For the last 25 years, disruption has been the ultimate determination of companies spanning varied sectors, from steel to telecom to entertainment. Now – perhaps more than ever – disruption is a real and vital necessity for businesses that wish to flourish amidst the turmoil. While the pandemic has generated a lot of challenges, it has also created opportunities particularly in the technology & digital sector. Communities around the world have moved to remote working and homeschooling, while businesses across all industries have been forced to innovate and digitally transform on an unprecedented basis to ensure continuity.
As per the latest reports, The UAE city of Sharjah & Bahrain offers the best ecosystems in the Middle East for startups & company formation in the areas of financial technology (FinTech), education technology (EdTech) and digital media. According to policy advisory and research organization Startup Genome – these two locations are ranked in the top five fastest-growing activation phase startup ecosystems globally, meaning that founders can “build on local economic strengths and develop focused programs to accelerate ecosystem growth and develop pockets of success leading to sizable exits.
The Global Startup Ecosystem Report — which tracked more than 1.27 million companies from over 250 ecosystems — recognizes the support for startups offered by these two ecosystems in the wake of the coronavirus disease (COVID-19) pandemic.
Here’s a closer look at the top five sectors in which the Middle East is instituting innovative, world-leading standards.
Artificial Intelligence
In the wake of the fourth industrial revolution, governments, and businesses across the Middle East are beginning to comprehend the shift globally towards AI and advanced technologies. They are challenged with a choice between being a part of the technological disruption or being left behind. When we look at the economic impact for the region, being left behind is not an option. As per reports, the Middle East is expected to accrue 2% of the total global benefits of AI in 2030. This is equivalent to US$320 billion.
In absolute terms, the largest gains are expected to accrue in Saudi Arabia where AI is anticipated to contribute over US$135.2 billion in 2030 to the economy, equivalent to 12.4% of GDP. In relative terms, the UAE is projected to see the largest impact of close to 14% of 2030 GDP.
The UAE, Saudi Arabia, and Qatar, in particular, have established a strong commitment towards the development and implementation of AI technologies. Businesses in these parts of the region have been investing heavily in new technology, reinforced by governments as early consumers of the technology.
It’s vital also to note that whilst the volatility in oil prices is taking its toll on the economic prospects of the region, it is generating the need for governments to seek alternative sources of revenue and growth. The development of non-oil sectors through investment in AI technologies could advantageously position the region for years to come.
Digital Media
Digital is not a passing trend; it is a revolution that is happening right now and picking up speed every day. In the Middle East and around the world, digital technologies are disrupting every aspect of business, government, and individuals’ lives.
The digitization story of the Middle East has many highlights thus far. Indeed, the region is heavily devoted to the digital age—particularly among consumers. Data shows that in the United Arab Emirates, 70 to 80 percent of the population are carrying a supercomputer in their pocket, placing the country in the top ranks of global smartphone penetration. On this metric Bahrain, Qatar, and the United Arab Emirates score higher than the United States (100 percent vs 80 percent).
Social media usage is also extensive: The Middle East and North Africa (MENA) region is ranked second in the world by several daily YouTube video views at more than 310 million.
And the Middle East region is the fastest-growing consumer of videos on Facebook. Embedded video consumption is twice the global average. Given the demographics in the region (50 percent of the population is under the age of 24 ), the tech-native and savvy youth in the Middle East will only further enhance the digital adoption rate in the coming years. Beyond the proliferation of better feature phones and media consumption, increased mobile access and versatility of social media usage meannew ways to reach, inspire, and educate a new generation for the 21st century.
EdTech
For current and future generations of students of every age, the learning process will never be the same again. Education has been revolutionized and blended learning is here to stay. As educators move into a new normal of teaching, from remote learning to hybrid instruction, the trends are forcing the entire education ecosystem to reconsider the way we teach.
In MENA, 110 million school-aged children stayed at home this term because of school closures, according to UNICEF. The pandemic has led to a regional surge of education technology (EdTech) startups filling in the gap in place of traditional and workplace settings. While EdTech traditionally concentrated on providing tutoring, content, and school management support, there is now an opportunity for it to be fully integrated into school curriculums.
E-Sports
The pandemic has led to the cancellation of major sporting events from Wimbledon to the Olympic Games. In the UAE, the General Authority of Sports has announced the suspension of all activities across all sports including tournaments and competitions. Similarly, on 6 March, the Sports Ministry in KSA announced a suspension of public attendance at all sports events. Many sports fans have turned their attention to E-Sports, with every E-Sports league accelerating its ability to host online-only matches. Streaming structures were put in place almost overnight and major brands took notice of these changes and moved their advertising stock to this new space. While E-Sports were already on the radar of major sponsors, the swell in viewers and consumption of online content is likely to generate a lasting interest in this burgeoning ecosystem even after the COVID-19 pandemic is over.
FinTech
FinTech regulatory regimes started emerging in the Gulf region in 2017. Since then, the region has become a hotbed for FinTech activity and regulatory development, with several jurisdictions competing to establish themselves as the FinTech hub in the region,
Bahrain and the UAE have received the bulk of venture capital investment in the region and FinTech related policy and regulatory activity have spiked within the last two years. The three key factors driving the emergence of Bahrain and the UAE as FinTech hubs in the region: (1) an ecosystem favorable to new financial alternatives, (2) an ecosystem where the government is at the center of efforts to drive innovation as part of a larger remit, and (3) an ecosystem particularly interested in attracting international talent as a means of inspiring innovation domestically. Bahrain and the UAE have emerged as the leaders in the region for developing ecosystems supportive of FinTech development.
Conclusion
Pulling it all together, it is evident that digital penetration is high and continuing to grow across the Middle East region. While it may seem that everything about the COVID-19 outbreak is gloom and doom, there is always a silver lining in every cloud. As the outbreak is likely to last some time, the shift to remote working and homeschooling may lead to more everlasting changes once the crisis is over. We may choose to scale back on business travel if virtual meetings worked during the coronavirus crisis. These behavioral shifts will lead to cost-saving benefits for business setup and an already obvious positive impact on our environment.
