MENA governments are aiming to enhance technology usage in their economies; to do so, they are increasing their focus on regulating the sector, attracting direct infrastructure investments, and raising advanced technology levels in investments across sectors. Multinationals will need to showcase how they are adapting and contributing to this goal of boosting technology use, especially in the Gulf countries, while planning their 2024 strategies.
Overview
The Middle East and North Africa (MENA) region is experiencing a profound transformation in its technology regulations and investments, driven by rapid advancements in digitalization and innovation. Key trends include:
- Robust engagement in digital transformation initiatives spanning sectors such as healthcare, education, finance, and government services, all aimed at bolstering efficiency, competitiveness, and overall quality of life. National development plans and visions designed to modernize public services, enhance governance, and create an enabling environment for technological innovation are important to watch.
- Efforts to boost 5G adoption, with substantial investments made in 5G infrastructure to fuel digital government services, smart city projects, and the ever-increasing need for high-speed internet connectivity.
- Enactment of comprehensive laws and regulations to safeguard critical infrastructure and data driven by cybersecurity concerns.
- Promoting the Information and Communication Technology (ICT) sector’s growth, through policies and initiatives that attract investment, stimulate innovation, and generate employment opportunities.
- Efforts to improve the digital quality of life for citizens, making digital services more accessible and user-friendly. Substantial investments in ICT infrastructure, including broadband networks and data centers, are being made to facilitate digital growth and ensure reliable connectivity.
Some sub-sectors are leading growth:
- The fintech sector is rapidly expanding, particularly in digital payments, lending, and digital banking services, accompanied by regulatory frameworks to ensure stability and consumer protection.
- Startups thrive in the MENA region, benefiting from government support through various initiatives, funding opportunities, and accommodating regulatory frameworks.
- E-commerce is booming, driven by the growing number of internet users, shifting consumer behaviors, and government-backed initiatives to promote online businesses. Regulatory changes are being introduced to establish structured and regulated environments for e-commerce activities, digital marketing, and data protection.
- The artificial intelligence (AI) market in MENA is set to experience substantial growth, with projections indicating it will increase from US$ 500 million in 2020 to US$ 8.4 billion by 2026, according to Research and Markets. This represents a compound annual growth rate of 47.8%, with Saudi Arabia and the UAE leading the way. The UAE’s AI market is expected to reach US$ 1.9 billion by 2026.
Actions to Take
As many multinationals are looking to protect margins, maintain pricing power, and bolster the competitiveness of their offering, multinationals will need to determine the right integration of technology use into their offering for 2024. Governments are looking to see integrated technologies, business customers are hoping to purchase technological solutions that will help them save costs, and consumers are engaging with more innovative products.
Companies will need to ensure the relevant skill sets are hired into the company, carrying their business into a competitive level in terms of technology use in data collection and analysis, marketing, and product and service provision.
Sub-sectors of technology that are seeing growth will form important customer bases for multinationals, requiring business development teams to identify and tailor their solutions to these fast-growing customers.
Multinationals will need to ensure very close monitoring of new regulations. New regulations could allow firms to better invest in certain markets due to improvements in the regulatory environment—or they could create a more restrictive environment for investments.
Updating stakeholder maps will also be critical, as technological regulations, procurement decisions, and investment plans are increasingly changing hands among government officials within the GCC.
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