Mideast-North Africa region sees surge in global investment despite conflicts 

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For the first time in years, the Mid­dle East and North African region is see­ing a surge in inter­est from inter­na­tion­al investors.

Major com­pa­nies like Google, Microsoft and Adobe recent­ly took part in one of the largest tech­nol­o­gy events in the region when Dubai host­ed Expand North Star 2024, which attract­ed over 6,500 exhibit­ing com­pa­nies, 1,800 star­tups and 1,200 investors from 180 countries.

Over the last year, more than half of all investors in region­al star­tups have come from out­side, reflect­ing how attrac­tive the Mid­dle East and North Africa, or MENA, have become for those seek­ing new areas for growth, includ­ing investors from the U.S., Europe and beyond. 

Farah el Nahlawi, a Unit­ed Arab Emi­rates-based research team leader at ven­ture data plat­form MAG­NiTT, pro­vid­ed hard num­bers on the surge of inter­na­tion­al invest­ment in the MENA region.

“In the first nine months of 2024, we record­ed a total of 390 investors in the MENA region, with 199 of them being inter­na­tion­al investors,” Nahlawi said. “When we break down these inter­na­tion­al investors, we see a diverse mix of con­trib­u­tors: 37% from the USA, 13% from the U.K. and 8% from Singapore.”

Finan­cial technology

Accord­ing to a recent report from MAG­NiTT, the finan­cial tech­nol­o­gy  sec­tor emerged as a key dri­ver, secur­ing $480 mil­lion in funding.

At the heart of this trend is the desire for many coun­tries in the region, like the UAE and Sau­di Ara­bia, to move beyond tra­di­tion­al resource-based indus­tries like oil, Nahlawi, said. They’re invest­ing heav­i­ly in tech­nol­o­gy, edu­ca­tion and inno­va­tion, cre­at­ing fer­tile ground for star­tups and entrepreneurs.

Nahlawi point­ed to sig­nif­i­cant gov­ern­ment ini­tia­tives across the region. “Pro­grams such as Sau­di Vision 2030 and the UAE’s eco­nom­ic poli­cies have been piv­otal in attract­ing inter­na­tion­al cap­i­tal,” she said.

“These ini­tia­tives have notably improved the invest­ment cli­mate through eco­nom­ic diver­si­fi­ca­tion, aimed at reduc­ing reliance on oil,” she added. “By pro­mot­ing sec­tors like tourism, tech­nol­o­gy and renew­able ener­gy, these gov­ern­ments are mak­ing their economies more resilient and appeal­ing to investors seek­ing long-term stability.”

Will­ing­ness to do busi­ness in the region has drawn crit­i­cism from some ven­ture cap­i­tal­ists who spoke on back­ground to pub­li­ca­tions like Finan­cial Times, call­ing the invest­ments a “Faus­t­ian bar­gain” with gov­ern­ments and mon­archs accused of human rights violations.

Sau­di Ara­bi­a’s alleged killing of Wash­ing­ton Post jour­nal­ist Jamal Khashog­gi in 2018, CNBC report­ed in Sep­tem­ber, “remains an issue for some West­ern part­ners and startups.”

The Post report­ed in May that “some tech exec­u­tives and secu­ri­ty researchers” remain wary about those abus­es, along with the pos­si­bil­i­ty that some coun­tries in the region could “use Amer­i­can tech­nolo­gies for sur­veil­lance — includ­ing to tar­get U.S. citizens.”

But for many inter­na­tion­al investors, the MENA region offers the chance to enter a fast-grow­ing mar­ket with high returns. For local gov­ern­ments, it’s a way to secure long-term growth beyond oil.

Sergii Mal­o­muzh, founder of Rewump — a busi­ness incu­ba­tor for next-gen­er­a­tion web star­tups — said region­al gov­ern­ments are adopt­ing pro­gres­sive and flex­i­ble reg­u­la­to­ry approach­es to sup­port emerg­ing tech­nolo­gies and industries.

“This sup­ports inno­va­tion and cre­ates a favor­able busi­ness cli­mate for for­eign invest­ments,” he told VOA.

Mal­o­muzh also said mar­kets like the UAE remain attrac­tive because of their high growth poten­tial and sta­ble eco­nom­ic poli­cies. “From my expe­ri­ence invest­ing in and work­ing with the MENA region, I’ve noticed that investors come from var­i­ous places, includ­ing the U.S., Europe, and the Gulf.”

Tal­ent in Sudan

Yousif Yahya, co-founder of Sudan’s Savan­nah Inno­va­tion Labs, a promi­nent incu­ba­tor and con­sul­tan­cy firm, empha­sized Sudan’s unique posi­tion with­in the MENA invest­ment land­scape. Although much of Sudan’s young, tal­ent­ed and mobile work­force has been dis­placed by war, Yahya told VOA that some vic­tims were for­tu­nate enough to find oppor­tu­ni­ties out­side Sudan, some­times fill­ing skills gaps and con­tribut­ing to cross-bor­der innovation.

Yahya also not­ed that a surge in inter­na­tion­al inter­est is part­ly dri­ven by coun­tries like Egypt, where com­pre­hen­sive pol­i­cy reforms have been enact­ed to attract and pro­tect for­eign invest­ments. These mea­sures, he argued, reflect a com­mit­ment across the region to build a sta­ble, pre­dictable and investor-friend­ly environment. 

Robert Mogiel­nic­ki, a senior res­i­dent schol­ar at the Arab Gulf States Insti­tute in Wash­ing­ton, high­light­ed the region’s poten­tial for entre­pre­neur­ial growth despite con­flicts in sev­er­al countries.

“Coun­tries in the MENA region boast young and grow­ing pop­u­la­tions and con­tain many promis­ing start­up scenes,” he told VOA.

Mogiel­nic­ki point­ed out that many MENA gov­ern­ments, par­tic­u­lar­ly in the Gulf, are active­ly invest­ing in entre­pre­neur­ship. “In some cas­es, gov­ern­ment enti­ties pro­vide direct sup­port and invest­ments to star­tups. In oth­er instances, gov­ern­ments are seek­ing to enhance the start­up and entre­pre­neur­ial ecosys­tems through sup­port­ive policies.”

How­ev­er, he cau­tioned, wars and geopo­lit­i­cal ten­sions could impact star­tups differently.

“The impli­ca­tions for star­tups and their abil­i­ty to secure invest­ments depend great­ly on the indus­try they oper­ate with­in, the poten­tial for dis­rup­tions to oper­a­tions, and fluc­tu­at­ing lev­els of avail­able invest­ment cap­i­tal,” Mogiel­nic­ki said.