In 1981, a historic economic agreement was formed between Bahrain, Kuwait, Oman, Saudi Arabia, Qatar and the United Arab Emirates, giving birth to the Gulf Cooperation Council (GCC). This union had ambitious goals, seeking common ground in culture, regulations and currency, as well as technological and scientific innovation. More recently, GCC member states have shifted their focus toward diversifying their economies and transitioning to digital technologies.
In fact, the GCC E-Performance Index of 2022 is a testament to the remarkable progress in digital transformation, with all GCC nations excelling in five key global indicators. This progress signifies their dedication to becoming significant players in the global tech industry.
Yet challenges persist, particularly with regard to innovation and talent acquisition. Finding and recruiting tech professionals, such as machine learning engineers, data solutions experts and supply chain architects, remains a hurdle in some GCC countries.
Nevertheless, the Middle East stands at the precipice of a digital revolution, and both GCC-based companies and governments understand the advantages of embracing new technologies and digitization. These benefits encompass cost optimization, enhanced resource management, improved customer satisfaction, expanded customer bases and a competitive edge gained through digital integration.
Simultaneously, as organizations across the region mature in their digital journey, they must shift from merely enabling digital transformation to operating as fully digital entities. This shift entails deriving a substantial portion of their revenues from digital products, services, channels and platforms.
GCC business leaders recognize that digitalization offers not only operational efficiency but also a pathway to embracing advanced technologies, paving the way for entirely new business models.
Recognizing the importance of innovation, GCC nations have taken significant steps toward cultivating an innovation-driven culture. Now, it's imperative for the private sector to capitalize on these government initiatives and nurture a culture of innovation within their organizations.
Innovation serves as a catalyst for economic growth through various avenues. At its core, innovation represents the change that unlocks new value, drawing from concepts like creativity, experimentation and prototyping. Fostering this culture begins with innovative leadership that introduces, facilitates and empowers innovation within an organization, ultimately manifesting in society as a whole.
In GCC, ICT Takes the Lead
The challenges associated with technology infrastructure are diminishing as the region witnesses the expansion of data center facilities and telecom operators rush to introduce advanced 5G networks capable of supporting data-intensive products and services.
When it comes to industries, it's no surprise that the ICT sector leads the way in adopting advanced technologies. This sector offers businesses a range of solutions and has found widespread integration into core products and services across various sectors, including consumer goods and retail, financial services and media and entertainment.
In the realm of advanced technology pioneers in the GCC, the ICT industry takes the lead. By 2024, the UAE is projected to allocate an estimated US$23 billion for ICT spending, with Qatar's spending expected to reach around US$9 billion and Kuwait's spending predicted to hit US$10 billion in that same year.
In response to the demands of the digital era, organizations within the GCC countries are significantly increasing their investments in technology as part of the ongoing digital transformation taking place in the region. Various technologies play pivotal roles in this endeavor.
In recent years, GCC countries have made significant investments in the development of 5G mobile networks. This advanced wireless technology offers the potential for higher speeds, reduced network latency and increased capacity to support more devices without compromising performance. The primary goal of these investments is to enhance various sectors, including the gaming industry, customer services, automation in industries such as oil and gas, healthcare and automotive, as well as the establishment of smart, interconnected cities.
As of Q2 2023, the UAE has emerged as the fastest-growing 5G market globally, according to data from Ookla Speedtest Intelligence. Meanwhile, Qatar has also achieved the highest average 5G download speeds within the GCC region, reaching an impressive 312 Mbps, as reported by Opensignal. Bahrain set itself apartby ranking among the top 20 countries globally in terms of fiber penetration, offering the most cost-effective fiber broadband services within the GCC.
- Internet of Things (IoT)
In the GCC, numerous tech companies offer IoT platforms for collecting data from devices and machines, along with tools for analyzing and translating this data into actionable business insights. The industrial sector leads in adopting advanced manufacturing and robotics technologies, often incorporating IoT. In the retail sector, large GCC retailers use sensors and beacons to enhance the shopping experience.
For instance, Qatar General Electricity and Water Corporation (Kahramaa) has deployed 280,000 smart meters for electricity and water, equipped with IoT capabilities. The Egyptian government has designed the New Administrative Capital (NAC) as a technologically advanced city with IoT services for both residential and business users, featuring state-of-the-art buildings and infrastructure.
- Cloud Computing
Security concerns initially held back many companies from transitioning their infrastructure and applications to the cloud, but those concerns have largely been resolved. Now, businesses of all sizes in the region are embracing cloud technology and services enthusiastically. The adoption of cloud computing by SMEs in the GCC is expected to double the market size by 2024, with 77% of UAE CIOs stating that they are investing in cloud technology.
A notable example is Expo 2020 Dubai, which became the first World Expo and the largest event in the Arab world to employ a multi-cloud approach for its infrastructure, utilizing both Etisalat 1C and AWS. The cloud computing market in Saudi Arabia has been steadily expanding, with annual spending on public cloud services projected to reach US$2.5 billion by 2026.
- Data and Analytics
In GCC countries, major corporations utilize analytics to monitor consumer behavior, track website traffic, predict demand and adjust pricing, among other applications. They gather data from IoT-connected devices, payment systems, augmented reality apps and more to enhance product positioning and user experiences.
The transformation of vast datasets into actionable intelligence is the core promise of data science. The presence of committed leadership and state-of-the-art technology and infrastructure positions GCC countries to set ambitious goals for becoming leaders in data science. This is evident through government initiatives like the UAE's Smart Data Strategy, Qatar's Tasmu program, Saudi Arabia's Open and Big Data Strategy, and Bahrain's Open Data Strategy.
- Artificial Intelligence
One of the major tech trends in the GCC involves the widespread adoption of AI and machine learning, particularly in the UAE and Saudi Arabia. According to a report by Oliver Wyman, the GCC could potentially save US$7 billion annually by automating routine tasks, especially in government functions like licensing, registration and tax filings. In 2023, GCC nations are further exploring the potential of generative AI tools as they continue to advance in e-government maturity.
PwC's Strategy & Middle East predicts that Saudi Arabia and the UAE will reap significant benefits from the growth of these technologies. In the UAE, nearly 75% of companies have either maintained or increased their investments in AI initiatives. Saudi Arabia is poised to lead in AI's contribution to GDP, with an estimated US$135.2 billion, while Bahrain, Kuwait, Oman and Qatar are expected to collectively contribute US$45.9 billion to GDP by 2030. Additionally, Saudi Arabia plans to train 20,000 data and AI specialists by 2030 to support its AI-related goals, while Kuwait is embracing AI to elevate its urban innovation efforts.
- Local Workforce
GCC universities are gaining recognition for their effective use of new technologies to enhance education. In the list of the top 10 Arab universities, Saudi Arabia secured five positions, alongside Qatar University, the University of Sharjah, UAE University and Abu Dhabi University.
In March 2023, Bahrain's Nasser Vocational Training Centre introduced the Smart Coders initiative, aiming to train around 2,000 adults in computer coding. By 2027, the initiative plans to prepare a total of 10,000 Bahrainis to enter the job market as programmers. Additionally, the UAE Ministry of Education launched an innovation strategy featuring DisruptED, a platform designed to assist students and professionals in adapting to new skills and work methods as the digital economy evolves.
- Smart Factories
To ensure the sustainability of the industrial sector's resources and enhance its productivity and efficiency through automation and modern technologies, it is essential to adopt the best practices.
Bahrain has unveiled a national initiative called “iFactories,” with the goal of facilitating the industrial sector's transition to Industry 4.0. This initiative involves evaluating factory readiness, assessing their digital maturity, and providing support for investments in technology infrastructure and manufacturing automation. The objective is to convert 300 factories into smart factories by 2026.
- Smart Mobility
Saudi Arabia expressed its intention to produce and export over 150,000 electric cars by 2026, in line with its goal of having a minimum of 30% of all vehicles be electric by 2030. Smart mobility strategies are driving the future of urban transportation in the GCC region.
Saudi Arabia's ambitious giga-projects, such as NEOM, Qiddiya and Roshn, plan to incorporate electric vehicle (EV) fleets. Dubai is taking futuristic steps by approving models of aerial taxi vertiports, with plans to launch flying taxis by 2026. Meanwhile, Muscat has implemented smart road technology to manage traffic, and Kuwait is employing an intelligent traffic control system to address congestion at busy intersections.
Saudi Arabia has introduced a new program centered on research, development and innovation (RDI) with the goal of contributing SR60 billion ($16 billion) to the GDP by 2040. This initiative is anticipated to generate high-value jobs in the fields of science and technology.
Meanwhile, the UAE's National Innovation Strategy continues to serve as a comprehensive guide, overseeing significant investments in research and development across seven priority sectors: renewable energy, transportation, education, healthcare, technology, water and space. Across the GCC countries, there is a growing emphasis on the roles of science and technology in bolstering RDI capabilities to establish national innovation systems.
Cutting-edge technologies are increasingly prevalent in GCC region projects, reflecting a broader trend of technological integration in construction. This shift is driven by the GCC countries' efforts to enhance infrastructure and promote economic diversification through long-term initiatives like Saudi Vision 2030 and the Dubai 2040 Urban Master Plan.
Industry reports reveal a nearly unanimous agreement among professionals that digital technology enhances project delivery. Construction technology providers attribute the widespread adoption of innovative technologies such as building information modeling (BIM), connected construction, digital twins, robotics and AI to the need to meet strict deadlines and ensure accurate project completion. This trend is particularly pronounced in large-scale, complex projects like Neom, the Red Sea Project and the Etihad Railway.
GCC businesses have a significant opportunity to achieve their net-zero and decarbonization objectives. The region's potential to generate 164 GW of solar energy by 2030, as projected by IRENA, can lead to substantial reductions in carbon emissions. Saudi Arabia is targeting 50% of its power to come from renewables by 2030, and the UAE has increased its greenhouse gas emissions reduction target to 31% by 2030.
The upcoming COP 28 event offers the GCC region a global platform to showcase concrete sustainable practices. While discussions will revolve around aligning digital transformations with the UN SDGs, the summit also provides an opportunity for more profound conversations on how digital transformation plays a vital role in establishing sustainable networks. In a similar context, Egypt's fourth-generation cities, powered by renewable energy and smart technology, embrace modern architecture and sustainable, green infrastructure. These cities are connected through multi-modal transport networks, marking a significant step toward sustainability.
The GCC governments' proactive efforts to digitize their systems and pioneer smart city initiatives have set global benchmarks, with ongoing plans for further development. Simultaneously, private sector firms are harnessing cutting-edge technologies to refine their operations and services.
In a world rapidly embracing digital transformation, it is imperative for the GCC region to leverage its strengths and create opportunities for growth within the tech sector. This not only holds the potential to boost economies but also nurtures a culture of innovation and continuous learning, ensuring the region remains at the forefront of the global technological landscape.