RIYADH: Derayah Financial Co. owns nearly 20 percent of D360, the PIF-backed local digital bank, the company’s CEO told Argaam on the sidelines of the Saudi Capital Market Forum.
The Saudi Cabinet had approved the license for D360 Bank to be established with a capital of SR1.65 billion ($440 million) in February earlier this year.
Derayah is seeking to expand its current business portfolio to cover retail banking solutions after it launched wealth management and securities trading activities, said Mohammed Al-Shammasi.
With the planned introduction of single-stock futures trading in Saudi Arabia, Al-Shammasi stressed the importance of such a transition in enhancing the capital market.
RIYADH: With the pandemic abating, a new crop of fintech companies is heralding the winds of change in the way businesses are run in Saudi Arabia.
From facilitating cashless payments to offering financial data analytics to providing loans, these firms are coming out with simpler and customized alternatives to traditional banking.
“The GDP in Saudi Arabia is just impressive. You have much bigger potential for what you do in Saudi Arabia. You have 10 times the potential in Egypt and at least five times the potential in the UAE,” Ahmad Coucha, co-founder and CEO of FlapKap, told Arab News.
FlapKap, an Egypt-based company, provides AI-based insights and financial data analytics and is planning to set shop in the Kingdom.
The company offers e-commerce firms cutting-edge insights to optimize their advertising spending and maximize profits. It also provides these businesses with flexible payment terms on advertising spending to ensure sustainable growth without cash constraints.
Another innovative fintech company making its presence felt in the Kingdom is HyperPay, a Jordan-based online payment company.
The company recently obtained a technical permit from Saudi Payments, a wholly owned subsidiary of the Saudi Central Bank, or SAMA.
The technical permit allows e-payment service providers to activate Mada services, a central payment scheme connecting all ATMs and sales points across the country.
“After years of hard work to establish a proper digital infrastructure, Saudi Arabia is now ready to adopt digital payments. And that is why they are way ahead of anyone in the region,” said Muhannad Ebwini, co-founder and CEO of HyperPay.
Of late, there has been a lot of traction in the fintech space thanks to SAMA’s role in promoting the sector’s development by allowing the entry of new players and new products as part of its Fintech Saudi program launched in 2018.
The initiative, aimed at pushing fintech companies to compete locally and globally, is now bearing fruits with an increasing number of innovative companies enhancing financial stability and supporting the economic development in the Kingdom.
According to a Fintech Saudi report, fintech transaction values between 2017 and 2019 increased by over 18 percent year-on-year, reaching over $20 billion in 2019.
With an increasing number of first-generation entrepreneurs competing with large financial institutions, the report stated that the transaction value will surpass $33 billion by 2023.
Additionally, there is also ample room for growth, with the average investment deal size at $2.7 million compared to the global average of $7.3 million, the report revealed.
Also noteworthy is the drastic change in the financial industry, which was earlier governed by a complex set of rules and regulations to ensure monetary safety. Fintech Saudi has tackled the problem by taking the bull by the horns.
The financial authority is now supporting these startups by walking them through the regulations and providing a more straightforward way to obtain an operating license from SAMA.
The result: The Kingdom witnessed a massive jump in venture capital investments in the fintech sector, hitting 16 deals in the first eight months of 2021, totaling $157.2 million. In 2021, it witnessed a 37-percent rise in new fintech launches over the previous year.
Factoring this instant rise in fintech companies, the Saudi Central Bank and the Capital Markets Authority launched the first-of-its-kind Financial Technology Center last month in Riyadh.
Located in Riyadh’s King Abdullah Financial District, the center aims to provide these fintech startups with investment opportunities. There’s no doubt that the prospects of fintech companies based in the Kingdom are far brighter now.
Last month, Saudi-based digital broker for personal loans Arib raised $2.3 million in a seed round investment led by venture capital firm Merak Capital.
The fintech will use its acquired funds to meet the requirements set by the Saudi Central Bank to finalize its licensing process and introduce new services to its portfolio.
Founded in 2019, Arib provides its users with auto financing options to match their credit profiles and get easy access to loans.
“The Kingdom is witnessing a huge technological revolution and a remarkable acceleration in digital transformation, especially in the financial technology sector,” said Arib CEO Walid Talaat, confirming the warm winds of change sweeping the Kingdom.
WASHINGTON: The World Bank is seeking to create a $170 billion emergency fund to help the poorest nations being buffeted by multiple crises, the bank’s President David Malpass said Monday.
The “crisis response envelope” will continue the work begun during the COVID-19 pandemic, and help countries deal with surging inflation, which was made worse by the Russian invasion of Ukraine as well as the “severe financial stress” caused by high debt levels, he said.
“This is a continued massive crisis response,” Malpass told reporters. High debt and inflation “are two big problems facing global growth,” he said.
“I’m deeply concerned about developing countries. They’re facing sudden price increases for energy, fertilizer and food.”
The Washington-based development lender last week downgraded its forecast for global growth this year, and the IMF is expected to do the same when it releases its updated forecasts on Tuesday.
Speaking ahead of this week’s spring meetings of the IMF and World Bank, Malpass said the 15-month aid fund would run through June 2023 and build on the $157 billion COVID-response fund, which expired in June 2021.
“We expect to commit around $50 billion of this amount in the next three months,” he said, adding that he plans to discuss the fund with the bank board in coming weeks.
Malpass repeated his concern for poor countries facing high debt levels, noting that 60 percent of low-income countries already face debt distress or are at high risk.
He has recommended improvements in the G20 Common Framework adopted last year, which was meant to offer a path to restructure large debt loads, but has not yet produced results.
A key hurdle is the lack of information on the size of debt owed to China, as well as some other lenders, by private companies as well as governments.
G20 finance ministers will meet on Wednesday on the spring meetings’ sidelines.
NEW YORK: Debt accumulated by businesses and individuals worldwide could slow economic recoveries from the pandemic crisis, the IMF warned Monday.
Governments took exceptional measures to support their economies as COVID-19 spread two years ago, including rolling out debt repayment suspensions or offering large-scale loans.
But these programs resulted in higher debt levels for some sectors, including those most disrupted by the virus, like tourism and restaurants, as well as low income households, the Washington-based crisis lender said.
In a chapter of its World Economic Outlook, the IMF said the debt burden could hold growth back in developed countries by 0.9 percent and in emerging markets by 1.3 percent over the next three years.
“Financially constrained households and vulnerable firms, which have grown in number and proportion during the COVID-19 pandemic, are expected to cut spending by more, especially in countries where the insolvency framework is inefficient and fiscal space limited,” the lender said.
To avoid exacerbating problems, government should “calibrate the pace” of phasing out aid and spending programs.
“Where the recovery is well underway and balance sheets are in good shape, fiscal support can be reduced faster, facilitating the work of central banks,” the IMF said.
For struggling sectors, governments could offer aid to prevent bankruptcies, or provide incentives for restructuring, rather than liquidation.
“To lessen the burden on public finances, temporary higher taxes on excess profits could be envisaged. This would help claw back some of the transfers to firms that did not need them,” the lender said.
RIYADH: Morocco gross domestic product’s growth is seen lower than previous predictions, China’s economy slowed in March, and Spain is to revise its 2022 GDP target. In Russia, the central bank governor flags faster rate cuts, with the Mayor announcing 200,000 jobs at risk as foreign firms leave. China’s economy is likely to continue in its recovery trend this year; the country’s retail spending fell by 3.5 percent and its industrial output, on the other hand, rose by 5.0 percent.
Morocco’s GDP growth
Morocco’s GDP growth is seen averaging between 1.5 percent and 1.7 percent in 2022, down from the 3.2 percent that was predicted in the budget law, the state news agency MAP reported, citing Prime Minister Aziz Akhannouch.
China Q1 GDP tops forecast
China’s economy slowed in March as consumption, real estate and exports were hit hard, taking the shine off faster-than-expected first-quarter growth numbers and worsening an outlook already weakened by COVID-19 curbs and the Ukraine war.
The biggest near-term challenge for Beijing is the tough new coronavirus rules at a time of heightened geopolitical risks, which have intensified supply and commodity cost pressures. Chinese authorities are therefore walking a tight rope as they try to stimulate growth without endangering price stability.
The GDP expanded by 4.8 percent in the first quarter from a year earlier, data from the National Bureau of Statistics showed on Monday, beating analysts’ expectations for a 4.4 percent gain and picking up from 4.0 percent in the fourth quarter.
A surprisingly strong start in the first two months of the year improved the headline figures, with GDP up 1.3 percent in January-March in quarter-on-quarter terms, compared with expectations for a 0.6 percent rise and a revised 1.5 percent gain in the previous quarter.
Analysts say April data will likely be worse, with lockdowns in commercial center Shanghai and elsewhere dragging on, prompting some to warn of rising recession risks.
Moscow mayor says 200,000 jobs at risk as foreign firms leave
Around 200,000 people risk losing their jobs in the Russian capital because foreign companies have suspended operations or decided to leave the Russian market, Moscow Mayor, Sergei Sobyanin, said on Monday.
Moscow authorities are ready to support people who lost their jobs by providing training and temporary and socially-important work, Sobyanin wrote on his blog.
Russia flags faster rate cut
Russia’s Central Bank should be able to lower its key rate faster and create conditions for more affordable loans, Governor Elvira Nabiullina said on Monday.
The central bank more than doubled its key interest rate to 20 percent when Russia was hit by international sanctions, after sending its forces into Ukraine in February, but then cut it this month to 17 percent, flagging a challenging economic environment and a slowdown in inflation.
Spain to revise down 2022 GDP target
Spanish Prime Minister Pedro Sanchez (Shutterstock)
Spain will revise down its economic growth target for 2022, Prime Minister Pedro Sanchez said on Monday in a TV interview.
The government is set to update its bullish 7 percent growth projection for 2022 later this month, to take into account the impact of inflation stoked by Russia’s invasion of Ukraine.
“There will be a downward revision of growth figures in Spain, Europe and the world, that’s a fact, but that does not mean that Spain will not continue growing and creating jobs,” Sanchez told Antena3 TV station.
The Bank of Spain expects gross domestic product to expand 4.5 percent in 2022.
China’s economy likely to remain in recovery for 2022
China’s economy is likely to stay on its recovery trend this year, and Beijing will step up macro policy implementation to stabilize the outlook, Fu Linghui, a spokesman at China’s statistics bureau, said at a news conference on Monday.
China will be able to contain COVID-19 outbreaks, and can keep consumer price increases under control, Fu said.
China March industrial output rises
China’s industrial output rose 5 percent in March from a year earlier. That was down from a 7.5 percent increase seen in the first two months of the year, data from the National Bureau of Statistics showed on Monday.
The reading was stronger than a 4.5 percent increase predicted by analysts in a Reuters poll.
Retail sales in March contracted 3.5 percent year-on-year, amid increasing COVID-19 outbreaks and lockdowns, after increasing 6.7 percent in January and February. The figure was well below expectations for a 1.6 percent decrease.
Fixed asset investment increased 9.3 percent year-on-year in the first quarter, compared with the 8.5 percent increase tipped by the Reuters poll, but down from 12.2 percent growth in the first two months.
LONDON: Oil prices rose on Monday in choppy trade, with Brent crude topping $112 a barrel, as outages in Libya deepened concern over tight global supply and the Ukraine crisis dragged on, offsetting concern over slowing Chinese demand.
Adding to supply pressures from sanctions on Russia, Libya’s National Oil Corp. on Monday warned “a painful wave of closures” had begun hitting its facilities and declared force majeure at Al-Sharara oilfield and other sites.
“With global supplies now so tight, even the most minor disruption is likely to have an outsized impact on prices,” said Jeffrey Halley, analyst at brokerage OANDA.
Brent crude, the global benchmark, rose 72 cents, or 0.6 percent, to $112.42 at 1225 GMT, but down from the highest since March 30 of $113.80 hit earlier in the session. US West Texas Intermediate gained 14 cents, or 0.1 percent, to $107.09.
The Libyan developments offset concern about demand in China, where the economy slowed in March, taking the shine off first-quarter growth numbers and worsening an outlook already weakened by COVID-19 curbs.
“Some Asian investors booked profits as they became worried about slowing demand in China,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.
Data on Monday also showed China refined 2 percent less oil in March than a year earlier, with throughput falling to the lowest since October as the surge in crude prices squeezed margins and tight lockdowns hurt demand.
Oil surged to the highest since 2008 in March, with Brent briefly topping $134.
There are concerns of deeper supply losses looming. Russian production declined by 7.5 percent in the first half of April from March, Interfax reported on Friday, and EU governments said last week the bloc’s executive was drafting proposals to ban Russian crude.