Digital economy of MENAP region can hit $700bn by 2030 with sufficient investment

The Digital Economy of the Middle East, North Africa, and Pakistan (MENAP) is expected to exceed $100 billion this year and has an overall potential to hit $700 billion by 2030, provided that these countries make a significant investment in the year 2022. Robust growth was recorded for the Map in the year 2021 and has the potential to expand by over 42 percent only if subsequent fundings go in. MENAP includes GCC countries, Lebanon, Jordan, Iraq, Egypt, Morocco, and Pakistan. The region, which is similar to India in terms of macro-level factors however lags in digital economy maturity like New Delhi, stated Redseer. 

MENAP's must benefit from evolved digital economies like India 

Total funding of over $20 billion in the coming 2-3 years is needed for MENAP’s digital economy to multiply at least 7 times by 2030. Investors looking at the MENAP region would benefit from a much high return multiple in the next 5-10 years. And earnings from more evolved digital economies such as India can be leveraged to leapfrog stages of evolution where possible, said the Redseer. 

Credit: Redseer

Credit: Redseer

“MENAP’s digital economy will surpass the USD 100 billion markets in 2022,” stated the Redseer. “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,” it went on to add. 

The MENAP has been boasting a stronger digital enabler penetration that includes the smartphone, internet, and good spending power, but has been lagging behind in regions like SEA in India. “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,” Redseer stated. And MENAP’s funding in-flow has been relatively low as compared to India. But the region “has the potential to give better returns in coming years,” stated the firm. While India’s digital economy has been skyrocketing, MENAP’s limited funding has slowed its progress, with a funding gap being starker in certain sectors. Additionally, a large portion of the funding is driven by corporates and PE/VC funding has also been inadequate. 

“The digital economy has seen a strong tailwind thanks to the pandemic. This has moved it beyond the initial disruption phase and placed it on a springboard for further strong growth,” RedSeer said. “Investor confidence in the space is rising and we expect more private equity/venture capital funding to start coming through in the short to medium term.”

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