How GCC countries can move from digital adopters to digital disruptors

How GCC countries can move from digital adopters to digital disruptors
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Updated 02 November 2021

How GCC countries can move from digital adopters to digital disruptors

How GCC countries can move from digital adopters to digital disruptors

GCC countries have recorded strong digital sector growth over the last decade. They now have the opportunity to move from being mostly adopters of digital technologies to becoming disruptors, hosting powerful local companies, institutions, and talent. If GCC countries went from being digital adopters to being digital disruptors, they could add $138 billion to regional GDP.

We recently measured where the GCC countries stand using the Digital Economy Index, a comprehensive measure of the digital maturity of 109 countries between 2010 and 2020. The DEI has five pillars: Foundations, talent, innovation, adoption, and local production.

The GCC region’s DEI score grew the fastest of any part of the world, at twice the speed of the OECD countries over the last decade. GCC countries have invested in digital infrastructure, adopted e-government platforms, and launched technology parks and business incubators.

Yet in overall terms, GCC countries still have a significant opportunity to capture the economic potential from digital. Ranked by DEI performance, countries can be grouped into three different categories.

Firstly, there are digital learners that prioritize the development of basic connectivity and adoption, enhancing their digital infrastructure to obtain the benefits of digital solutions.

But digital adopters — which include the GCC countries — have met connectivity requirements, which in turn promote higher demand for digital outputs. These countries typically seek to develop talent, enable digital innovation, and localize digital services. They empower the sector through policies and regulations, establishing capability development programs, and formalizing partnerships with the private sector.

Digital disruptors — which include the most developed economies — have developed a vibrant, enabling digital ecosystem. They are leaders in adopting and producing digital outputs. Disruptors tend to be net exporters of technology solutions; they foster innovation, sponsor vibrant startup ecosystems, and they are home to best-in-class digital talent.

Our analysis of the 109 countries confirms a strong positive correlation between a country’s DEI score and national economic development and performance. Specifically, our analysis demonstrates that a 10 percentage point increase in any country’s DEI score would lead to a 2.6 percent increase in GDP per capita growth and 1.1 percent growth in employment.

If GCC countries were to move from being adopters to being disruptors, the contribution of the digital economy to the overall economy would grow from 12.2 percent to 13.4 percent. 

For example, if Saudi Arabia were to increase its DEI from 44.47 to 54.72 — matching Germany’s level — its GDP per capita would increase from $19,587 to $20,779, and it would provide a net gain of around 340,000 jobs.

Capturing this opportunity requires that governments take vigorous action to implement the correct policies. Our DEI analysis shows that GCC countries need more digital talent, innovation, and domestically produced digital products and services if they are to play a role in global digital markets over the medium term. Similarly, the region needs more digital activity in terms of patents, disruptive business models, and venture capital availability to keep up with the activity of advanced economies.

To leap the digital gap and keep pace with advanced economies, GCC countries need to focus their efforts in three main areas.

First, they should reform the regulatory frameworks to adapt to the new market realities of the digital era. Regulations need to be adaptive and anticipatory to keep pace with technological and business model changes. Governments also need to build their economic and technical capacity in a way that will allow them to assess continually the impact of specific policies, and correct any implementation shortfalls. In particular, careful regulations of financial services, data protection, digital economy policies (such as taxation), cybersecurity, and e-commerce transactions can increase the efficiency of financial flows in the region.

GCC countries should then deepen the talent pool. Countries in the region need more digital talent, a key enabler to build sustainable, thriving digital economies. Digital talent is a combination of the capacity of the education system to produce the knowledgeable graduates required by the economy, upgrade the basic and advanced skills of current workers to operate and innovate digital technology, and increase the current share of the labor force employed in digital occupations.

Finally, policymakers must strengthen innovation and localization. Local production and digital innovation are vital because they contribute significantly to the growth of national GDP and jobs, either directly through revenues and direct employment, or indirectly by nurturing an ecosystem of innovative startups and SMEs.

Growing the digital economy is no longer a choice for Gulf countries. It is an imperative for their economic future, ensuring economic growth, creating jobs, and building economic resilience and sovereignty.

Bahjat El-Darwiche & Tarek El Zein are partners at Strategy& Middle East, part of the PwC network. Dima Sayess and Rizk Melissa also contributed.


OPEC+ begins policy debate as capacity constraints loom

OPEC+ begins policy debate as capacity constraints loom
Updated 12 sec ago

OPEC+ begins policy debate as capacity constraints loom

OPEC+ begins policy debate as capacity constraints loom

LONDON: The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, begin a series of two-day meetings on Wednesday with sources saying chances of a big policy change look unlikely this month, according to Reuters.

At its last meeting in early June OPEC+ decided to speed up production cuts and to raise output each month by 648,000 barrels per day in July and August, up from earlier increases of 432,000 bpd.

OPEC+ consists of OPEC and allies such as Russia.

Washington welcomed OPEC’s decision, which came after months of pressure from the West on OPEC+ to raise production to help cool off oil prices, which soared as a result of sanctions on Russia for the invasion of Ukraine.

However, prices kept rising due to tight supply and worries that OPEC is coming close to running out of spare capacity to raise output any further.

French President Emmanuel Macron told US President Joe Biden this week that he has been told that Saudi Arabia and the United Arab Emirates can barely increase oil production.

Biden will travel to the Middle East including Saudi Arabia next month and is widely expected to further press Riyadh to raise production.

At least five OPEC+ delegates said the meeting this week will focus on confirming August output policies while not discussing September.

Two other delegates said the issue of production post August could emerge but it was not clear what steps could be taken.


Luxury hotel brand JW Marriott makes Saudi debut with Riyad Capital   

Luxury hotel brand JW Marriott makes Saudi debut with Riyad Capital   
Updated 12 min 15 sec ago

Luxury hotel brand JW Marriott makes Saudi debut with Riyad Capital   

Luxury hotel brand JW Marriott makes Saudi debut with Riyad Capital   

RIYADH: International hotel brand JW Marriott will debut in Saudi Arabia with the rebranding of Burj Rafal hotel in Riyadh, the project owner Riyad Capital said. 

In a bourse filing, the Saudi fund manager revealed that the hotel's development has achieved the first phase to deliver a luxury corporate destination in King Abdullah Financial District’s new business center.

The first phase of the improvement plan includes enhancements to arrival experiences, as well as new food and beverage outlets, it added.

Riyad Capital said the remaining phases of the project will be implemented according to the strategy set forth earlier.


TASI begins in red as investor awaits oil price stability: Opening bell

TASI begins in red as investor awaits oil price stability: Opening bell
Updated 16 min 16 sec ago

TASI begins in red as investor awaits oil price stability: Opening bell

TASI begins in red as investor awaits oil price stability: Opening bell

RIYADH: Saudi stocks opened Wednesday's session in red as investors awaited possible stabilization of oil prices.

The main index, TASI, fell 0.19 percent to 11,648, while the parallel market, Nomu, added 1.02 percent to 20,565 as of 10:09 a.m. Saudi time.

Abdullah Saad Mohammed Abo Moati for Bookstores Co. led the gainers with 3.93 percent gain, after it posted SR15 million ($4 million) in profit for its fiscal year ending March 31, 2022, an increase of 183.3 percent.

Leading the fallers was Tihama Advertising and Public Relations Co., down 2.67 percent.

Saudi Aramco, the largest player on the Saudi oil market, started today’s trading down 0.77 percent.

In the financial sector, the Kingdom’s largest valued bank Al Rajhi dropped 0.59 percent, while Bank Aljazira fell 0.09 percent.

Al Moammar Information Systems Co. edged down 0.50 percent, following an agreement with US-based Cloudera to host and distribute its services in the Kingdom.

SABIC Agri-Nutrients Co. gained 0.84 percent, following the announcement that it will pay dividends of SR4 a share in the first half of the year.

Saudia Dairy and Foodstuff Co. fell 0.47 percent, following shareholders approval of SR0.50 per share for dividends in 2021.

Dar Alarkan Real Estate Development Co. decreased 1.25 percent, following the appointment of Yousuf Al Shelash as chairman and Majed Abdul Rahman Al Qasim as vice chairman.

Retal Urban Development Co. lost 1.81 percent, following the acquisition of SR339 million in residential land in the Sedra Masterplan Community.

In energy trading, Brent crude settled at $117.10 a barrel and US West Texas Intermediate reached $111.20 a barrel, as of 10:06 a.m. Saudi time.

 


Here’s what you need to know before Tadawul trading on Wednesday

Here’s what you need to know before Tadawul trading on Wednesday
Updated 9 min 59 sec ago

Here’s what you need to know before Tadawul trading on Wednesday

Here’s what you need to know before Tadawul trading on Wednesday

RIYADH: Saudi stocks regained some momentum on Tuesday, mirroring a rise in oil prices after China eased lockdown restrictions.

TASI surged 2.1 percent to 11,671, buoyed by a 3.3 percent rise in oil giant Aramco and a 3.4 percent leap in the Kingdom’s biggest lender Saudi National Bank.

The parallel market, known as NOMU, also recorded a 0.6 percent gain to end the day at 20,358 points.

With Saudi Arabia leading the gainers in the Gulf, stock exchanges of Abu Dhabi, Dubai, and Qatar added 1.9, 1.1, and 1.1 percent, respectively.

This was followed by marginal gains amounting up to 0.3 percent in the Omani and Kuwaiti indexes, while Bahrain’s BAX bucked the trend to close 0.3 percent lower.

Elsewhere in the Middle East, Egypt’s benchmark index EGX30 extended losses as it slipped 0.8 percent.

In energy trading, Brent crude reached $117.44 a barrel by 9:09 a.m. Saudi time on Wednesday, while US West Texas Intermediate traded at $111.44 a barrel.

Stock news

  • The Saudi Investment Bank, known as SAIB, completed the issuance of SR2 billion ($533 million) worth of Riyal-denominated Sukuk
  • Saudi Telecom Co., better known as stc, received its board’s approval to repurchase up to 15 million shares at SR453 million for an employee incentive plan
  • Derayah REIT fund received the board of directors’ approval to restructure its financing, which stood at SR748 million by 2021 end
  • Ayyan Investment Co. almost completed construction works at Al Salam Hospital and expects to obtain the required licenses to begin trial operations by the third quarter of 2022
  • Hail Cement Co.’s shareholders approved buying back 4.9 million shares and keeping them as treasury shares
  • Saudia Dairy and Foodstuff Co.'s shareholders approved a dividend distribution of SR3 per share for the second half of its financial year ended March 31, 2022
  • Naseej for Communication and Information Technology Co. was awarded a deal valued at SR14.5 million to implement a project in the field of e-education and training
  • Shareholders of the Red Sea International Co. will vote on a capital reduction of 50 percent to SR302 million in the next general assembly meeting
  • Saudi Advanced Industries Co. appointed Youssef Al-Qafari as board chairman instead of Abdullah Al-Juraish, who retains his membership in the board of directors
  • Abdullah Saad Mohammed Abo Moati for Bookstores Co. posted a 183 percent profit surge to SR15.1 million for its fiscal year ending March 31, 2022
  • Dar Al Arkan Real Estate Development Co. named Yousuf Al Shelash chairman of the board and Majed Abdul Rahman Al Qasim vice-chairman
  • Retal Urban Development Co. bought SR339 million worth of residential lands within the Sedra Masterplan Community
  • Shareholders of Saudi Arabia Refineries Co. approved a dividend payout of SR0.5 per share for 2021
  •  SABIC Agri-Nutrients Co. will distribute SR4 per share in dividends for the first half of the current year

Calendar

  • June 30, 2022

End of the Wafrah for Industry and Development Co.’s subscription to new shares

End of Petro Rabigh’s subscription to new shares

  • July 4, 2022

Launch of single-stock futures trading on Tadawul

  • July 7, 2022

Saudi Exchange will close for Eid Al Adha holidays and resume trading on July 13


Saudi IT firm MIS to offer US big data giant Cloudera’s services in Kingdom 

Saudi IT firm MIS to offer US big data giant Cloudera’s services in Kingdom 
Updated 52 min 4 sec ago

Saudi IT firm MIS to offer US big data giant Cloudera’s services in Kingdom 

Saudi IT firm MIS to offer US big data giant Cloudera’s services in Kingdom 

RIYADH: Al Moammar Information Systems Co. has entered into an initial agreement with US-based big data giant Cloudera Inc. to host and distribute its services in Saudi Arabia.

The Saudi-based IT firm is seeking to launch a platform to host Cloudera’s solutions on its cloud and resell it in the Kingdom as the first of its kind in the Middle East, it said in a bourse filing.

Cloudera will be providing support to MIS’ clients through the new platform in addition to managing and securing data across clouds in Saudi Arabia.

According to the filing, the two parties are looking to launch the platform within the next six months.