Growth, investment hotspots and the region’s expanding digital footprint: Our experts have compiled the 8 digital themes powering Public Sector ambitions, that every GCC-based executive decision maker should pay attention to.
It is undeniable that the GCC is undergoing a region-wide digital paradigm shift.
Resonant impacts of the pandemic—coupled with a concerted push for economic diversification—have catalyzed striking technological disruption in even the most stalwart government entities.
As evidenced by the key themes of last month's LEAP22 conference in Riyadh, trends such as turbocharged digital transformation investments, citizen-centric e-government services, multi-cloud strategies, forays into the metaverse, and more are setting the scene for a dynamic digital future in the GCC.
Just as important, the upcoming Smart City Expo Doha in March 2022 will highlight ideas and solutions for creating a more sustainable and prosperous future for cities and citizens.
Of course, critical to success is a proactive approach to navigating risk through robust governance and regulations and accelerating broad adoption for e-government services.
Here are the eight digital trends we expect will continue to shape the GCC in 2022 and beyond.
Click on each box to go directly to the trend you’d like to read about.
Investment-powered digital transformation
Citizen-centric digital services
The power of ‘cloud-first’
Achieving cyber resilience
Future-proof data governance strategies
Expanded AI adoption and innovation?
A new dawn for digital government currencies
Entering the Metaverse
1. Investment-powered digital transformation
Ambition backed by hard cash
The pandemic has rendered digital investments even more essential, as daily activities from shopping to schooling now feature a significant online component that is here to stay.
Recognizing both the opportunities and challenges posed by Fourth Industrial Revolution technologies, governments across the GCC have placed digital transformation at the center of their economic and social development plans.
GCC governments have doubled down on their digital transformation strategies: As a core component of their respective Vision 2030 plans, the UAE, Saudi Arabia, and Kuwait have each launched a number of significant digital initiatives. Bahrain also recently announced plans to invest more than $30 billion across 22 signature projects in key industries. And similarly, Qatar's ongoing TASMU program seeks to comprehensively deploy solutions and cooperation across priority sectors. In March 2022, Qatar will host Smart City Expo Doha, bringing together global experts to discuss topics like cities-as-a-platform and the reshaping of digital public services.
By 2025, more than 40% of all ICT investments in the region will be allotted to the execution of digital transformation efforts. In 2022, we expect GCC governments will continue pursuing robust digital transformation strategies: keeping citizen-centered design at the heart of their e-services, exploring more agile development methodologies, and upskilling their workforces for the digital age.
2. Citizen-centric digital services
Private sector innovations inspire e-government’s approach
As digital technologies have advanced, governments have revolutionized both the scope and quality of their online service offerings.
During the pandemic, governments were forced to act quickly to secure the health and livelihoods of their citizens by implementing new digital government services.
With striking agility, COVID-19 tracing apps emerged across the GCC throughout 2020, including Saudi Arabia's Tawakkalna, the UAE's Al Hosn, and Qatar's Ehteraz. These platforms fundamentally altered how citizens engage with the government through digital means.
From 2016 to 2020, GCC countries saw their Online Services Index—a multi-factor indicator measuring e-government quality—increase by 10%.
Private sector competition has made digital service delivery radically more customized, convenient, and human-centered—setting a benchmark the public sector must put at the forefront to keep pace. During 2022, we anticipate that government agencies will deepen their digital investments, aiming to meet the standard of service quality set by private companies.
3. The power of ‘cloud-first’
Multi-cloud affords several key advantages
As digital transformation unfolds across the region, the cloud will be a critical enabler of the new platforms, services, and infrastructure that governments and enterprises seek to activate.
Organizations are increasingly adopting a multi-cloud strategy, allowing them to leverage cloud computing applications from various suppliers, avoid vendor lock-in, and enjoy more competitive pricing, and mitigate outages. In the UAE, Expo 2020 Dubai became the first World Expo and the Arab world’s biggest event to deploy a multi-cloud approach for its infrastructure, leveraging Etisalat 1C and AWS.
The total public cloud spending in the GCC will more than double in the coming years, from $956 million in 2020 to $2.5 billion by 2024.
As governments deliver more advanced services to a growing population, the agility, capacity for innovation, and economies of scale afforded by the cloud are critically important. In 2022, we expect countries to double their investments in cloud technologies, including software-as-a-service, infrastructure-as-a-service, and other "as-a-service" assets.
4. Achieving cyber resilience
A growing problem inspires sector growth
With increased digitalization has come the expanded global threat of cyber-attacks, and GCC countries certainly have not been immune. Notable cybersecurity incidents in the region have included attempts against the Kuwait Interior Ministry, the Qatari news agency, and Saudi Aramco.
During 2020, the UAE saw at least a 250% increase in cyber-attack aggression, according to Mohamed al-Kuwaiti, head of UAE Government Cyber Security. And during the first half of that year alone, more than 50 million e-mail, URL, malware, and banking malware attacks were recorded in the GCC region broadly.
In response to this growing threat, GCC governments have taken measures to enhance cybersecurity capabilities. According to the ITU Global Cybersecurity Index 2020 (GCI), Saudi Arabia and the United Arab Emirates ranked among the top 5 globally. Both Saudi Arabia and UAE have been notably active in their activation of online protection efforts in conjunction with global partners.
The Middle East cybersecurity market is expected to grow from $16.1 billion in 2020 to $28.7 billion by 2025.
When data breaches do occur, Qatar provides an example of how timely response can mitigate catastrophic damage. The country's COVID-19 tracking application, EHTERAZ, was released in 2020 with a vulnerability that could have given hackers access to the personal data of over one million citizens. Potentially exposed data could have included full names, geolocations, and private health information. Luckily, Qatari authorities quickly identified the problem, and the flaw was addressed within 24 hours. Despite the relatively swift fix, this incident emphasizes the importance of a proactive—rather than reactive—approach to data protection.
In 2022, we envisage that GCC countries will continue their efforts on cybersecurity capacity-building, while also taking on the more challenging task of comprehensive cyber resilience. Additionally, governments will be preparing for the emerging cyber risks posed by new technologies, such as 5G, IoT, and AI.
5. Future-proof data governance strategies
Early investments reap rewards
As global economies become increasingly data driven, GCC governments have embarked on longer-term investments in the governance and infrastructure required to support a robust data strategy.
The International Data Corporation (IDC) estimates that Saudi Arabia spent a whopping total of $32.9 billion on information and communications technology (ICT) during the year 2021 . In the UAE, yearly ICT spending is projected to reach $23 billion by 2024, growing at a compound annual growth rate of 8%.
Many GCC governments have also strengthened their data regulations and controls. For example, Saudi Arabia's National Data Management Office (NDMO) has been established as a centralized national data regulator. NDMO develops legislation on topics like data classification, data sharing, data privacy, and open data to ensure consistent standards are applied to all public sector data use cases. End-user spending on data security in MENA is expected to grow 22.6% CAGR, from $70 million in 2020 to $129 million in 2023.
As discussed by NEOM Tech & Digital Company CEO Joseph Bradley during the recent LEAP22 conference, open data is a critical aspect of this regulatory framework essential to building trust in public sector data initiatives. And efforts to raise awareness around open data are still underway: As of 2021, 63% of Dubai companies surveyed were not aware of government open data portals and how they can be utilized.
As e-government continues to expand, we expect GCC governments and enterprises to deepen investments in data management, governance, and protection—not only in the defensive context but also as part of a longer-term, holistic data strategy framework.
6. Expanded AI adoption and innovation
Emerging technologies are coming to the fore
GCC governments are increasingly incorporating emerging tech into their core products and services, leveraging new capabilities unlocked by artificial intelligence (AI) and the Internet of Things (IoT).
The growing young population in the region presents an opportunity for governments and enterprises to provide the robust digital experiences that citizens and consumers alike will increasingly demand.
In particular, the UAE has begun transitioning government services to digital channels. As part of its Smart Dubai portfolio, Dubai has launched an AI-powered advisor "Rashid" which serves as a virtual assistant for citizens, residents, and tourists. Rashid aggregates data from public and private entities and leverages artificial intelligence capabilities to answer queries on topics from business incorporation, to licensing and attestations, to transportation routes.
NEOM, the $500 billion smart megacity envisioned for northwest Saudi Arabia, has already planned for an unprecedented activation of AI and IoT technologies. For example, the California-based company Esri has been enlisted to provide location intelligence (LI) technology. This tool uses geospatial data and analysis to inform decisions like where retailers should locate their stores and how city planners can mitigate traffic bottlenecks.
AI is expected to contribute more than $300 billion to the Middle East GDP by 2031.
In 2022, we expect GCC governments to explore intelligent automation applications further to drive efficiency, promote economic innovation, and revolutionize the quality of public services.
7. A new dawn for digital government currencies
Early indicators point to rising interest and expanding prevalence
Gaining traction in the GCC since 2016, blockchain interest originated in the UAE, Saudi Arabia, and Bahrain, particularly in the government, education, and financial services sectors. While most are currently in their nascent stages, Gulf blockchain-based projects are rapidly developing.
In 2021, the UAE launched the Emirates Blockchain Strategy, which seeks to transfer 50% of government transactions to the blockchain. Saudi Arabia has partnered with IBM And Elm to explore blockchain applications to government and commercial services.
Separately, Bahrain became the first country in the world to pass a Law for the Issuance of Letters and Electronic Transactions to establish a legal framework for using blockchain in commercial and government sectors.
The British University in Dubai began issuing degrees via the blockchain in 2018. Similarly, since 2019, the University of Bahrain publishes and encrypts digital diplomas using blockchain and machine learning technologies.
Some banks and financial services companies in the GCC region have partnered with companies specializing in blockchain and fintech, including Ripple and Fenergo. The UAE and KSA are both piloting blockchain-based programs to enhance cross-border payments. And Bahrain is leveraging the blockchain to enhance its Know Your Customer (KYC) process for commercial banks and intermediaries.
Global spend on blockchain solutions will reach $17.9 billion in 2024, with more than 25% coming from the banking sector for cross-border payments and trade finance.
Throughout 2022, the GCC's digital currencies and blockchain landscape will continue to evolve, with blockchain innovations extending into fields such as finance, public administration, and supply chain management.
8. Entering the Metaverse
The next big technology platform emerges
Participation in the metaverse is becoming increasingly popular in the Middle East and GCC countries.
Various groups have launched initiatives in the space, including the Commercial Bank of Dubai's NFT collection and the Saudi ‘Virtual Black Stone’ experience for Hajj and Umrah.
The UAE has been particularly ambitious in its exploration of metaverse technologies: The Abu Dhabi Investment Office and Mubadala Investment Company signed an agreement with Roborace in December 2021 to accelerate the use of autonomous technologies and metaverse infrastructure in the mobility sector. At the Arab Health and Medlab Middle East Exhibition and Congress 2022, Dubai's Ministry of Health and Prevention recently unveiled the world's first Metaverse customer happiness service center. And a Metaverse Dubai project was recently launched, creating a platform incorporating NFTs, blockchain trading, and digital real estate for total immersion in the digital world.
Similarly, at the LEAP22 conference, the NEOM Tech & Digital Company announced their launch of XVRS, a platform allowing users to explore multiple points of view across the virtual and physical worlds.
The virtual reality market in MENA alone is expected to grow at a CAGR of 43.5% to reach $23 billion in 2028.
In 2022, we expect the regulatory infrastructure around the metaverse will continue to take shape. Regulators must implement an effective governance structure to build accountability, transparency, and trust around this paradigm-shifting technology.
None of these trends are unique to the GCC—in fact, what is most remarkable about digital innovation is how broadly and comprehensively it has shaped global society. But the region's public sector entities are distinguished by the sheer extent to which they have invested in e-government and emerging technologies. As such, we see these 2022 trends as a harbinger of what is to come with public sector digital maturity broadly: both the vast potential such technologies hold and the grave risks that must be mitigated through robust governance and regulations.