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Gulf Cooperation Council (GCC) countries are leading the charge toward digital transformation and technological adoption. Bahrain, Qatar and Saudi Arabia have seen a consumer-driven push toward new technologies. Where other areas of the world saw business adoption first, consumer second, the Middle East is seeing the same changes happen in reverse. The median average age in GCC countries is only 27, and younger consumers mean a more flexible and integrated approach to technology. With consumers ready for advances in all areas of technology, this region has the potential to take a global leadership position in digital transformation.
Digital transformation is helping businesses cut costs, improve productivity, and communicate with customers around the world. Business is usually the driving force behind the switch, but the swapped roles in the Middle East create unique challenges. There are areas where smartphone market penetration has reached 100 percent, leaving businesses behind.
In these areas, consumers have already made the transition to digital, but access to technology has not always come with the demand. The oil-based economy is slowly becoming obsolete, but countries have not always reacted swiftly to that change. With slowed investment in alternative infrastructure, every aspect of the industry feels the effects, from communications technology to the education needed to engage the human capital required for growth. Loss of traditional revenue sources and regional instability all create problems for businesses engaged in digital transformation. Security concerns, both physical and digital, are a major and ongoing issue that every developing nation faces.
The differences in the Middle East are marked, with not just consumers leading the way. Government agencies, historically some of the slowest technology adopters, are diving right into digital transformation. In Egypt, the former Minister of Communications and Information Technology, Yasser El Kady, recently announced that all government services will be digitized by the end of 2019. His replacement Amr Talaat plans to continue rolling out digital services and announced a focus on small and medium-sized businesses. That means online portals to handle any payments and direct lines of communication between the government and its constituents.
Resilience&, a UK-based consultancy network, is paving the way for businesses to follow suit. A planned USD500,000 investment will help support the spread of information and infrastructure development that is crucial to a successful digital transformation. Smartphone adoption has become a key part of digital transformation, putting compute resources in the hands of virtually every citizen. Recent investments by Orange Egypt, the regions largest Telecom company has laid the ground work for rapid expansion.
Saudi Arabia is a highly-advanced region that is already well on the way toward digital transformation, with the government taking a leading role on the journey. The recently released document, Vision 2030, includes technology and digitization plans for both the public and private sectors. Initiatives cover everything from quality of life to financial sector development, and behind all of them is the technology to make these changes possible.
The addition of a single technology, artificial intelligence, has the potential to boost the Saudi economy by more than a percentage point according to research by Accenture. That works out to $215B for the national economy by 2035. Much of that growth is predicted to come from manufacturing and public and professional services industries.
A recent report places the United Arab Emirates as one of the top 20 most digitally advanced economies in the world. It holds the top spot in the Middle East by a wide margin and plans to continue paving the way with the Dubai Internet of Things Strategy initiative. Behind the scenes of this success is a strong regulatory framework, exceptional access to talent in digital fields, and remarkable business agility.
AI technology is another big driver of potential growth. The Minister of State for Artificial Intelligence, Omar Sultan Al Olama, predicts that integrated AI will save the government billions in the near future. Efficiencies are a major factor in spending, and that is where AI can deliver the most assistance. The launch of the UAE Strategy for Artificial Intelligence has identified nine sectors that can immediately benefit from existing AI technology. With this strategy in place, investments in training and adoption are underway to bring AI to existing processes over the next decade.
The Gulf Cooperation Council has made considerable strides toward innovation and technological growth. The UAE and Saudi Arabia have had remarkable success with digital transformation, but some of these nations are in an earlier stage. For example, Kuwait is still in the early transformative stages, but new government initiatives push growth in this sector. Internet tariffs are down, helping propel competition. The Kuwait Hub project is expected to increase total internet traffic by 40 percent.
The Sultan of Oman revealed an ambitious project that moves from an oil economy toward a knowledge-based economy with the e.oman strategy. Oman stands ready to enter a metamorphosis with a focus on industry development and digital government solutions.
Qatar is already heavily invested in digital transformation, with many government services available through online and mobile channels. Pay bills, apply for assistance and contact a variety of government agencies through easily accessed web portals. Sustainable diversification is a major part of the country's National Vision 2030 and includes moves toward digital transformation through the development of infrastructure and an innovative and knowledge-based economy.
Many countries in the Middle East are among the leaders in digital transformation, globally. Government initiatives push forward efforts to streamline and manage resources, cutting costs while building revenue streams.
As businesses and the private sector catch up to consumer demand, expect to see more of these countries take a leadership role. The development and execution of transformative technology is the next step. Investments in artificial intelligence, infrastructure and human capital are a big part of the plan. Many areas of the region are already adopting leading edge tech in manufacturing and government services. Health care and operational AI are on the horizon.
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