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Mar, 2022     

MENAP Digital Economy to cross $100B this year; $20bn investment needed to unlock 7x growth

The MENAP Digital Economy will multiply 7x by 2030; this will require a funding of ~$20 Bn in the coming 2-3 years


1. The MENAP Digital Economy is expected to reach ~$100 Bn by the end of 2022

Digital Economy – MENAP, USD Bn, 2018 – 2022(F)

Note: MENAP includes GCC countries, Lebanon, Jordan, Iraq, Egypt, Morocco and Pakistan

MENAP’s Digital Economy will surpass the USD 100 Bn market in 2022. After the disruption seen in 2020 where certain mature sectors like Online Travel, Mobility etc. were strongly hit, causing a slight dip, 2021 has been a year of robust growth. 2022 also has started on a strong note and we expect a 40%+ YoY growth resulting in a USD 104 Bn market by 2022.

2. MENAP region is similar to India and SEA in terms of macro-level factors; however, slightly lags in Digital Economy maturity

 

 

Note: 1. Penetration refers to the ratio of Digital Economy to GDP 2. MENAP includes GCC countries, Lebanon, Jordan, Iraq, Egypt, Morocco and Pakistan 3. Digital Economy includes E-tailing, Foodtech, Mobility, Online Travel, Ed-tech, Health-tech, Fintech, etc.

MENAP region, while boasting of stronger digital enabler penetration (smartphone, internet) and good spending power, currently lags regions like SEA and even India in terms of digital economy maturity. India has seen strong funding tailwinds with a cumulative funding inflow of USD 100 Bn over last 5 years and a massive USD 42 Bn in 2021, alone.

3. As funding in-flow has been relatively low, MENAP region has the potential to give better returns in coming years 

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MENAP in comparison has received very limited funding, with the funding gap being starker in certain sectors. Additionally, a large portion of the funding is driven by corporates and PE/VC funding has been low. This explains the relatively low maturity of the digital economy. However, investors looking at the MENAP region now would benefit from a much high return multiple in the next 5-10 years. Additionally, learnings from more evolved digital economies can be leveraged to leapfrog stages of evolution where possible, placing the region in an attractive position.

4. The MENAP Digital Economy will multiply 7x by 2030; this will require a funding of ~$20 Bn in the coming 2-3 years

Digital Economy – MENAP1, USD Bn, 2022 – 2030(F)

Note: MENAP includes GCC countries, Lebanon, Jordan, Iraq, Egypt, Morocco and Pakistan

MENAP’s digital economy has the potential to hit the USD 700 Bn mark by 2030. A funding of USD 20 Bn in the coming 2-3 years will help unlock this growth path for the region. Investor confidence in the space is rising and we expect more PE/VC funding to start coming through in the short to medium term.