UAE leads region’s digital transformation

05 April 2021
The GCC currently leads the rise in the region’s digital competitiveness, but lower infrastructure costs in North Africa provide a window of opportunity

MEED's artificial intelligence report also includes:

Creating an artificial intelligence ecosystem
> Construction gets a digital renovation
G42 shores up UAE's AI roadmap
> Qatar forms artificial intelligence committee

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Of all the sweeping changes that have been brought about over the past year as a result of the Covid-19 pandemic, one of the most lasting will end up being the rapid acceleration in digitalisation that has taken place within the global economy.

From the new opportunities and challenges that come from working-at-home arrangements to the huge boost that e-commerce and other digital platforms have received, the crisis has led to major shifts in the workforce. This has propelled the advent of automation forward and put artificial intelligence (AI) front and centre.

AI is a particularly bright new frontier of value generation within the global economy. Machine-learning and heuristic softwares, and programmes capable of handling complex tasks and displaying human-like behaviour, are expected to underpin much of the automation anticipated within the economy and society, whether it is in mines and factories or in hospitals and schools.

In the Middle East and North Africa (Mena) region, many countries are moving forwards with national AI programmes and strategies geared towards turning their economies into pillars of global AI development, testing and application. 

This is as equally true in the GCC countries, where automation holds the potential to reduce dependence on expatriate labour, as it is in North Africa and the Levant, where the fresh perspective presented by AI could help solve complex infrastructure challenges and drive technological growth.

Regional progress

MEED’s Digital Transformation Index seeks to build a picture of how well placed regional economies are for this change in terms of physical infrastructure, human capital and government policy regulation. It also tracks the progress of the markets so far in the development of their digital economies.

In the lead is the UAE, where the government has consistently pressed its digital and now its AI agenda, and where the relatively mature economy – by regional standards – has a well-developed digital ecosystem. The physical infrastructure, as in much of the GCC, is excellent, and cybersecurity, digital regulation and the ease of doing business are all conducive to the digital business environment.

Perhaps unsurprisingly, the next three countries are all also within the GCC. Again, they are supported by robust physical and regulatory infrastructure, expanding digital economies and favourable business environments. 

Qatar and Saudi Arabia both have exceptional cybersecurity ratings – better even than that of the UAE. However, they fall short in terms of ease of doing business, potentially providing a less welcoming environment for digital entrepreneurs and small and medium-sized enterprises. 

Saudi Arabia has also been rated as the strongest ‘digital riser’ by the European Centre for Digital Competitiveness.

Bahrain, meanwhile, has region-beating average data speeds that clock in at nearly twice those of the closest competition in the region. This advantage has already secured the country Amazon’s regional web services data centre. 

However, Bahrain’s region-beating infrastructure is not presently translating into a region-beating digital platform economy. Areas such as cybersecurity and digital regulation are also weaker.

Data transmission

It should be noted that no country in the region has achieved a score above four in the index, where five is the maximum. This is largely due to the fact that, at present, while several of the GCC countries lead in terms of infrastructure and other metrics, the costs of data transmission per unit in these countries also remains consistently higher and represents an ongoing inhibitor of competitiveness.

Morocco places fifth in the index, in recognition of its fast but also relatively cheap data transmission. The country has also been rated highly for ease of doing business, and noted for its growing digital economy and rising digital competitiveness.

Egypt is also a rapidly rising digital contender, boasting a highly skilled digital workforce that has led global names such as Ericsson to establish analytics and AI hubs in the country. What Egypt lacks in terms of country-wide infrastructure, it makes up for in low costs.

Kuwait and Oman are falling behind the rest of the GCC nations in terms of digital development. Both have poorer physical infrastructure, lower data speeds and higher costs. The ease of doing business is also weaker in both these countries as compared with the ratings for their GCC neighbours.

Next in the index come Iran, Jordan, Tunisia and Algeria, all of which have low data speeds, but also low costs. However, the main burdens for these economies are more general indicators of competitiveness in the form of weaker, more intermittent power networks, weak cybersecurity and low ease of doing business scores.

The last two countries in MEED’s ranking, Lebanon and Iraq, perform fairly poorly across all metrics considered within the index, and excel in none. Weak infrastructure and poor business environments all but write off these countries, at least in the near term, when it comes to digital growth and competitiveness.

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