The new Gulf economy

The World Government Summit (WGS) in Dubai last month saw world leaders, key United Nations bodies and philanthropic celebrities descend on the city to discuss the future of governing, with innovation, data and new technology playing a key role in many of the talks and panel sessions.

Indeed, at the summit, the UAE’s Minister of Cabinet Affairs and The Future, Mohammed Al Gergawi, stressed the role big data now plays in the economic, social and political sectors, making the bold statement that “those who hold data, hold the keys to the future”.

Comparing the current technological revolution to those which transformed the globe during the 18th and 19th centuries, Al Gergawi said: “The world has changed and now we are talking about the Fourth Industrial Revolution. But countries have not been able to keep up with these changes.”

One of the key issues faced by governments in the 21st century is the speed at which technological advances – largely in the private sector – are taking place, and how quickly governments can mitigate those advances and use them for public benefit while creating legislation which also safeguards the public.

To be sure, several political scandals in recent years – Cambridge Analytica, Facebook and the issue of whether there was meddling in the US election and Brexit – have seen government bodies struggle to keep up with and check private sector technological advancements. Personal data has been central to this debate, with 91 per cent of Americans stating in a recent Pew Report that they no longer feel that they have control over how their personal data is used or how it is harvested.

Commenting on the issue at the WGS, Al Gergawi said: “The private sector now knows more about us than any government around the world. They know what we eat, and when we eat; when we sleep and when we wake up; where we travel to, which destination and how we travel. They even know the number of our heart beats. [Those] who own this information, own the future.”

UAE: Leading the way for GCC tech innovation?

For much of the past 20 years, the UAE has aimed to manage some of the risk – and opportunity – posed by technological advancement in the private sector field, by positioning itself as a regional leader in innovation, partnering with both local and international bodies.

Most recently, in January this year, the UAE government signed a deal with the World Economic Forum to set up the first advancement research centre in the Arab world, in Dubai. The new hub – the Dubai Affiliate Centre for the Fourth Industrial Revolution Network – will focus on new technologies, such as artificial intelligence (AI), precision medicine and blockchain cryptocurrency, and is one of only three Affiliate Centres worldwide, with the flagship facility based in San Francisco, US.

Although it’s certainly too early to judge the merit of the new centre, the Fourth Industrial Revolution Network has already helped to develop several successful private-public sector technological partnerships internationally.

In recent years, the organisation has assisted the Rwandan government in managing airspace regulation and drone crafts, and in India it is working with the government on a project that could see drone data revolutionise the agriculture industry in the country, through better management of crop productivity, crop disease surveillance and agriculture prediction amongst other issues.

Speaking at Davos 2019, Klaus Schwab, founder and executive of the World Economic Forum, commented that the new centre in the UAE will “help accelerate our time to impact and ensure that the new wave of innovation benefits the many, not the few”.

Also central to the UAE government’s technological advancement plans is the country’s National Strategy for Advanced Innovation. Set up just over a year ago in February 2018, the organisation took over from the previous 2014 National Innovation Strategy. The department focuses on how the country can use technology to both equip Emiratis with the technical skills necessary to navigate the digital landscape of the 21st century, as well as build a sustainable future in terms of renewable energy and resources for the country – particularly as the UAE moves away from being a resource-based economy.

In the first year of operation, the organisation welcomed delegates of British SMEs to the country to discuss business growth opportunities, and also encouraged national companies to innovate. One of the first of the country’s companies to succeed in this field was the Dubai Electricity and Water Authority (DEWA), which achieved a gold award in innovation for its sustainability work at the 10th Global Continual Improvement & Innovation Symposium & Award (GCIIS) 2018.

Perhaps one of the most interesting recent government initiatives to encourage private sector digital investment is the Dubai Future Accelerators programme. Set up in 2016, it has gone from strength to strength with the department receiving 600 applications from companies based in 74 countries when it opened for its most recent round of applicants in 2018.

The programme, which is run by Dubai Future Foundation (DFF), sees government bodies and global bodies work together for nine weeks including incubation workshops and mentoring events. An example of one of the most recent successful start-ups to benefit from the organisation’s incubation programme is ArabClicks, a marketing platform which aims to assist market growth and connectivity for Middle Eastern SME e-commerce companies, and now has its headquarters in Dubai.

Indeed, it seems that technological innovation and incubation programmes could be a key part of the country’s economic strategy over the next decade. Speaking at a recent international trade talk, the group chairman and CEO of DP World, Sultan Ahmed Bin Sulayem hinted at as much, saying: “Today is the age of mind. Apple is an idea, data is an idea. The mind makes a machine. The biggest wealth today in any country is in the minds of people.”

Saudi Arabia marching ahead with Vision 2030

The UAE’s largest and most powerful neighbour is also looking to new technologies and investing in a new, ideas-based economy in order to help transition the country away from oil dependency. In the four years since Saudi Arabia’s colossal Vision 2030 announcement, it has become clear that developing a sophisticated digital infrastructure is integral to the country’s aims of developing public amenities along with restructuring government management and developing the country’s recreation and tourism sectors.

One of the key challenges has been developing telecoms networks in the country. The government is currently undergoing an ambitious project which will see 90 per cent of high-speed broadband coverage in cities and 66 per cent in other urban areas. However, industry spectators seem optimistic. Indeed Jean-Philippe Courtois, the Microsoft International president has on multiple occasions voiced his opinion that the country is a “ripe technology market”, and has supported the country through action too. The company’s cloud and Microsoft ecosystem is expected to create more than 63,000 jobs in the country through investment from 2017-2022.

Similar to the UAE, incubation programmes have been a key strategy in developing public-private initiatives to drive technological advancement in The kingdom. One of the most successful platforms in the country is the Badir Programme for Technology Incubators and Accelerators. The initiative reported a record result for 2018, raising nearly $20.3m during the year across 63 investment deals. Nearly $1m of this came from government investment, while 50 per cent of capital came from private investors, and the remaining 40 per cent from venture capital firms.

Nawaf Al Sahhaf, CEO of Badir Programme for Technology Incubators said increased awareness was a central part of the success seen in the 2018 results.

“Saudi start-ups have a wide range of financing options as funding volumes in the local market has increased steadily, with a lot of fresh money flowing into seed and early-stage companies,” he said.

The programme is currently working towards creating 600 tech start-ups and 3,600 jobs by 2020 in Saudi Arabia.

Over the past four years, there have been some tangible political shifts in the kingdom as it lays down and builds on foundations for Vision 2030. The trickle-down effect of these changes has seen the opening up of the country to an increasing number of international companies. A recent example of this is the partnership this February between Saudi Payments and the country’s banks with Apple Pay, allowing Visa consumers across the country to pay with their iPhone or Apple Watch. A key move for a country which has 74 per cent smartphone penetration, and a 40 per cent Millennial population.

The wider GCC: Kuwait and Bahrain push into new frontiers

The two GCC giants are not the only countries pushing forward with technological investment. This January Kuwait announced a new $200m funding investment for young Arabs pursuing a career in the digital economy.

Managed by the country’s Arab Fund for Economic and Social Development, the country’s minister of finance, Dr Nayef Al Hajraf, said that he envisions the project as being a GCC-wide initiative, to create jobs for the burgeoning youth demographic. The country’s deputy prime minister and foreign minister Sheikh Sabah Al Khaled also commented that private investment in the region’s digital economy played a key role in the future of the GCC.

In Bahrain, the focus has been on developing a new financial technology hub in the region. In February 2018, the country announced the public-private initiative FinTech Bay, and remains the only country in the GCC with dedicated legislation to support and develop a FinTech economy. Since its launch, the hub has seen investment from global players including Cisco, Microsoft and Batelco along with many more.

Most promisingly, global research and consultancy organisation, Oxford Business Group (OBG) examined non-oil growth in their recent publication The Report: Bahrain 2019, and highlighted that the new FinTech legislation in the country and investment in the financial technology niche played a key role in encouraging support and investment in the country’s financial services industry.

Indeed, the unanimous admission that the region needs to move from being dominated by resource-led economies, and the resulting initiatives that have been set in place over the past five years are a key first step in bridging the gap posed by the technological revolution and depleting oil supplies.

However, this is not enough to determine success. Adaptation and real growth in these areas over the next decade will be a crucial determining factor of the region’s success in the next 50 years and further ahead in the region’s future.