Saudi Arabia and the UAE have emerged as top destinations for AI startup funding across the Middle East and North Africa (MENA), as both nations look to scale their investments in frontier technologies. 

Enterprises across the UAE and Saudi Arabia raised $519 million and $235 million, respectively, making up 60% and 27% of the MENA’s AI funding last year, according to data platform Magnitt. 

The reported attributed strong financial services sectors as a key driver, with most VC investors hosting offices in either Riyadh or Dubai. 

Saudi Arabia and the UAE have launched colossuses to drive their national AI ambitions – G42 backed by Abu Dhabi sovereign wealth fund Mubadala Investment Company and Humain, a subsidiary of Saudi sovereign wealth fund, Public Investment Fund.

The US recently authorised the export of advanced AI chips to G42 and Humain, slated to receive American semiconductors, equivalent of up to 35,000 Nvidia Blackwell chips.

The International Monetary Fund said that the GCC is well-positioned to leverage digitalization, with most countries close to or on par with advanced economies, especially in terms of digital infrastructure and affordability. 

“Similar to digitalization, the GCC’s AI preparedness exceeds that of an average EM (emerging market), supported by rapid advances in AI investments (including by SWFs), R&D (e.g., initiatives with universities and research centers, and investments in GenAI foundational models), and talent (including the attraction of AI skills from abroad),” the fund said in its GCC note published on December 6. 

AI captures sizeable slice

AI startups in MENA raised $858 million in 2025, making up 22% of the region’s total funding and 29% of its deal volume. 

AI-native startups, with their appetite for compute and model development, received 69% of total AI capital, while AI-enabled startups raised $267 million.

AI-native are startups whose core product or service is built on AI, while AI-enabled startups deploy the technology within their workflows and processes

Enterprise software stood as a top performer, drawing 30% of the region’s AI funding with 59 deals, signalling at the growing adoption of AI solutions by corporates. 
 

Bahraini banks could face a funding shortfall of $1.9 billion as of year-end 2025, in the event of a full-blown US-Iran conflict, threatening GCC stability and capital flows, according to recent analysis.  

The kingdom’s absolute funding shortfall, which will total 8% of its external assets after assumed haircuts, will be a steep decline from a $1.7 billion surplus in 2024, S&P Global said in a stress analysis report published on Tuesday. A haircut refers to a reduction applied to the value of an asset in percentage terms. 

Under a severe stress scenario where GCC lenders could face external funding outflows, Bahraini lenders may require domestic or regional support.

The shortfall reflects Bahraini banks' “rising external debt and an increase in assumed haircuts on investment portfolios that results from high exposure to sovereign creditworthiness”, the report added. 

Qatari lenders have pared their funding shortfall compared with previous estimates, with the potential shortfall declining from $7.4 billion as of year-end 2024 to $4.4 billion as of year-end 2025. The financial gap is anticipated to be covered by its government, thus limiting its overall risk.

Banks in the UAE, Kuwait, and Oman, on contrast, maintain strong net external asset positions and are well placed to cope with outflows. This scenario extrapolates to Saudi lenders, too, despite rapidly rising external debt levels. Saudi banks witnessed a sharp rise in their net external debt, increasing fivefold to $54.6 billion at year-end 2025, from $9.1 billion at year-end 2024.

On balance, GCC lenders have been highly exposed to external debt outflows amid rising geopolitical risks and regional tensions since 2023. 

“We continue to view external debt outflows as a plausible risk under a severe stress scenario - particularly in the event of a prolonged conflict involving non-regional and regional actors and sustained, broad-based attacks,” the report added. 

In case of an escalation, GCC lenders may face external funding outflows that may equate to half of interbank liabilities, and 30% for non-resident deposits. Lenders may then liquidate their external positions to fund the outflows that could result in reduced assets valuations, according to the analysis.   

Such liquidations could cause haircuts of 10% on interbank deposits and 20% on deposits held at head offices and branches. Furthermore, a reduction of 20% is possible on investment portfolios abroad, typically held for liquidity management; and 100% on loans to non-residents and other assets, the agency said. 

Qatari banks' net external debt stood at approximately $121 billion at the end of last November, equalling about 32% of total domestic lending. Non-resident deposits and interbank funding totaled $109 billion around the same time, constituting around 52% of banks’ external debt, according to S&P. 

“We consider this debt to be subject to the potential for outflows in the event of a significant spike in geopolitical risk. We note, however, that such outflows were limited when targets in Qatar were attacked by Iran and Israel in 2025, with about $3 billion of total outflows in each of August and October,” the rating agency said last month.  

Western Europe dominated tourism traffic in Dubai last year, with overall year-on-year visitor numbers up 5%. 

Arrivals from Western Europe stood at 4.1 million in 2025, making up a fifth of total visitor numbers, and up from 3.74 million in 2024. 

Visitors from CIS and Eastern Europe totalled 2.89 million, making 15% of the total visitor pool, followed by tourists from South Asia (2.89 million), Northeast and Southeast Asia (1.85 million; 9%), the Americas (1.40 million; 7%), Africa (897,000; 5%) and Australasia (401,000; 2%). 

Nearly three million tourists from the six-member Gulf Cooperation Council (GCC) and 2.17 million from the Middle East and North Africa (MENA) region visited Dubai last year, constituting 15% and 11% of total arrivals, respectively.  

Dubai hosted 19.59 million international tourists in 2025, up 5% year-on-year from 18.72 million arrivals the previous year, as it solidifies its position as a regional and global tourism hotspot. 

Strategic partnerships, global marketing campaigns and major events contributed to the emirate hosting such a colossal visitor pool, Dubai’s media office said in a statement on Monday. 

The city welcomed a record 2.04 million international overnight visitors last December, rising 6% year-on-year and edging past last January’s record of 1.94 million tourists. 

“By further enhancing the city’s exceptional infrastructure and forging strong global partnerships, we continue to consolidate Dubai’s emergence as one of the world’s most sought-after destinations,” said Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Dubai Crown Prince, and the UAE’s deputy prime minister.

“Dubai’s success also reflects the city’s diversity, cultural vibrancy, and its ability to continuously evolve its tourism and hospitality offerings. Through close collaboration between all stakeholders, we are focused on driving greater innovation and raising service excellence across the tourism ecosystem.”

In 2025, Dubai International (DXB) airport retained its position as the world’s busiest for international passengers for the 11th consecutive year, with total traffic from January through to September totalling 70.1 million.

By the end of December, the city’s hotel inventory reached 154,264 rooms across 827 establishments, which puts it well ahead of global peer cities such as Bangkok, New York, Paris and Singapore, and almost on par with London in terms of total room inventory. 

Three Dubai properties found space on the list of the world’s 50 best hotels in 2025, including Atlantis The Royal, Jumeirah Marsa Al Arab, and The Lana Dubai.

Qatar Investment Authority (QIA) is seeking to expand its venture capital (VC) initiative by $2 billion, raising the programme's total capital commitment to $3 billion. 

Qatar’s Prime Minister Sheikh Mohammed bin Abdulrahman bin Jassim Al-Thani, who announced the expansion in his address at the Web Summit Qatar held in Doha, said the year 2026 would mark a shift from momentum to scale. 

QIA’s Fund of Funds program, which currently supports 12 regional and international fund managers in Qatar, will welcome five new VC funds into its fold. 

The new funds represent specialities across AI, fintech, blockchain, infrastructure and special situations, the sovereign wealth fund said in a statement on Sunday.

“With an aggregate AUM of nearly $10 billion the new funds joining the program will support our efforts to develop Qatar as a regional hub for VC expertise,” said Mohammed Saif Al-Sowaidi, CEO of QIA. 

“While Doha represents the first international office for many of our funds, these managers are also encouraging their portfolio companies to establish their regional HQ here – further positioning Doha as a hub for entrepreneurs.”

The five VC funds joining the initiative include the $4-billion multi-stage, multi-strategy VC firm Greycroft; Ion Pacific, a VC structured secondaries and special-situations manager with approximately $700 million under management; and Liberty City Ventures, a VC fund and incubator with $2.4 billion of assets under management. 

Others include tech-focused investment firm Shorooq and European VC firm Speedinvest, with more than €1.2 billion in assets under management and six offices across EMEA. 

The Fund of Funds program, launched during the Web Summit event in 2024, has since commitment north of $1 billion to regional and global VC firms. 
 

Qatar has joined a US-led initiative to secure global tech supply chains, to enhance bilateral relations and ensure the sustainability of global supply networks. 

Qatar will expand its international partnerships in semiconductors, advanced computing, cybersecurity, and digital technologies via the initiative, according to a news report published by Qatar News Agency. 

The Pax Silicia Declaration is a US-led economic security coalition to protect global tech supply chains, address AI supply chain opportunities and vulnerabilities, and explore joint investment. The initiative marks the first time countries are organizing around compute, silicon, minerals, and energy as shared strategic assets.

Dr. Ahmed bin Mohammed Al Sayed, Qatar’s minister of state for foreign trade affairs said the world is undergoing a profound transformation driven by AI, rising demand for energy and critical minerals, and rapid technological advancement.

“It supports Qatar's transition toward an innovation-driven economy, enhances the resilience of US supply chains, expands opportunities for joint research and technological development, strengthens public-private sector collaboration, and supports the growth of US companies operating in Qatar and across the region.”

US Under Secretary of State for Economic Affairs, Jacob Helberg welcomed Qatar's accession to the Declaration, describing the occasion as a pivotal moment for bilateral relations and for the global economy as a whole.

“If the 20th century ran on oil and steel, the 21st century runs on compute and the minerals that feed it,” said Helberg.

The United States and Qatar will work together on strategic investments, including critical minerals security initiatives and the modernization of global logistics infrastructure, he added. 

Qatar has launched several initiatives to fulfill its AI ambitions, including the Qatar AI Initiative as well as a national company, Qai, to develop and operate AI infrastructure within its borders and beyond. 

The PAX Silicia alliance is defined by capabilities rather than traditional alignments, said Helberg, bringing together countries with the resources and strategic vision to secure a shared technological future. 

Qatar becomes the eighth signatory, joining nations including Australia, Israel, Japan, Republic of Korea, Singapore, and the UK. The UAE is reportedly expected to join later this week.

The Middle East has emerged a hotspot for deal activity in 2025, surpassing Southeast Asia for the first time, and becoming the only emerging venture market to record an annual rise in deal count. 

The Middle East recorded a record 581 deals, up 13% annually, while narrowing the funding gap, with an all-time high of $3.4 billion, up 89% year-on-year. The performance was underpinned by stronger diplomacy ties, major events, and rising investor confidence according to data analytics firm Magnitt. 

The region saw a record $1 billion in deals worth $100 million or more, supported by the return of late-stage liquidity, diplomatic ties, key events, and rising investor confidence.

The GCC region stood out as a powerhouse, positioning itself as a destination of long-term capital, with five deals worth $100 million or more. Saudi Arabia was the most active country by funding, recording 257 deals worth $1.7 billion, with the UAE following at $1.58 billion up 67% year-on-year.   

“Throughout 2025, the region saw international investors from North America, Europe, and Asia continue to deepen their presence in the region across private capital, said Philip Bahoshy, CEO of Magnitt, in its latest report. 

“They were drawn by policy consistency, economic ambition and sustained investment in infrastructure. Global financial institutions and asset managers including Ray Dalio, Brevan Howard, KKR and Brookfield expanded their local footprint."

"Additionally, 9,800 millionaires were set to relocate to Dubai in 2025; 600 multinational companies have regional headquarters in Saudi Arabia and Dubai has passed a milestone of being home to over 100 global hedge funds,” Bahoshy added. 

M&A activity rose 41% year on year across the MENA region, while AI become an active investment theme, with related company funding increasing 204% annually to $817 million. 

Despite an 11% year-on-year decline, Singapore remained the most funded emerging venture market, with $3.08 billion. The Southeast Asia region experienced a 29% year-on-year decline in funding and deal count, with M&A activity falling to 24 deals from 35, its lowest level in seven years.

Egypt has received $3.5 billion from Qatar as part of an investment agreement to develop a residential and tourism project on its northwestern Mediterranean coast.   

The payment represents the cash portion of the deal, Mohmed El-Homosany, the spokesperson for the Egyptian cabinet, said in a statement. 

The second phase involves an “in-kind consideration” consisting of the project’s residential units, that are expected to fetch about $1.8 billion on sale, he said. 

The New Urban Communities Authority is entitled to a share equal to 15% of the project’s net profits. 

The New Urban Communities Authority and Qatari Diar Company - the real estate arm of Qatar’s sovereign wealth fund – signed an agreement in November to implement an urban tourism project in the Alam El Roum area on the northwestern coast of Egypt's Matrouh Governorate.

The $29.7 billion project spans across 4,900 acres, along a 7.2 kilometer Mediterranean waterfront, featuring residential complexes, tourism and entertainment projects, golf courses and a yacht marina.

The project will also host a service free zone, electricity distribution and water desalination and treatment plants, hospitals, schools, universities, and several government offices. 

Approximately 60% of the total land area will be allocated for residential development, 25% to roads, squares and open green spaces with 15% to service areas.