As the world attempts to wean itself off fossil fuels, several oil-dependent countries in emerging markets are using technology and the digital economy to fuel the transition to a post-oil future.
And it’s not just that high-tech industries themselves can make important contributions to an economy, but the right application of technology can increase efficiencies and opportunities across sectors.
The United Arab Emirates (UAE), for example, is often highlighted as one of the success stories among countries diversifying away from an oil-dependent economy, and the country appears to be heavily invested in the digital economy.
As a national strategy document puts it: “The oil of the future is data”.
Related: The UAE’s growing role as a regional FinTech hub
According to another report, the country’s FinTech sector alone attracted $234 million in venture capital (VC) investments in the first half of 2022, accounting for 34% of all VC invested during that period.
Continue reading: UAE attracts US$700 million in investments in H1 2022 and maintains position as MENA’s VC capital
These include some impressive funding rounds such as the $54 million Series B secured by BNPL provider Tabby (Buy Now, Pay Later), which has since added a further $150 million in loans to its war chest, to fund its expansion throughout the Middle East and the North Africa (MENA) and Gulf Cooperation Council (GCC) regions.
Continue reading: BNPL Provider Tabby Receives $150M Loan To Expand In MENA
In sub-Saharan Africa, Nigeria is another oil-dependent economy that is increasingly pinning its hopes on the digital economy to diversify its revenues and foreign exchange earnings.
As recently reported by the country’s National Bureau of Statistics, the information and communications sector, which includes telecommunications and information services, has grown steadily in recent years, outpacing the growth of the petroleum sector.
For example, the sector accounted for 18.44% of the country’s total gross domestic product (GDP) in the second quarter of 2022, while the oil sector contributed a meager 6.33% of total real GDP over the same period.
Like the UAE, Nigeria has attracted a range of high-quality FinTech investments in recent years, with companies like Flutterwave and OPay making headlines with valuations in excess of $1 billion.
Related: Nigeria’s Flutterwave Raises $170M At A $1B Valuation
Also related: Nigerian payments giant OPay in talks to raise $400 million at a $1.5 billion valuation
Last month, fintech-focused global VC firm QED Investors made its first foray into the African market with an investment in Nigerian payments and banking platform TeamApt.
Learn more: QED Investors makes first African investment in TeamApt
For these emerging markets, the digital economy presents a clear opportunity to transition from crude oil to a viable, modern, non-oil economy that is technology-centric and equally capable of sustaining economic growth for years to come.
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