As the world seeks to wean itself off fossil fuels, several oil-dependent countries in emerging markets are using technology and the digital economy to drive the transition to a post-oil future.
And it’s not just that high-tech industries can themselves be important contributors to an economy, but the right application of technology can increase efficiency and opportunity in all sectors.
The United Arab Emirates (UAE), for example, is frequently singled out as one of the success stories among countries diversifying away from an oil-dependent economy, and the country seems to be placing heavy bets on the digital economy.
As one national strategy document puts it, “the oil of the future is data.”
According to another report, the country’s FinTech sector alone attracted $234 million in venture capital (VC) investment in the first half 2022, accounting for 34% of all VC invested during the period.
This includes some impressive funding rounds such as the $54 million Series B secured by buy now, pay later (BNPL) provider Tabby, which has since added an additional $150M in loans to its war chest to help fund its expansion across the broader Middle East and North Africa (MENA) and Gulf Cooperation Council (GCC) regions.
In sub-Saharan Africa, Nigeria is another oil-dependent economy that is increasingly pinning its hopes on the digital economy to diversify its revenue and foreign exchange earnings.
As the country’s National Bureau of Statistics recently reported, the information and communication sector, which includes telecommunications and information services, has been growing steadily in recent years, outpacing growth in the petroleum sector.
For instance, 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% to the total real GDP during that same period.
Like the UAE, Nigeria has attracted a run of high-value FinTech investments in recent years, with the likes of Flutterwave and OPay making headlines for their billion-dollar-plus valuations.
Last month, the global VC firm QED Investors, which specializes in FinTechs, made its first foray into the African market with an investment in the Nigerian business payments and banking platform TeamApt.
For these emerging markets, the digital economy represents a clear opportunity to divest from crude oil to a viable non-oil, modern economy that is centered on technology and can equally sustain economic growth for years to come.
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