hub for all things innovation and we can only expect digital learning tools to make education more accessible and prevent future learning losses. KSA is ready to embrace future events that may disrupt the global education sector much like the recent COVID-19 pandemic. 

However, startups and existing players need networking and support to weather troublesome storms. The political and socio-economic landscape is always changing and firms need to brace for this change accordingly.  

In this blog, we shall be considering the case for the logistics, fintech and ESG sectors – their evolution and how they stand in the region today.

“Moving the track forward”: Trends in the logistics space

Ever since the COVID-19 pandemic,  there has been a  rise in e-commerce and online shopping which has resulted in the logistics services in the region getting a boost. While e-commerce funding may have dropped in recent years, the number of startups seeking to optimize the customer experience and last-mile delivery is still a very favourable market.

MENA-based logistics startups raised a total of $362 million in funding in 2022, according to venture capital platform Wamda. This represents a 122% increase year-over-year, as the sector continued to benefit from the growth of e-commerce and the rising need for efficient warehousing and last-mile delivery solutions. Most recently Saudi logistics firm RedBox raised approximately $7m to expand its ops across the kingdom. The aim was primarily to push the concept of “smart shipping lockers” which allows users to retrieve their items at their convenience. AI  and automation also seek to disrupt this space with new solutions eg. automated warehousing, cloud-based solutions, and micro-fulfilment centres.

In 2021, Majid Al Futtaim opened a fully automated micro-fulfilment centre at their Carrefour store in Dubai where the task of managing orders is automated, Autonomous Mobile Robots provide insights and assistance to human associates in maintaining stock level. Amazon is planning to establish an advanced fulfilment centre by 2024 in partnership with the Abu Dhabi Investment Office. These projects have immense potential to transform the logistics industry in the region.

Green Logistics: Welcoming the Future

ESG  issues have become embedded in the corporate strategies of many firms now and there has been a rise in the role of “Chief Sustainability Officer”.  Research from Strategy& has shown that 98% of companies with an A rating for ESG have an executive who is specifically responsible for sustainability. ESG  is no longer just an option but a need of the hour for forward-thinking organizations. In 2022, ESG funding in the MENA region reached a record $1.2 billion, according to a report by PwC.

ESG – A step for the future

ESG  issues have become embedded in the corporate strategies of many firms now and there has been a rise in the role of “Chief Sustainability Officer”.  Research from Strategy& has shown that 98% of companies with an A rating for ESG have an executive who is specifically responsible for sustainability. ESG  is no longer just an option but a need of the hour for forward-thinking organizations. In 2022, ESG funding in the MENA region reached a record $1.2 billion, according to a report by PwC.

ESG Supportive Trends

1. Government support – Multiple governments in the region have a pro-green policy approach and as such seek to facilitate initiatives that further add to their country’s sustainability efforts.  

For example, the Saudi Arabian government has launched several initiatives to promote ESG investing, such as the Saudi Green Bond Program and the Saudi Green Investment Fund.

2. Investor demand– Multiple investors want some level of ESG  initiatives in company plans and policies eg. Some funds/grants are only accessible if the company meets certain requirements or shows a commitment to supporting ESG  initiatives in terms of its product offering , CSR or internal work practices 

3. Sustainable  frameworks and workshops

There has been a greater focus on developing actionable plans via workshops and training – seeking to imbibe a culture of “eco-first” policies such as carbon tracking platforms that help companies curate more eco-friendly strategies

Edtech: Digital Classrooms and Beyond

According to FAST Company –  The Middle East and Africa’s edtech market is expected to reach $7 billion (AED 26 billion) by 2027, as schools across the region adopt technology solutions and products in the classroom. Like logistics, EdTech saw an increased focus during the lockdown years  – however in recent times with more of a shift both on the professional front and academic front of the “return to physical premises”,  Edtech startups have looked to enhance or reinvent their offerings for a changing market.  This also gave rise to the concept of EdTechs covering areas which were not perhaps generally catered to by schools/universities.

Gaming and e-sports have also been on the rise, especially in the MENA  region and with it, the trend of game streaming has also seen traction.  There is a popular Saudi-based game streamer who is offering detailed lessons to young aspirants as a possible career path. As tech and trends evolve – so must edtech providers and the need will then be to look for whitespaces; areas in education that haven’t been explored or evolved and hence need due coverage.

Fintech in the MENA Region

Fintech of late has held the lion’s share of funding and stakeholder interest. The FSDP in Saudi has had ambitious plans to revamp the country’s fintech ecosystem but other countries in the MENA  region are not far behind. Bahrain too is following strongly with a mandated central bank-driven Open Banking policy with multiple players in the Open Banking space ramping up efforts every quarter. Saudi is becoming a regional hub with many fintech startups now relocating to major cities like Riyadh where government support and assistance from local and international incubators, and accelerators add to the appeal.

Dastak’s Contribution to the Sector

The region stands at the cusp of transformation on multiple fronts. While the journey for aspirants seeking to benefit from each country’s ecosystem will have its challenges – there are plentiful opportunities and we at Dastak stand ready to help you take the next step in taking part in riding the MENA  economic wave. Dastak too seeks to build a dedicated Pak- Saudi fintech corridor with the ambition to link the ecosystems of the two countries for cross-border linkages, unlocking new markets and opportunities for value creation in the overall region. we’re also working on enhancing the skillsets for freelancers viz-a-viz a unique proposition aimed at equipping them with access to MOOC courses in a seamless manner.  

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