New Payment Option Highlights Middle East’s Desire to Diversify

The oil and gas sector has been the staple of the Middle Eastern economy for decades, but recent developments have made several Gulf States desperate to diversify their economies.

Several nations recognise that their over-reliance on oil is as shaky as the volatility of its prices, so the need to create alternative revenue sources has become a top priority.

Saudi Arabia is one of several Gulf States leading the diversification charge, courtesy of their comprehensive Vision 2030 plan that has seen their non-oil sector grow at a rapid rate.

This now accounts for 45 percent of the nation’s Gross Domestic Product (GDP), and has been fuelled by notable developments in tourism, manufacturing, logistics and renewable energy.

Kuwait Eyes Alternative Cash Flow Options

Neighbouring countries such as Kuwait are lagging behind the Arabians. Kuwait still relies heavily on the oil and gas sector, which accounts for over 90% of their revenue.

However, the recent introduction of a new instant payment system called WAMD suggests they are willing to explore alternative cash flow options.

WAMD offers a secure and user-friendly way to transfer money and only requires a phone number to perform transactions. Its introduction into the Kuwaiti financial sector has sparked talks of the system potentially paving the way for a heavily regulated online gambling sector.

The nation has also devised a Vision 2035 scheme to diversify their economy and compete globally, but whether softening its stance on gambling is part of the plan remains to be seen.

Going down that route goes against the laws of the land, but establishing real money online casinos in Kuwait could be a game-changing revenue generator for the country.

While WAMD caters to the needs of Kuwaiti citizens, the development of eliWallet further indicates that the wider Middle East region is looking to broaden its horizons.

The eliWallet is a product of the Jordan Kuwait Bank (JKB) joining forces with Mastercard and FOO. It is a new multi-currency payment wallet that could be a noteworthy development for the entire Middle East region.

The partnership exemplifies the region’s desire to reduce their reliance on oil - a shift driven by unstable prices, geopolitical tensions and a global transition towards renewable energy.

The oil and gas sector has traditionally been the cornerstone of growth and development in the Middle East, but it also exposes their economies to price fluctuations and uncertainties in the global market.

Diversification has become crucial for their long-term stability, and the launch of eliWallet is a positive step towards creating an alternative revenue source.

The eliWallet features virtual and physical cards that support transactions in various currencies. It also allows users to make online and offline transactions and facilitates seamless and swift money transfers across borders.

The primary objective of eliWallet is to streamline how customers manage their finances and conduct transactions, providing them with greater financial freedom.

The collaboration with Mastercard ensures safe and secure transactions in areas or countries where Mastercard is accepted, while the FOO plays a crucial role in developing the wallet’s user-friendly interface.

They also manage customisation, testing and deployment of the technology to ensure customer satisfaction and smooth integration with third-party services.

Diversification Remains the Key to Growth in the Middle East

The launch of eliWallet is a positive step towards economic diversification in the Middle East.

It is the latest financial technology (fintech) development that has swept across the region after Kuwait launched WAMD, signalling their intention to invest in more non-oil forms of revenue generation.

Kuwait is in dire need of new non-oil income pathways, especially as the nation anticipates considerable budget deficits in the near future.

Finance and Investment Minister Dr Anwar Al-Mudhaf has warned that the country is anticipating a budget deficit of $85 billion over the next four years. This follows years of accumulated deficits amounting to $107.7bn, which has over-stretched the national reserves.

The country’s only option for safeguarding its future and maintaining stability was diversifying the economy, but providence has provided the nation with an alternative route.

Kuwait Petroleum Corporation (KPC) announced the discovery of a massive oil field that contains approximately 3.2bn barrels of oil equivalent.

As one of the world’s leading oil producers, this discovery reaffirms Kuwait’s status as a key player in the global energy market and will profoundly impact the national budget in the coming years.

The oil barrels would not only meet the country's long-term energy needs but also create new export opportunities, which could increase revenue from exportation.

This latest development represents a massive game changer that could impact Kuwait’s diversification plans. However, balancing this opportunity with sustainable development goals would be in the nation’s best interests.

Diversifying the economy is still crucial for long-term stability. It would also defend the nation against any fluctuations in oil prices in the future.