Qatar is positioned to weather these headwinds because of its small population, substantial financial reserves, and favorable business conditions for investment. The state has been taking steps towards economic diversification from reliance on revenues from sales of hydrocarbon products. On December 3, 2018, it announced its withdrawal from the Organization of Petroleum Exporting Countries (OPEC), in order to focus on its natural gas export sector. 
The Covid-19 pandemic has been a wakeup call, necessitating Qatar’s quick transformation to a digital economy with the implementation of a mobile payment system, AI and blockchain technology. These new digital technologies require a high consumption of electric energy, which is currently produced with fossil fuels that adversely impact the environment.
Accordingly, Qatar has committed to a National fintech strategy to diversify its economy, which will be solarized with world’s second cheapest solar energy, to increase the proportion of renewable energy in its total electricity generation to 20% by 2030 as part of a broader effort by the gas-exporting nation to decarbonize its electricity grid and reduce the footprint.
“The ongoing coronavirus crisis not only highlights the importance of tech and fintech, but also accelerates adoption and development. We will continue in our efforts to enrich and develop the tech and fintech infrastructure in Qatar as an enabling platform and look forward to seeing more international FinTechs, including those from the U.S., easily integrate into Qatar’s thriving eco-system via Qatar Financial Center’s (QFC) FinTech license and wide range of benefits,” explained Mr. Yousuf Al-Jaida, CEO of QFC. The QFC said it recorded 33% growth in 2019, with over 800 Fintech, IT, tax, and investment consulting firms now part of the organization.
National fintech strategy
Qatar is a leading financial hub in the Middle East. It has been weaving Shariah-compliant blockchain technology into its existing financial and legal infrastructure through the sector’s emphasis on digital payments – QPay, Qatar’s largest FinTech company – money management; and lending, among others, to emerge as a regional fintech hub.
The fintech sector saw global investment grow to some US$111.8 billion by end of 2018, up from $50 billion in 2017 according to KPMG. Last year, to attract foreign Fintech investment, and encourage large companies to launch subsidiaries in the country, the Qatar Investment Promotion Agency was established which introduced free zone incentive programs.
Qatar’s sovereign wealth fund has also continually increased its investments in tech and Fintech companies, and technology investment funds like Softbank Vision Fund, which attempted to emerge as a formidable solar investor in the world.
Qatar Solar is a 100% owned holding company formed by Qatar Foundation specifically to invest in solar technologies, new applications of solar and solar research opportunities in line with Qatar’s National Vision 2030. Qatar Solar Energy is the largest solar technology development and manufacturing facility in the MENA region. QSTec – a high-quality polysilicon that is utilized in solar modules – was Qatar Solar’s first investment into the solar industry. 
The coronavirus pandemic has forced governments worldwide to focus on bringing blockchain tech to their financial services. This includes Qatar, which developed a National Fintech Strategy set forth by the Qatar Central Bank (QCB), which aims to support the Fintech sector in partnership with several key local stakeholders including QFC and Qatar Development Bank (QDB), because the Qatari public sector is the biggest spender on blockchain technology.
As part of its Fintech Strategy, the QCB is weighing whether to issue a central bank digital currency (CBDC) or not, as Covid-19 has led to an increased interest in digital currencies around the world. “The QCB greatly welcomes the safe use of technological advancements that promote financial stability and inclusion in Qatar. Issuing a CBDC certainly has its benefits in innovation and enabling users to significantly change the way they make payments.
However, if QCB were to issue a CBDC, there would also be wide-reaching implications for the economy, the financial system, and its operations. Such a decision would therefore be made only after considering the matter greatly and how it will help QCB achieve its public policy objectives. Therefore, there is currently no definitive plan to issue CBDC, however, the QCB is assessing the opportunities that this technology presents for Qatar and will continue to research the matter before making a final decision” said the QCB’s FinTech Section.
During March QCB released specifications for a national “Qatar Mobile Payment System” QR code system, a project designed to increase financial inclusion and reduce the use of banknotes in the country. The system aims to enable the user to use an electronic wallet on their mobile phone, to carry out P2P payments and pay for goods and services in addition to conducting withdrawals and cash feeds for electronic wallets in an instant. 
“Qatar has demonstrated an incredible synergy among entities in the pursuit of becoming a global leader in FinTech,” said Mohammed Barakat, managing director of the U.S. Qatar Business Council. “Considering Qatar’s already existing large payment processing and remittance market and its strategy to become a regional gateway for a huge surrounding market, I foresee rapid growth in Qatar’s FinTech sector.”
With its border opened to select flights from low-risk countries on August 1, the QDB recently launched a FinTech Incubator (for early-stage start-ups) and an accelerator program (for mature FinTechs), that will cater to local and global FinTech entrepreneurs at QFC, offering a ‘FinTech Circle’, a co-workspace for qualifying FinTech companies free of charge for 12 months, to enable Fintech communities and talents to network and collaborate. The QFC – with 500 firms and $20 billion in combined total assets under management – operates its own legal, regulatory and tax infrastructure.
“From Fintech’s early emergence as a challenger to a conventional financial services sector to its role today as a change catalyst and enabler, it is safe to say that our industry has come a long way. Blockchain is following suit, with 10% of global GDP expected to be stored on blockchain by 2027. In Qatar, blockchain and other emerging technologies can play a major role in Qatar’s overall economic transformation, especially in the digitization of various sectors, where they can be applied in four key areas: government to citizen, business to consumer, government to business, and business to business,” explained QDB CEO Abdulaziz bin Nasser al-Khalifa.
Fintech adoption curves are accelerating with Covid-19 working as a catalyst to Qatar’s solarized Fintech transformation. Qatar’s solar energy joint venture partner Japanese trading firm Marubeni has already partnered with Blockchain companies LO3 Energy and WePower to leverage blockchain technology in developing Marubeni’s renewable/solar energy trading applications.
About the author
Selva Ozelli, Esq., CPA is an international tax attorney and CPA who frequently writes about tax, legal and accounting issues for Tax Notes, Bloomberg BNA, other publications and the OECD.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.