Amennyiben segítségre van szüksége, kattintson ide:

The Digital Economy: The Middle East's New Growth Frontier

safder nazir

Safder Nazir

2021-10-18 15
Emotional male voice
  • Emotional male voice
  • Emotional female voice
  • Standard male voice
  • Standard female voice
Speed 1.0X
  • Speed 0.5X
  • Speed 1.0X
  • Speed 1.5X

Today, the digital economy is at the forefront of the national development plans of many countries across the world. Nations such as China, Australia, Singapore, Malaysia, and Ireland have not only made the digital economy a cornerstone of their future national development, but also introduced various digital-specific strategies to achieve this end. Many countries in the Middle East are also moving in the same direction, increasing their focus on the digital economy and introducing strategic initiatives to enhance digitalization.

The Rise of the Digital Economy in the Middle East

The Middle East economy has traditionally been dependent on oil and gas resources, driving economic and national prosperity. However, this reliance has tapered off in the last two decades, coinciding with a fall in oil prices and the rise of digital technologies. At the turn of the century, countries such as the UAE, Qatar, and Bahrain initiated diversification efforts to develop their financial sectors and establish knowledge-based economies. These diversification efforts have intensified and became widespread throughout the Middle East in the last decade, especially across Gulf Cooperation Council (GCC) countries. For example, Saudi Arabia — the biggest economy in the Gulf region and the world's largest oil exporter — is aiming to increase its share of non-oil Gross Domestic Product (GDP) from 16% in 2016 to 50% by 2030.1  Today, every GCC country has a similar national vision that focuses on developing non-oil sectors for economic growth, local value and employment creation, and social development.

Digitalization as a Cornerstone of National Development

The Middle East has made significant progress in the adoption of digital technologies over the last decade. Consequently, digitalization is a vital component of national visions and development plans across the region. And there are already some good examples that show the extent of digitalization in the region and the evolution of the digital economy.

The Digital Consumer: The Middle East has a young, tech-savvy population. Approximately 75% of the region's population is under the age of 40, a figure that's much higher than the world average of 63%.2  This large proportion of young people, combined with large-scale infrastructure developments currently underway in the region, has made the Middle East one of the fastest global adopters of digital technologies. For example, mobile infrastructure investments in the broader Middle East and North Africa (MENA) region are estimated to total US$70 billion over the 2019–25 period.3  Mobile broadband penetration in GCC countries has already reached 100%,4  and more than 50% of consumers in the region shop online. In the UAE, 80% of digital payments are already contactless.5  With respect to the prevalence of digital skills among the population, GCC countries are ranked on a par with major global players such as Hong Kong, Germany, South Korea, and Ireland.6

Digital Business: The changing characteristics of consumers have also changed the nature of businesses in the region. Today, digital business models are dominant in key sectors in the Middle East. The UAE, for example, has significantly focused on digital governance in the last decade and made several strategic investments. Government-to-consumer interactions in the country are now predominantly digital, and there are plans in place to close half of existing government service centers in the next two years.7  A similar digital trend has been seen in the UAE banking sector as well. The number of bank branches in the country fell by 34% between 2016 and 2020, coinciding with the launch of several digital banks, such as Liv., E20., NEO, NEOBiz, and CBD Now.

The Development of the Digital Economy in the Middle East

The recent rise to prominence of Middle Eastern digital economies has been propelled by the emergence of the digital consumer and the associated development of digital business models. The national visions of countries across the region place great emphasis on the growth of the digital economy, and several digitally-focused initiatives have been introduced as a result. These initiatives can be grouped into three overarching categories: the overall economy and the development of skills, sector-specific efforts, and tech-specific efforts. These categories, as well as examples of initiatives in different countries, are worth exploring in more detail.

The Digital Economy and the Development of Skills in the UAE

A few months after the outbreak of the COVID-19 pandemic, the UAE announced plans to prioritize the development of the digital economy. As such, the country plans to double the size of its digital economy over the next 10 years by rolling out smart infrastructure and enhancing the digital readiness of the government. To achieve this goal, the UAE created a new cabinet post: the Minister of State for Artificial Intelligence (AI), Digital Economy, and Remote Work Applications. This ministry will focus on rolling out technology applications to enhance businesses and the UAE supply chain. The nation considers AI to be central to its future vision and expects the technology to generate up to AED335 billion in extra growth by 2031.8

The UAE has also recognized that skills development is essential for the digital economy. Accordingly, the government recently introduced a National Program for Coders, which aims to make the UAE the world's foremost destination for coders and future innovators. The program is seeking to train and attract 100,000 coders and establish 1000 digital companies over five years.9  In another related move, the government has established the world's first graduate-level, research-based university for AI, the Mohamed bin Zayed University of AI (MBZUAI).

Sector-Specific Digital Development Efforts in Qatar

In 2008, Qatar introduced its Qatar National Vision 2030 with a strategic goal to develop a knowledge-based economy. The key areas of development outlined in this vision include innovation, entrepreneurship, skills, infrastructure, and the efficient delivery of public services. To help realize all of this, Qatar has introduced various initiatives focused on three key sectors: government, Smart Cities, and Financial Technology (FinTech).

Government: Qatar is currently preparing to launch its updated digital government strategy: Qatar Digital Government Strategy 2021–2026. This new strategy will focus on transforming the user experience by applying AI, Machine Learning (ML), big data analytics, blockchain, and cloud computing technologies in the public sector.10

Smart Cities: To prepare for the upcoming FIFA World Cup Qatar 2022 and aid the long-term sustainable growth of its cities, Qatar introduced the TASMU Smart Qatar Program. This program focuses on five key sectors: transportation, logistics, healthcare, the environment, and sports. For example, establishing a smart transport system is one of the key objectives of the program, with lowering road fatalities to six per 100,000 persons and cutting car emissions by 10% set as two specific goals. Qatar is also pursuing several related projects, such as the introduction of electric buses, the buildout of smart bus hubs, and the expansion of public Wi-Fi.

FinTech: The evolution of the financial sector and the advent of FinTech has provided fresh impetus to Qatar's vision for a knowledge-based economy. In 2017, Qatar formed its National FinTech Taskforce with the mission to create a sustainable, robust, and internationally competitive FinTech ecosystem. Accordingly, the taskforce has created a national FinTech strategy and established an incubator: the Qatar FinTech Hub. The taskforce is also planning to launch a regulatory FinTech sandbox, offering a safe, controlled space for organizations to trial FinTech solutions.

Tech-Specific Development Efforts in Saudi Arabia

As mentioned earlier, Saudi Arabia is pursuing major economic diversification plans. The Kingdom has several giga-projects under construction including the cross-border Smart City project NEOM, The Red Sea — billed as the world's most ambitious regenerative tourism project — and the ultra-luxury tourism project AMAALA. All are envisaged as digitally-enabled, sustainable, carbon-neutral developments. Indeed, in 2020, the Saudi government introduced new policies aimed at achieving sustainable growth and creating competitive advantages through the digital economy. The country has since undertaken several tech-specific initiatives to realize these policy goals, focusing on three key areas: data and AI, the cloud, and 5G.

Data and AI: Saudi Arabia is banking heavily on data and AI to spearhead the development of its digital economy. The government has established the Saudi Data and AI Authority (SDAIA) and introduced the National Strategy for Data and AI (NSDAI). According to the latter, Saudi Arabia expects to attract investments worth SAR75 billion and create 300 start-ups in the data and AI field. NSDAI also focuses on skills development, with plans to increase the number of data and AI specialists and experts to 20,000 and boost workforce literacy to 40%.

Cloud: To thrive in the digital economy, organizations need to evolve into digital enterprises. However, digital enterprises need to build their foundations on cloud-centric digital infrastructures. Saudi Arabia has consequently introduced a cloud computing regulatory framework and a cloud-first policy to facilitate digital transformation in the public sector. These rules compel government entities to consider the cloud when making new technology investments and are expected to accelerate cloud adoption in the public sector.

5G: GCC countries are among the world's leaders in 5G development. In addition, the UAE, Saudi Arabia, Qatar, and Kuwait all feature in the global top 10 in terms of national mobile broadband speeds.11  In Saudi Arabia, 83% of 5G-capable devices are actively connected to 5G networks, a clear sign of Saudi Arabia's 5G maturity. With its high speeds and low latencies, 5G is a key catalyst of the digital economy.12 Saudi Arabia therefore intends to continue investing in 5G technology, with plans to allocate or improve spectrum to boost speeds and coverage across the Kingdom.

Conclusion

Today, a nation's future heavily depends on advancements in science, knowledge, innovation, and technology. Yet, urban and economic development in any nation now also needs to meet sustainability goals. Many countries in the Middle East are nurturing and empowering such advancements through initiatives focused on developing the foundational elements of the digital economy — such as infrastructure, data, and skills — using critical technology enablers such as 5G, the cloud, and AI. Collectively, these initiatives will have far-reaching impacts on economic growth, employment creation, and public service delivery. In addition, they will also help countries reach underserved segments of their populations.

1.https://www.vision2030.gov.sa/
2.United Nations World Population Prospects 2019.
3.https://www.gsma.com/mobileeconomy/mena/
4.International Telecommunications Union (ITU) 2019 Statistics.
5.https://www.khaleejtimes.com/news/uae-is-committed-to-double-the-size-of-digital-economy-in-10-years-top-official-says
6.World Economic Forum (WEF) Global Competitiveness Report, 2019.
7.https://www.khaleejtimes.com/news/government/making-government-future-ready-is-a-priority-says-sheikh-mohammed
8.https://ai.gov.ae/strategy/
9.https://ai.gov.ae/np4c/
10.https://hukoomi.gov.qa/en/news/qatar-digital-strategy-2026-to-be-launched-in-the-current-year
11.https://www.speedtest.net/global-index Aug 2021.
12.https://www.gsma.com/membership/resources/saudi-5g-is-fast-and-new-spectrum-allocations-should-make-it-faster/

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy, position, products, and technologies of Huawei Technologies Co., Ltd. If you need to learn more about the products and technologies of Huawei Technologies Co., Ltd., please visit our website at e.huawei.com or contact us.

0/500

Write your comment here.
Submit

0 comments

    More comments

      You have scored successfully.

      You have submitted successfully.

      Evaluation failed.

      Submission failed.

      Please write your comment first.