Start-up aims to boost financial inclusion across the Arab world

Now Money cofounder Ian Dillon. (Supplied)
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Updated 15 February 2020

Start-up aims to boost financial inclusion across the Arab world

  • Dubai's Now Money aims to open up financial services for low-income workers across the GCC bloc
  • Globally, as many as 69 percent of adults have an account at a bank or mobile money provider

CAIRO: In the Arab world, there is plenty of room for growth of the proportion of the adult population with access to banking services, according to a World Bank study.

Globally, as many as 69 percent of adults have an account at a bank or mobile money provider, says the report.

Up to 20 million adults in the Middle East and North Africa send or receive domestic remittances but do not have a bank account.

In fact, countries with the highest gross domestic product per capita have significant levels of underutilization of banking facilities, such as those in the Gulf Cooperation Council (GCC).

This is mainly due to the large expatriate population working in these countries with low and middle-income salaries.

In the UAE in particular, about 80 percent of the population is outside the current financial system due to a lack of suitable bank accounts, insurance policies, credit cards and loan options.

While many of the region’s banks have begun to evolve from conventional ones into wider financial services providers, there is still much work to be done in terms of financial inclusivity.

In a clear nod to the fact that regional financial inclusion has direct bearing on the socioeconomic development of its citizens, the Council of Arab Central Banks officially declared April 27 the Arab Day of Financial Inclusion in 2018.

Ian Dillon, pictured, cofounder of Now Money — a Dubai-based financial technology (fintech) group — said while 70 percent of the UAE population does not earn enough to meet the minimum salary level required to open a traditional bank account, most do make monthly remittances overseas.

Founded four years ago, Now Money launched with the aim of opening up financial services for low-income workers in the Gulf, such as laborers, taxi drivers, cleaners and hotel staff.

“The UAE remittance market is over $30 billion annually, the third largest in the world. Importantly, 98 percent of this population own a smartphone, being their only lifeline to family back home,” Dillon said.

Utilizing a smartphone app, Now Money offers access to competitive exchange rates. It also provides access to the broader financial system via a debit card for store and online purchases — such as mobile phone top-ups — as well as cash machines. The firm has agreements with 20 companies to provide services to their employees.

“Traditional banks make money through deposits and lending, which is why they avoid low-income customers,” said Dillon.

“They tend to withdraw funds in cash as soon as they’re paid, and don’t have the ability to take large lending products,” he added.

“Knowing there was a captive, tech-savvy market with a reliable remittance behavior pattern gave us the idea for Now Money, an app-based account and remittance marketplace for the up to 5 million low-income migrant workers in the UAE and 25 million across the GCC countries.”

Dillon said the biggest challenge for anyone wanting to do something new in payments, particularly in an emerging market, is a lack of understanding. “We’ve had to blaze our own trail; there has been no path to follow,” he added.

Dillon said the Middle East is beginning to embrace startup culture to make it easier for others to follow, which is a positive first step.

“We’re really happy to have been a part of the process that enables the UAE economy to grow with new businesses, innovations and technologies,” he added.

“Expansion across the Gulf excites us … There’s so much opportunity, especially in Saudi Arabia and Bahrain,” he said.

“The product may differ a little for each market depending on requirement and appetite, but we’re already establishing partnerships in these markets to allow us to launch in early 2020.”

• This report is being published by Arab News as a partner of the Middle East Exchange, which was launched by the Mohammed bin Rashid Al Maktoum Global Initiatives and the Bill and Melinda Gates Foundation to reflect the vision of the UAE prime minister and ruler of Dubai to explore the possibility of changing the status of the Arab region.

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Oil slumps more than 4% on coronavirus fears

Updated 28 February 2020

Oil slumps more than 4% on coronavirus fears

  • Traders fret about impact of spreading virus on crude demand, particularly from China

LONDON: World oil prices tumbled by more than 4 percent on Thursday, as traders fretted about the impact of spreading coronavirus on crude demand, particularly from key consumer China.

Brent oil for April delivery tanked almost 4.2 percent to $51.20 per barrel, while New York’s WTI crude for the same month dived nearly 5 percent to $46.31.

“Concerns that the virus will prompt a global slowdown, weaker consumer confidence and reduced travel has raised concerns about lower demand, weighing on prices,” said CMC Markets analyst Michael Hewson.

Investors are growing increasingly fearful about the economic impact of the new coronavirus or COVID-19 outbreak. 

The virus continues to spread meanwhile, with Brazil reporting Latin America’s first case, and Denmark, Estonia, Greece, Georgia, Norway and Pakistan following suit.

Around 2,800 people have died in China and more than 80,000 have been infected. There have been more than 50 deaths and 3,600 cases in dozens of other countries, raising fears of a pandemic.

The spread of the virus to large economies including South Korea, Japan and Italy has raised concerns that growth in fuel demand will be limited. 

Consultants Facts Global Energy forecast oil demand would grow by 60,000 barrels per day in 2020, a level it called “practically zero,” due to the outbreak.

US President Donald Trump sought to assure Americans on Wednesday evening that the risk from coronavirus remained “very low,” but global equities resumed their plunge, wiping out more than $3 trillion in value this week alone.

“The negative price impact would intensify if the coronavirus were declared pandemic by the World Health Organization, something that looks imminent,” said PVM Oil Associates analyst Tamas Varga.

“The mood is gloomy and the end of the tunnel is not in sight – there is no light ahead just darkness. Not even a refreshingly positive weekly US oil report was able to lend price support.”

Gasoline stockpiles dropped by 2.7 million barrels in the week to Feb. 21 to 256.4 million, the Energy Information Administration (EIA) said on Wednesday, amid a decline in refinery throughput. Distillate inventories fell by 2.1 million barrels to 138.5 million.

US crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels, the EIA said, which was less than the 2-million-barrel rise analysts had expected.

The crude market is watching for possible deeper output cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+.

“Oil is in freefall as the magnitude of global quarantine efforts will provide severe demand destruction for the next couple of quarters,” said Edward Moya, senior market analyst at OANDA. 

“Expectations are growing for OPEC+ to deliver deeper production cuts next week.”

OPEC+ plans to meet in Vienna on March 5-6.