The value of the digital economy in the Middle East, North Africa and Pakistan (MENAP) region could reach $100 billion in 2022 and $700 billion by 2030, but a funding gap of $20 billion must be closed in order to reach that potential, according to a new report.

Redseer Consulting said the digital economy in the MENAP region, which includes GCC, Lebanon, Jordan, Iraq, Egypt, Morocco and Pakistan, is likely to cross $100 billion by the end of this year and could multiply by seven times to reach $700 billion by 2030 if the required funding is unlocked.

Corporates from the GCC have played an important role in the digital advancement of the MENAP region, said the report from strategy consulting firm Redseer Consulting, contributing twice that of India.

Funding of $20 billion will help unlock the $700 billion opportunity, the report said, and a customer-centric ecosystem, which is already being developed, will support this. 

Going forward, funding will come from local family offices who have engaged in the digital economy in recent years and local venture capital firms which able to raise more capital as there are more success stories in the economy.

International funds and sovereign wealth funds or government funds will also play a part said one of the report authors, Sandeep Ganediwalla, partner of Redseer Consulting and one of the report authors.

At present, the digital economy in the region is led by e-tailing followed by online travel, the report showed, with a disruption to investment into the sector in 2020 led by shrinking interest in online travel caused by widespread travel restrictions.

However, Redseer forecasts that the region’s digital economy is now in its acceleration phase.

For example, Pakistan saw more funding in 2021 than it has in all previous years put together, and on current trends will cross its 2021 total in the first half of 2022, said Ganediwalla.

“It is a matter of investors understanding the narrative for the region and getting comfortable with multiple jurisdictions and starting to see scalable start-ups, he said.”

Softbank’s $100 billion Vision Fund, which includes funding from major GCC players including Saudi Arabia’s Public Investment Fund (PIF), is an example of a natural phenomenon, that the scale of investment grows as the sector matures, he added.

(Reporting by Imogen Lillywhite; editing by Seban Scaria)

imogen.lillywhite@lseg.com