Next generation

From volunteering in Saudi Arabia, to energy efficiency, to fintech solutions for low-earning migrant workers, meet the young entrepreneurs with winning ideas for shaking up business in the GCC

Into the fold

Kat Budd - UAE

For as much as 80 per cent of low-earning migrants in the UAE, a bank account is an unaffordable luxury. As hefty fees, minimum balance rates and charges put traditional banking services out of reach, blue-collar workers rely on a fusion of payroll cards, remittance houses and payday lenders to fill the void.

NOW Money, a Dubai financial technology (fintech) startup, has ambitious plans to change that. Using a free app, it is bringing digital money services to the fingertips of low-income workers, turning their smartphones into virtual banks. Users can pay bills, receive cash and – critically for a group that sends the bulk of its wages home – gain access to a web of remittance providers that promise to transfer money abroad at better rates, and at a fraction of the cost charged by traditional players.

“We’re a financial inclusion project,” says cofounder Kat Budd. “We’re a commercial organisation, yes, but we want to drive change.”

NOW Money works directly with employers to fuse their payroll to the app. Workers receive a link and training before their salary is paid directly into an online account. The account, which is protected by a clutch of biometric security features, comes with an ATM card for use online or for swiping at the cash register, and gives blue-collar migrants round-the-clock access to their money. To date, NOW Money has signed up more than 30,000 users – from delivery drivers, to hotel staff, and retail workers – capitalising on soaring smartphone use and a population already up to speed with mobile money models.

“This is a population that is very tech-savvy, and these solutions have existed for years in their home countries,” explains Budd. “As the price point on smartphones falls, it makes sense that we will see mobile money take off in the GCC as it has in other regions.”

The payoff could be significant. Of the $581.6bn that crossed national borders in 2015, the World Bank estimates banks and courier services netted around 8 per cent, taken in fees. NOW Money charges 2 per cent, says Budd, and its providers charge between 0.5 and 2 per cent per transfer.

“We only make money if people use our service,” she says. “We’re incentivised to make it engaging, and to serve the customer well.”

The idea for the app came in 2014. Budd and cofounder Ian Dillion had worked with online-only startup banks in the UK, and saw a gap in the market for a digital model in the UAE – but one targeting the bottom of the pyramid. They spent $150,000 “if not more”, says Budd, to map out the business and the app, before raising $500,000 in a funding round.

Another break came in 2015, when the pair joined Dubai-based startup accelerator Astrolabs. “It really upped our game in terms of moving the business forward,” explains Budd. More challenging was navigating the maze of red tape around licensing and regulation, in a region where digital banking is in its infancy.

“Fintech is only now catching on here, so we were really breaking new ground,” she says. “It’s persistence that got us through.”

The focus now is on growth. The startup hopes to move into Saudi Arabia this year – the world’s second largest remittance source country – and is in the throes of a fresh funding round, which aims to raise $5m. It has also begun working with Melltoo, the Gulf’s answer to ecommerce platform Ebay, offering its services to the site’s unbanked sellers.  With 100,000 active users, “it is an opportunity to become the region’s Paypal,” says Budd.

In January, NOW Money pitched against three other Gulf social enterprises to scoop first place in the GCC finals of The Venture, a global contest to find social enterprises with the ability to scale. The win gives the company a shot at the global prize later this year, which is backed by a $1m funding pot, and the chance to be a positive voice for the region, she adds.

“People thought we were absolutely crazy to leave our jobs to pursue this,” recalls Budd. “But we see massive opportunity in this market.”

Consult for a cause

Muhammad Al-Bakri - Saudi Arabia

It started with Facebook. In 2009, a group of young people got together via the social media site to distribute goods such as fridges, food and medicine to poor neighbourhoods in Saudi Arabia’s port city of Jeddah. Unlike other initiatives that disbanded after a while, this group of volunteers carried on.

Still, although the group kept returning to the same neighbourhoods nothing was changing. It was then that Muhammad Al-Bakri and his cofounders realised that, despite deep wells of generosity in the kingdom, a large gap exists between doing good and doing well.

“It was always the same people still waiting for food,” he explains. “That’s when we decided there must be a better way.” And so, Young Initiative Group (YIG) Consult was born.

YIG Consult aims to professionalise the nonprofit sector in Saudi Arabia by promoting the tools to plan, implement and measure the impact of charitable projects. “People in nonprofits work from the standpoint of sustainability, whereas [people in Saudi Arabia] tend to work on an emotional platform – God will provide and impact is something others will worry about,” explains Al-Bakri. “There is so much abuse of the nonprofit sector because no one expects reports on the outcomes.”

In 2014, the social enterprise started working with firms to design and carry out corporate social responsibility (CSR) projects, including training for corporate volunteers. YIG has worked with clients such as global consumer goods giant Unilever, and advised Rabea Tea employees on how to encourage young people to take on environmental projects, for example. It is also working with a wealthy client to develop a crowdfunding platform for medical charities.

The money from the advisory arm has helped kickstart YIG’s own projects. Part funded by the King Khalid Foundation, YIG is developing an Arabic web platform that aims to help NGOs plan and measure their performance. While such tools are freely available already, few are in Arabic, according to Al-Bakri. There will be a free version of the platform and a paid version to unlock more advice and tools, he explains.

Another of YIG’s projects is an initiative to boost volunteering in the kingdom. The social business is working with children from all income levels between the ages of three to five, and seven  to 11, to instil a sense of civic duty early on. YIG works with richer children on the responsibility that comes with privilege, while teaching students from lower-income households they are just as able as others to make a difference, says Al-Bakri.

Social enterprise is a relatively new sector in the kingdom, but it has already gained ground among young Saudis thanks to a growing awareness of successful social businesses abroad. “Youth see social enterprise as a better way to do charity,” says Al-Bakri.

At the same time, the rise of social ventures can help tackle youth unemployment, one of Saudi Arabia’s most pernicious problems. “Once you realise you can operate a nonprofit like a business, it will generate jobs automatically,” he notes.

It can also help fill the gap in services as government coffers feel the squeeze of the oil price rout that has hit the Gulf kingdom: “Energy conservation, water conservation, housing – these are all big challenges. We need to start realising as a community that we must address these issues in an entrepreneurial way.”

Al-Bakri hopes young Saudis will start to see the blend of business and philanthropy as an attractive career option, although he acknowledges the social sector is not yet seen as “a serious sector” in terms of talent, and many are wary of the lower salaries on offer. But being a social entrepreneur has its own rewards. “Now young people can dedicate their life to something more gratifying than creating money for a company,” he says.

Powering up

Charles Blaschke - UAE

Charles Blaschke has a goal: to cut the world’s energy consumption by a fifth, by simplifying energy bills. The Dubai-based founder of Taka Solutions believes engaging consumers could shrink usage and pollution faster – and at a fraction of the cost – of more complex fixes such as wind farms and solar power stations.

“The way to solve climate change is to put the tools for energy efficiency in everybody’s hands,” he says. “It’s the most effective way to reduce energy and carbon emissions.”

Launched in 2013 with $150,000 in seed funding, Taka uses a pay-as-you-save model to retrofit buildings and deliver energy savings. Working with clients including Standard Chartered Bank, Cleveland Clinic Abu Dhabi and Fairmont Hotels, the firm uses building information modeling, cloud-based analytics, engineering and smart technology to spot and capitalise on energy-saving opportunities. Taka foots the upfront bill for making buildings more energy-efficient, in exchange for a cut of the savings generated.

“We make an average saving of about 28 per cent [in energy bills],” says Blaschke. “If we don’t save, we don’t get paid.”

Client contracts are typically between five and eight years in length, and Taka broke even after just 12 months of operation, Blaschke says. With buildings estimated to account for more than one-third of global energy use, however, the profit is outweighed by the potential social return. “Our goal isn’t to save a little bit of energy by turning off a few lights,” explains Blaschke. “Our goal is to make deep retrofits, big savings and generate big impact. The more business we do, the more good we can do in tackling this huge problem.”

Globally, energy efficiency is on the rise, blunting demand for fossil fuels and the carbon dioxide they generate. Investment in the market rose 6 per cent to $221bn in 2015, according to the International Energy Agency. The Paris-based agency believes efficiency could cut the bills of energy consumers by $86bn by 2030, making tens of power plants around the world redundant.

Now, Taka’s focus is these consumers. In 2016, the company’s pay-to-save model caught the eye of The Venture, a global competition that seeks out social enterprises with the potential to deliver wide-scale impact. Though Taka missed out on a place at the global final, the contest helped the firm to sharpen a plan to expand its reach, and bring energy-saving expertise to individuals.

“After years of upgrading buildings to save money and energy, we realised we needed a way to get down to the tenant,” says Blaschke. “We could save a building $1m a year, but that would go to the owner’s pocket. To an individual, saving AED100 ($30) from their monthly energy bill is a lot.”

Taka’s answer is a free app that tracks an individual’s energy usage, gamifying their monthly bill. Tenants receive tips on cutting their consumption and comparisons to neighbours, encouraging smarter use of electricity. This is particularly critical for the power-hungry GCC states. According to the Arab Petroleum Investments Corp, the trade bloc will need to add 69GW of electricity production over the next five years to meet soaring domestic demand.

“It’s customised and all at their fingertips,” says Blaschke. “We want tenants to see how they can cut their bills and the products and solutions that could help. And from an energy efficiency perspective, a high-performing building depends on the people within it.”

In October, Taka launched a joint venture with Corys Environment, the investment arm of UAE-based Green Coast Enterprises. Taka Energy Services will “remove funding barriers” to Taka’s goal of cutting global energy consumption and carbon output by a fifth, says Blaschke.

“This will allow us to offer larger financing and deeper retrofits, and will eventually save more energy, carbon and money for our clients. [This partnership] is going to change the energy and investment landscape of the UAE in the years to come.”