Digital Transformation in the GCC
by Sophie Smith
The ongoing COVID-19 pandemic has made digital technology evermore relevant and critical as activities ranging from schooling, working to shopping have shifted to online platforms. Not only has this accelerated digital transformations, but digitalisation has become recognised as one of the key aspects of economic sustainability. The release of the United Nations E-Government Survey 2020, which measures progress in adopting digital government services worldwide, highlights this, pointing to the necessity of developing digital capacities, while underlining its challenges, including cybersecurity and data privacy. Throughout the Middle East and North Africa (MENA) region, the higher income Gulf Cooperation Council (GCC) countries take the lead in e-government, with the United Arab Emirates (UAE) ranking 21st, followed by Bahrain (38), Saudi Arabia (43), Kuwait (46), Oman (50) and Qatar (66).
Digital Initiatives in the Arab Gulf Region
Each GCC country has implemented digitalisation initiatives in line with their National Visions aiming to diversify the economy. The UAE launched several digital projects as part of its Vision 2030, including the Dubai Internet City, which acts as a hub for technological innovation to attract information and communications technology (ICT) companies. On top of this, the government has adopted the UAE Artificial Intelligence (AI) Strategy to invest in AI technologies, as well as the Emirates Blockchain Strategy 2021 to promote the development of blockchain technologies. Qatar has a similar initiative, Smart Qatar or TASMU, that realises technological solutions and cooperation across sectors consistent with its Vision 2030. Bahrain and Oman have also recognised the importance of digital technology; Bahrain’s Digital Government Strategy 2022 emphasises the transformation of services through digital technologies and Oman’s e.Oman focuses on IT industry development, ICT infrastructure and eGovernment. Further, Saudi Arabia and Kuwait have integrated digital developments into Vision 2030 and Vision 2035, respectively. Saudi Arabia has developed digital goals relating to e-commerce and financial technology (fintech), as well as established a digital skills training programme. In tandem, Kuwait’s ambitions focus on the Internet of Things (IoT) systems facilitated through the development of telecommunications, notably fibre optic networks.
The Impact of Digital Initiatives
Such strategies have significantly altered the Gulf societies. At large, they have helped the regimes realise their plans for economic diversification that encourage a more sustainable form of economic growth. Championing technological innovation through measures such as investing in 5G and AI and lower government regulations has attracted numerous foreign investors and businesses to the countries. For example, Bahrain hosts Amazon Web Services’ first data centre in the Middle East and the UAE’s Dubai Technology Entrepreneurship Campus accommodates more than 800 start-ups from 70 countries. This, in turn, creates new employment opportunities to accommodate the growing younger demographic and generates a large amount of revenue, all conducive to economic growth. Moreover, the emphasis on digital innovation has also helped the Gulf countries tackle COVID-19. Aside from introducing contact tracing apps, the countries have extensively employed AI to limit the spread of COVID-19. Saudi Arabia has launched several apps, including Tawakkalna, issuing movement permits during curfew hours, and Tetamman, providing online healthcare. The UAE police force has used its surveillance programme, Oyoon, to monitor valid movement permits, and smart helmets with thermal cameras to detect coronavirus. Similarly, the Royal Oman Police has employed drones to ensure individuals maintain social distancing.
The emphasis on digital innovation is equally beneficial to businesses. Digital infrastructure such as 5G improves data-speed transfers, which increases efficiency and flexibility while AI can boost productivity. Currently, Qatar and Saudi Arabia are among the top 10 countries with the highest labour productivity. Such a digital environment has also proven beneficial during COVID-19. The shift to remote working was regarded as efficient and swift as a result of existing digital infrastructures. Many companies have accelerated their digital transitions; for instance, MVC Global and Cox Logistics Group launched a ‘SmartHub’ logistics warehouse, which uses blockchain and AI to distribute food and medicines to the GCC market. Several businesses have also set up e-commerce platforms with satisfying outcomes.
Such initiatives – both from the governments and businesses – have increased the quality of goods and services and altered consumer behaviours. Through schemes, such as Saudi Arabia’s project to extend wireless broadband coverage to remote areas, the number of individuals with internet access rose above 90 percent in 2019 in all Gulf countries, except Oman (80.2 percent). As a result, citizens perform more tasks online; for example, Saudi Arabia’s Absher app allows citizens to apply to jobs or update passport information, among other functions. Online retail has also increased; the compound aggregate growth rate of online sales revenues in the Middle East is 16.9 percent from 2016 to 2021, with the UAE leading the rise. These trends have merely accelerated during the COVID-19 pandemic as consumers have rapidly adapted their behaviour, switching to online shopping and using card or mobile payments instead of cash.
Digitalisation, however, does not come without challenges. One notable concern is data protection and maintaining user privacy. Most recently, issues have arisen over COVID-19 contact tracing apps. This comes as Kuwait and Oman lack specific data protection laws, although certain provisions exist. The Kuwaiti E-Transactions Law ensures that client data is retained confidentially and the Omani Electronic Transaction Law protects and regulates the transfer of personal data. Equally, the UAE and Saudi Arabia do not have any specific data protection legislation, but it is predicted that they will soon adopt such laws. Despite that, Saudi Arabia’s regulatory cloud computing framework is among only a few in the world and the Kingdom’s privacy and data protection frameworks are partially aligned with the European general data protection regulation (GDPR). In contrast, Bahrain, Qatar and the UAE Free Zones, have comprehensive data protection laws, which mirror the European privacy legislation. Particularly the laws of Bahrain, Dubai International Financial Centre (DIFC) and the Abu Dhabi General Market (ADGM) are ‘heavily influenced by EU 1995 Data Protection Directive (1995 Directive), each enshrining the globally accepted fundamental principles of data protection.’ As data sharing increases, such laws become more important, necessary to safeguard user privacy.
Another challenge is cybersecurity and the potential of cyber-attacks. With increased digitalisation, the GCC countries have become more vulnerable to cyberthreats. In 2012, the Saudi oil company Aramco was subject to a software attack that significantly interrupted the company’s IT infrastructure. Bahrain has also reported several cyberattacks, such as in July 2019 when Iranian hackers attacked its National Security Agency, the Ministry of Interior and the Electrical and Water Authority. This comes despite their high ranking in the Global Cybersecurity Index, which assesses countries’ commitment to cybersecurity. Qatar set up the National Cyber Security Committee in 2013 to implement the National Cyber Security Strategy and has since introduced laws dedicated to cybercrime prevention. Likewise, Oman established National Computer Emergency Readiness Team to analyse threats. Saudi Arabia, Bahrain, Kuwait and the UAE all have similar measures in place. Such strategies help tackle cyberthreats but require continual reassessment to account for the ever-changing cybersecurity environment.
All in all, the GCC countries have made considerable advances in the technology sector, cultivating digital and innovative societies that have altered business operations and consumer habits. While on the whole this has proven beneficial, as exemplified by the response to the COVID-19 pandemic, challenges remain and should be continually addressed to ensure both user privacy and cybersecurity.
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