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Africa & Middle East Embedded Finance Market Report 2022-2029: Strategic Partnership with Global Players to Drive Financial Inclusion Through Embedded Lending

Africa & Middle East Embedded Finance Market Report 2022-2029: Strategic Partnership with Global Players to Drive Financial Inclusion Through Embedded Lending
PR Newswire
DUBLIN, March 23, 2022

DUBLIN, March 23, 2022 /PRNewswire/ — The “Africa…

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2 years ago

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Africa & Middle East Embedded Finance Market Report 2022-2029: Strategic Partnership with Global Players to Drive Financial Inclusion Through Embedded Lending

PR Newswire

DUBLIN, March 23, 2022

DUBLIN, March 23, 2022 /PRNewswire/ -- The "Africa & Middle East Embedded Finance Business and Investment Opportunities - 50+ KPIs on Embedded Lending, Insurance, Payment, and Wealth Segments - Q1 2022 Update" report has been added to ResearchAndMarkets.com's offering.

Africa & Middle East's Embedded Finance industry in the region is expected to grow by 45.3% on annual basis to reach US$10,359.2 million in 2022.

The embedded finance industry is expected to grow steadily over the forecast period, recording a CAGR of 27.8% during 2022-2029. The embedded finance revenues in the region will increase from US$10,359.2 million in 2022 to reach US$39,820.0 million by 2029.

Strategic partnership with global players to drive financial inclusion through embedded lending in the Africa and Middle East region

In the Africa and Middle East region, there is a large proportion of the young population who do not have access to financial services. Targeting such consumer demographics, firms are entering into strategic alliances with global players to drive financial inclusion in the region.

  • In June 2021, Aafaq Islamic Finance entered into a strategic partnership with The Social Loan Company, a Singapore-based artificial intelligence-powered cutting-edge, big data-driven credit enablement platform company.
  • Under the collaboration with The Social Loan Company, the firm is planning to launch embedded lending services, thereby offering credit to the underserved young population in the region.
  • Notably, The Social Loan Company has had a phenomenal upward trajectory through its flagship embedded lending brand CASHe in India over the past four years.

The publisher expects more such strategic alliances with global players in the embedded lending industry over the next four to eight quarters, which will subsequently drive the growth of the market in the Africa and Middle East region from the short to medium-term perspective.

Strategic collaboration with online and offline businesses will be the key to driving the growth of embedded lending in the Africa and Middle East

To provide an increasing number of consumers and businesses with embedded lending solutions, the publisher expects that strategic alliances with both online as well as offline businesses will be the major driving factor for the growth of the industry in the Africa and Middle East region. Notably, buy now, pay later (BNPL) firms have adopted this strategy widely in the region. 

  • In the Middle East, BNPL firms are aggressively partnering with various businesses across industry verticals. Dubai-based Tabby, for instance, has partnered with 2,000 global brands, which also include small and medium-sized businesses in the region. Similar, Tamara, the Saudi Arabian BNPL firm, has entered into a strategic collaboration with 1,000 merchants to offer consumers short-term loans in the UAE as well as Saudi Arabia.

While the BNPL sector is growing strongly in the online space, the publisher expects that strategic partnerships in the offline space will remain a key factor in driving the industry's future growth in this region. This is primarily because businesses are reopening again as the effect of the global pandemic subsides and consumers return to physical stores. Consequently, future growth will be driven by partnerships with offline retailers in the region.

Embedded insurance market gained a huge traction in mobility sector in the Africa & Middle East region

The Africa & Middle East region witnessed significant growth in the embedded insurance demand by the mobility sector. Moreover, the embedded insurance market has already crossed the growth stage in the mobility embedded insurance product life cycle and now are moving towards the maturity stage at a considerable pace. The market witnessed numerous collaborations among ride-hailing, driver-sharing, and embedded insurers. 

  • Uber (India) launched in-ride embedded insurance for its drivers and delivery partners across Saudi Arabia in 2018.
  • Additionally, in In December 2019, UAE based ride-hailing app Careem (Uber's subsidiary) launched in-ride insurance for passengers and drivers across 15 cities. The insurance policy will cover up to $20,000 in expenses incurred due to death or major injury sustained during a Careem ride.

The developments mentioned above show that the mobility sector has provided embedded insurance to its clients and drivers for years. Additionally, the market for mopeds and e-bikes is expanding rapidly due to the surge in food and grocery delivery requirements due to the Covid-19 pandemic. As a result, insurtech firms have been drawn to capitalize on the expanding market for usage-based insurance for e-bike and moped fleets.

Market participants are introducing new products through newly obtained funds. The launch of new products will assist fleet businesses by providing flexible and seamless embedded insurance options. 

  • In August 2020, Israel-based mobility insurtech firm Bambi Dynamic raised US$ 6 million led by MS&AD Ventures and backed by existing investor The Phoenix Insurance Company. The newly raised funds were utilized to enhance its offerings across the mobility sector.

The Africa & Middle East embedded payment industry is going through a trial phase, and incumbents in the payments market ecosystem must evolve to stay relevant in the industry, as the everchanging demand from clients is making the current system outdated.

Established and new-age fintech companies have invested heavily in embedded payment solutions in the last four to six quarters, resulting in market growth.

Moreover, customers expect e-commerce platforms to provide a smooth buying experience. Embedded payment can be the solution to this ever-growing client requirements. This also allows the companies to provide value-added benefits to clients and increase loyalty. Consequently, the publisher expects strong market growth over the next four to eight quarters.

The embedded payments industry is still in its nascent stages of development in most of the big economies such as Egypt and the UAE. However, in the last six to eight quarters, it was observed that a spike in the number of start-ups in the embedded payment market, spurred by the collaborative efforts of the governments and other stakeholders, enhanced the payment systems.

The region has several diverse factors driving the market growth, including a vast economy, a large young population, and an abundant skilled workforce. As a result, the region has enormous potential to grow its fintech industry in 2022 and beyond.

Scope

Embedded Finance Market Size and Forecast

Embedded Lending Market Size and Forecast

Embedded Lending by Consumer Segments, 2020 - 2029

  • Business Lending
  • Retail Lending

Embedded Lending by B2B Sectors, 2020 - 2029

  • Embedded Lending in Retail & Consumer Goods
  • Embedded Lending in IT & Software Services
  • Embedded Lending in Media, Entertainment & Leisure
  • Embedded Lending in Manufacturing & Distribution
  • Embedded Lending in Real Estate
  • Embedded Lending in Other

Embedded Lending by B2C Sectors, 2020 - 2029

  • Embedded Lending in Retail Shopping
  • Embedded Lending in Home Improvement
  • Embedded Lending in Leisure & Entertainment
  • Embedded Lending in Healthcare and Wellness
  • Embedded Lending in Other

Embedded Insurance Market Size and Forecast

Embedded Insurance by Industry, 2020 - 2029

  • Embedded Insurance in Consumer Products
  • Embedded Insurance in Travel & Hospitality
  • Embedded Insurance in Automotive
  • Embedded Insurance in Healthcare
  • Embedded Insurance in Real Estate
  • Embedded Insurance in Transport & Logistics
  • Embedded Insurance in Others

Embedded Insurance by Insurance Type, 2020 - 2029

  • Embedded Insurance in Life Segment
  • Embedded Insurance in Non-Life Segment

Embedded Insurance by Type of Offering, 2020 - 2029

  • Embedded Insurance in Product Segment
  • Embedded Insurance in Service Segment

Embedded Payment Market Size and Forecast

Embedded Payment by Consumer Segments, 2020 - 2029

  • B2B
  • B2C

Embedded Payment by End-Use Sector, 2020 - 2029

  • Embedded Payment in Retail & Consumer Goods
  • Embedded Payment in Digital Products & Services
  • Embedded Payment in Utility Bill Payment
  • Embedded Payment in Travel & Hospitality
  • Embedded Payment in Leisure & Entertainment
  • Embedded Payment in Health & Wellness
  • Embedded Payment in Office Supplies & Equipment
  • Embedded Payment in Other

Embedded Wealth Management Market Size and Forecast

For more information about this report visit https://www.researchandmarkets.com/r/v7hfi0

Media Contact:

Research and Markets
Laura Wood, Senior Manager
press@researchandmarkets.com

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There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it’s only a matter…

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3 hours ago

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March 19, 2024

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There Goes The Fed's Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it's only a matter of time before the Fed admits it is unable to rsolve the so-called "last mile" of inflation and that as a result, the old inflation target of 2% is no longer viable.

Then one year ago, we correctly said that while everyone was paying attention elsewhere, the inflation target had already been hiked to 2.8%... on the way to even more increases.

And while the Fed still pretends it can one day lower inflation to 2% even as it prepares to cut rates as soon as June, moments ago Goldman published a note from its economics team which had to balls to finally call a spade a spade, and concluded that - as party of the Fed's next big debate, i.e., rethinking the Neutral rate - both the neutral and terminal rate, a polite euphemism for the inflation target, are much higher than conventional wisdom believes, and that as a result Goldman is "penciling in a terminal rate of 3.25-3.5% this cycle, 100bp above the peak reached last cycle."

There is more in the full Goldman note, but below we excerpt the key fragments:

We argued last cycle that the long-run neutral rate was not as low as widely thought, perhaps closer to 3-3.5% in nominal terms than to 2-2.5%. We have also argued this cycle that the short-run neutral rate could be higher still because the fiscal deficit is much larger than usual—in fact, estimates of the elasticity of the neutral rate to the deficit suggest that the wider deficit might boost the short-term neutral rate by 1-1.5%. Fed economists have also offered another reason why the short-term neutral rate might be elevated, namely that broad financial conditions have not tightened commensurately with the rise in the funds rate, limiting transmission to the economy.

Over the coming year, Fed officials are likely to debate whether the neutral rate is still as low as they assumed last cycle and as the dot plot implies....

...Translation: raising the neutral rate estimate is also the first step to admitting that the traditional 2% inflation target is higher than previously expected. And once the Fed officially crosses that particular Rubicon, all bets are off.

... Their thinking is likely to be influenced by distant forward market rates, which have risen 1-2pp since the pre-pandemic years to about 4%; by model-based estimates of neutral, whose earlier real-time values have been revised up by roughly 0.5pp on average to about 3.5% nominal and whose latest values are little changed; and by their perception of how well the economy is performing at the current level of the funds rate.

The bank's conclusion:

We expect Fed officials to raise their estimates of neutral over time both by raising their long-run neutral rate dots somewhat and by concluding that short-run neutral is currently higher than long-run neutral. While we are fairly confident that Fed officials will not be comfortable leaving the funds rate above 5% indefinitely once inflation approaches 2% and that they will not go all the way back to 2.5% purely in the name of normalization, we are quite uncertain about where in between they will ultimately land.

Because the economy is not sensitive enough to small changes in the funds rate to make it glaringly obvious when neutral has been reached, the terminal or equilibrium rate where the FOMC decides to leave the funds rate is partly a matter of the true neutral rate and partly a matter of the perceived neutral rate. For now, we are penciling in a terminal rate of 3.25-3.5% this cycle, 100bps above the peak reached last cycle. This reflects both our view that neutral is higher than Fed officials think and our expectation that their thinking will evolve.

Not that this should come as a surprise: as a reminder, with the US now $35.5 trillion in debt and rising by $1 trillion every 100 days, we are fast approaching the Minsky Moment, which means the US has just a handful of options left: losing the reserve currency status, QEing the deficit and every new dollar in debt, or - the only viable alternative - inflating it all away. The only question we had before is when do "serious" economists make the same admission.

They now have.

And while we have discussed the staggering consequences of raising the inflation target by just 1% from 2% to 3% on everything from markets, to economic growth (instead of doubling every 35 years at 2% inflation target, prices would double every 23 years at 3%), and social cohesion, we will soon rerun the analysis again as the implications are profound. For now all you need to know is that with the US about to implicitly hit the overdrive of dollar devaluation, anything that is non-fiat will be much more preferable over fiat alternatives.

Much more in the full Goldman note available to pro subs in the usual place.

Tyler Durden Tue, 03/19/2024 - 15:45

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Household Net Interest Income Falls As Rates Spike

A Bloomberg article from this morning offered an excellent array of charts detailing the shifts in interest payment flows amid rising rates. The historical…

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3 hours ago

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March 19, 2024

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A Bloomberg article from this morning offered an excellent array of charts detailing the shifts in interest payment flows amid rising rates. The historical anomaly was both surprising and contradicted our priors.

10 Key Points:

  1. Historical Anomaly: This is the first time in the last fifty years that a Federal Reserve rate hike cycle has led to a significant drop in household net interest income.
  2. Interest Expense Increase: Since the Fed began raising rates in March 2022, Americans’ annual interest expenses on debts like mortgages and credit cards have surged by nearly $420 billion.
  3. Interest Income Lag: The increase in interest income during the same period was only about $280 billion, resulting in a net decline in household interest income, a departure from past trends.
  4. Consumer Debt Influence: The recent rate hikes impacted household finances more because of a higher proportion of consumer credit, which adjusts more quickly to rate changes, increasing interest costs.
  5. Banks and Savers: Banks have been slow to pass on higher interest rates to depositors, and the prolonged period of low rates before 2022 may have discouraged savers from actively seeking better returns.
  6. Shift in Wealth: There’s been a shift from interest-bearing assets to stocks, with dividends surpassing interest payments as a source of unearned income during the pandemic.
  7. Distributional Discrepancy: Higher interest rates benefit wealthier individuals who own interest-earning assets, whereas lower-income earners face the brunt of increased debt servicing costs, exacerbating economic inequality.
  8. Job Market Impact: Typically, Fed rate hikes affect households through the job market, as businesses cut costs, potentially leading to layoffs or wage suppression, though this hasn’t occurred yet in the current cycle.
  9. Economic Impact: The distribution of interest income and debt servicing means that rate increases transfer money from those more likely to spend (and thus stimulate the economy) to those less likely to increase consumption, potentially dampening economic activity.
  10. No Immediate Relief: Expectations for the Fed to reduce rates have diminished, indicating that high-interest expenses for households may persist.

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One more airline cracks down on lounge crowding in a way you won’t like

Qantas Airways is increasing the price of accessing its network of lounges by as much as 17%.

Published

4 hours ago

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March 19, 2024

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Over the last two years, multiple airlines have dealt with crowding in their lounges. While they are designed as a luxury experience for a small subset of travelers, high numbers of people taking a trip post-pandemic as well as the different ways they are able to gain access through status or certain credit cards made it difficult for some airlines to keep up with keeping foods stocked, common areas clean and having enough staff to serve bar drinks at the rate that customers expect them.

In the fall of 2023, Delta Air Lines  (DAL)  caught serious traveler outcry after announcing that it was cracking down on crowding by raising how much one needs to spend for lounge access and limiting the number of times one can enter those lounges.

Related: Competitors pushed Delta to backtrack on its lounge and loyalty program changes

Some airlines saw the outcry with Delta as their chance to reassure customers that they would not raise their fees while others waited for the storm to pass to quietly implement their own increases.

A photograph captures a Qantas Airways lounge in Sydney, Australia.

Shutterstock

This is how much more you'll have to pay for Qantas lounge access

Australia's flagship carrier Qantas Airways  (QUBSF)  is the latest airline to announce that it would raise the cost accessing the 24 lounges across the country as well as the 600 international lounges available at airports across the world through partner airlines.

More Travel:

Unlike other airlines which grant access primarily after reaching frequent flyer status, Qantas also sells it through a membership — starting from April 18, 2024, prices will rise from $600 Australian dollars ($392 USD)  to $699 AUD ($456 USD) for one year, $1,100 ($718 USD) to $1,299 ($848 USD) for two years and $2,000 AUD ($1,304) to lock in the rate for four years.

Those signing up for lounge access for the first time also currently pay a joining fee of $99 AUD ($65 USD) that will rise to $129 AUD ($85 USD).

The airline also allows customers to purchase their membership with Qantas Points they collect through frequent travel; the membership fees are also being raised by the equivalent amount in points in what adds up to as much as 17% — from 308,000 to 399,900 to lock in access for four years.

Airline says hikes will 'cover cost increases passed on from suppliers'

"This is the first time the Qantas Club membership fees have increased in seven years and will help cover cost increases passed on from a range of suppliers over that time," a Qantas spokesperson confirmed to Simple Flying. "This follows a reduction in the membership fees for several years during the pandemic."

The spokesperson said the gains from the increases will go both towards making up for inflation-related costs and keeping existing lounges looking modern by updating features like furniture and décor.

While the price increases also do not apply for those who earned lounge access through frequent flyer status or change what it takes to earn that status, Qantas is also introducing even steeper increases for those renewing a membership or adding additional features such as spouse and partner memberships.

In some cases, the cost of these features will nearly double from what members are paying now.

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