MENA IT spending to reach $194bn in 2024 – up 5.2% on previous year: report

MENA IT spending to reach $194bn in 2024 – up 5.2% on previous year: report
Despite the rise, organizations are becoming more cautious with their IT expenditures, according to an expert. Shutterstock
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Updated 18 June 2024
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MENA IT spending to reach $194bn in 2024 – up 5.2% on previous year: report

MENA IT spending to reach $194bn in 2024 – up 5.2% on previous year: report

RIYADH: Information technology spending in the Middle East and North Africa region is set to reach $193.7 billion in 2024, a 5.2 percent increase from the previous 12 months, according to a new report. 

In its latest MENA IT Spending forecast, US-based consulting firm Gartner stated that while the outlay in the sector is set to increase, it will be at a slower rate than the 6.6 percent annual rise recorded in 2023.

This comes as tech startups based in the region secured $429 million in funding in the first quarter of the year. Additionally, MENA saw around $1 billion in tech commitments by venture capitals during the first six months of 2024.

Earlier this year, global investment manager Investcorp dedicated $500 million for growth stage tech companies in the region, while venture capital firms Singaporean Golden Gate and UAE’s Polynome Group both dedicated $100 million each for MENA-based tech investments.

Miriam Burt, managing vice president analyst at Gartner, noted that the slowing growth of expenditure in the IT sector is being caused by factors beyond the sector itself.

“While inflation in the region has eased, organizations in the Middle East continue to face challenges due to ongoing uncertainty caused by oil production cuts, downside economic risks linked to regional geopolitical tensions, as well as supply chain disruptions in key shipping routes,” she said.

“As a result, local organizations are becoming more cautious with their IT expenditures,” Burt added. 

Data center spend to fall




Data centers have been the focus of spending in recent years. Shutterstock

The report stated that despite experiencing growth in 2023, spending on data center systems is projected to decline by 0.3 percent in 2024, reflecting a shift toward alternative capabilities. 

Data center system expenditures are set to drop from $4.82 billion in 2023 to $4.80 billion in 2024. 

The systems in data centers include servers, external controller-based storage, and enterprise network equipment. 

“This is due to the rise in demand of alternative options such as software-defined storage, hyper-converged infrastructure software, and the ‘storage as a service’ model,” said Burt. 

MENA IT services spending is expected to record an increase of 9.6 percent in 2024 to reach $19 billion, up from $17.3 billion last year. 

“IT leaders in the MENA region are, in the first instance, spending more on professional and consulting services to prepare their businesses for cloud migration, AI (artificial intelligence), generative AI, and IoT (internet of things) implementations, and secondly, taking advantage of the data monetization opportunities resulting from the convergence of these technologies,” Burt added. 

“Security remains a key area for IT services spending, as well as the increasing purchase of products, services, and tools through ‘XaaS’ (Anything-as-a-Service) consumption models – both contributing to the overall growth of this segment,” she added. 

Demand drop of new devices




Shutterstock

Device spending is expected to decline by 4.5 percent in 2024 due to uneven demand for newer devices, such as mobile phones, in different countries within the MENA region. 

The subsector is set to drop from $28.3 billion recorded in 2023 to $27 billion this year. 

Software is set to see the highest growth in 2024, with spending forecasted at $15.2 billion, up from $13.5 billion in the previous 12 months. 

Communications services are expected to account for the bulk of 2024’s IT spending, with $127.5 billion in expenditures, up from $120 billion in 2023. 

“CIOs (chief information officers) in the MENA region are expected to increase their spending on cloud services. While AI/GenAI has some influence on cloud services spending, it is not expected to have an immediate and significant impact on IT spending levels in MENA in 2024,” said Eyad Tachwali, senior director advisory at Gartner. 

“Regional CIOs’ focus today is primarily on everyday lower-cost use cases rather than on costly game-changing AI,” he added. 

Furthermore, the report stated that global hyperscalers, which have the ability to offer extensive infrastructure for storage and computing facilities for AI and GenAI, are accelerating investments in in-country data centers, particularly world-class green data centers. 

“Some have launched sovereign cloud services tailored to the unique needs of specific Gulf Cooperation Council markets,” Burt said. 

Gartner’s IT spending forecast methodology relies heavily on rigorous sales analysis by over a thousand vendors across the entire range of IT products and services. 

On a separate note, other analysts state that Saudi Arabia is the fastest-growing IT market in the Middle East, Turkiye, and Africa. 

Jyoti Lalchandani, regional managing director of research firm IDC, said wider information and communication technology market spending is expected to reach $37.5 billion by the end of 2024. 

The comments were made during the ICT Indicators Forum hosted by the Saudi Ministry of Communication and Information Technology alongside the Saudi Communications, Space, and Technology Commission in Riyadh on April 24.  

It was further noted that spending in this area across the Saudi government sector would exceed $752 million by the end of 2024 as innovative technologies become foundational to building an “experience economy.” 

“AI, big data analytics, IoT, and cybersecurity spending is poised for tremendous growth and will account for almost one-third of overall IT spending in Saudi Arabia in 2024. Spending on AI in Saudi Arabia will surpass $720 million in 2024, reaching $1.9 billion by 2027 at a CAGR (compound annual growth rate) of 40 percent – half of that will be on interpretative AI,” Lalchandani said. 

“We have seen Saudi Arabia emerge as a hub for the cloud,” he added, with spending on public cloud forecasted to surpass $2.4 billion in 2024 and reach $4.7 billion by 2027.  

Software-as-a-Service will account for more than 50 percent of the 2024 spending. 

IDC further highlighted that spending on cybersecurity alone will surpass the $1 billion mark in 2024 and reach $1.6 billion in 2027. 

“I do remember a few years ago, the cybersecurity market was estimated at about $500 million. Today, we’re talking about literally double that. We’re talking about $1 billion in the cybersecurity industry, and to hear it be called the fastest growing market in the region is really a testament to our beloved nation,” Salman Faqeeh, CEO of Cisco Saudi Arabia, said while speaking on a panel during the forum. 


Saudi GACA, Germany’s Lilium sign MoU to boost air mobility roadmap   

Saudi GACA, Germany’s Lilium sign MoU to boost air mobility roadmap   
Updated 22 July 2024
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Saudi GACA, Germany’s Lilium sign MoU to boost air mobility roadmap   

Saudi GACA, Germany’s Lilium sign MoU to boost air mobility roadmap   

RIYADH: Saudi Arabia’s General Authority of Civil Aviation has inked a deal with German electric vertical take-off and landing vehicle manufacturer Lilium, propelling the Kingdom’s advanced air mobility roadmap.

The memorandum of understanding, signed between the authority and the aerospace firm at the Farnborough International Airshow, supports GACA’s development of AAM solutions in the Kingdom, according to a statement. 

This comes as the authority collaborates with stakeholders and companies globally to create a thorough national plan for AAM. 

This strategy encompasses the essential elements and regulatory framework needed to ensure AAM technologies’ secure and effective integration. During the implementation phase, the focus will be on incorporating eVTOL operations with existing aviation systems and other transportation modes.

The newly signed MoU falls in line with the authority’s engagement with global companies to bring new aviation mobility solutions to Saudi Arabia.

It also aligns well with GACA’s continuous efforts across the industry to ensure the Kingdom has regulations that encourage growth, ensure the highest levels of safety, and put passengers first.

“This agreement reflects GACA’s commitment to advancing innovative and sustainable air mobility solutions for Saudi Arabia in support of Vision 2030,” GACA President Abdulaziz Al-Duailej said. 

“By working with global advanced air mobility companies, we aim to establish a robust regulatory framework that ensures the safe and efficient operation of eVTOL aircraft,” Al-Duailej added. 

From Lilium’s side, CEO Klaus Roewe said: “Our goal is to jointly advance regulatory and practical steps for suitable framework conditions for electric aviation and our customers in Saudi Arabia.”

He added: “Today’s agreement delivers on one of the main ingredients required to successfully launch eVTOL operations — a definitive path to all relevant regulatory cornerstones.”

The announcement builds on the momentum of recent successful air taxi trials in support of GACA’s AAM roadmap development, the statement added. 

Last week, Lilium confirmed that it is making its debut in Saudi Arabia with a groundbreaking agreement to supply up to 100 eVTOL vehicles to Saudia, the Kingdom’s first national carrier.

The formalization of this agreement came after a framework deal was initially arranged in late 2022, making Saudia the first airline in the region to invest in sustainable air mobility. 


Saudi logistics platform OTO secures $8m funding for UAE and Turkiye expansion

Saudi logistics platform OTO secures $8m funding for UAE and Turkiye expansion
Updated 22 July 2024
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Saudi logistics platform OTO secures $8m funding for UAE and Turkiye expansion

Saudi logistics platform OTO secures $8m funding for UAE and Turkiye expansion

RIYADH: Saudi logistics platform OTO is set to expand into the UAE and Turkiye, following a successful SR30 million ($8 million) series A funding round. 

The company announced that the financing was led by Sanabil Investments, a wholly-owned entity of the Public Investment Fund, with additional contributions from Sadu Capital, and Iliad Partners. Propeller and Soma Capital also participated in the deal, according to a press release. 

This follows a previous raise of SR12.3 million from venture capital funds and angel investors including Middle East Venture Partners, Derayah Ventures, and 500 Global.  

This investment supports Saudi Arabia's National Logistics Strategy, which seeks to rank the Kingdom among the top 10 countries globally in performance in the sector by the end of the decade, in line with Vision 2030 objectives. 

Mohammad Al-Razaz, co-founder and CEO of OTO, said: “Securing this funding round is a testament to our team’s dedication and our commitment to transforming the shipping and logistics sector in line with Saudi Vision 2030.”   

The company claims its platform integrates with over 250 local and international shipping companies and e-commerce platforms, enabling merchants to manage, ship, track, and analyze their logistics activities.   

The platform also offers merchants the option to connect their own shipping contracts or purchase shipping labels at pre-negotiated rates. 

He added: “We are focused on delivering innovative solutions that enable merchants to streamline their operations and manage logistics with unmatched efficiency.”

Investor confidence in OTO’s platform is bolstered by projections showing Saudi Arabia’s e-commerce revenue is expected to grow at 13.5 percent annually through 2027, outpacing the global average growth rate of 11.2 percent, according to Agility Logistics. 

The platform plans to use this funding to expand its presence in Saudi Arabia, the UAE, and Turkiye by adding new features and enhancing its platform, focusing on small and medium-sized businesses and e-commerce merchants. 

The release stated that the Turkish e-commerce market is projected to grow at an annual rate of 11.58 percent from 2024 to 2029, reaching $49.5 billion by 2029.   

“The last few years have put a significant spotlight on the shipping industry and increased the need for smart shipping solutions. OTO has built a platform with a fully integrated set of functionalities to help companies of all shapes and sizes meet their logistics requirements,” a spokesperson from Sanabil Investments stated.  

OTO serves over 10,000 local and international brands and has seen its revenue double along with a notable increase in orders processed year-over-year. 

Furkan Uzar, chief technology officer and co-founder of OTO, said that this funding propels the company toward its vision of becoming the shipping gateway of the internet.   

“By bridging the tech gap between sales channels and shipping providers, we can accelerate our growth and offer customers streamlined, automated shipping solutions,” he added. 


Closing Bell: Saudi main index slips to close at 12,174

Closing Bell: Saudi main index slips to close at 12,174
Updated 22 July 2024
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Closing Bell: Saudi main index slips to close at 12,174

Closing Bell: Saudi main index slips to close at 12,174

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Monday, losing 28.17 points, or 0.23 percent, to close at 12,174.76. 

The total trading turnover of the benchmark index was SR8.34 billion ($2.22 billion) as 127 of the stocks advanced, while 96 retreated.  

The Kingdom’s parallel market Nomu rose 277.53 points, or 1.08 percent, to close at 26,040.47. This comes as 35 of the listed stocks advanced, while 30 fell. 

The MSCI Tadawul Index lost 6.03 points, or 0.39 percent, to close at 1,523.43.

The best-performing stock of the day was Dr. Soliman Abdel Kader Fakeeh Hospital Co. The company’s share price surged 7.02 percent to SR64.

Other top performers were Sadr Logistics Co. as well as United Cooperative Assurance Co.

The worst performer was Al Sagr Cooperative Insurance Co., whose share price dropped by 4.78 percent to SR21.90. 

Other stocks to fall were Miahona Co. and ACWA Power Co.

On the announcements front, Aldrees Petroleum and Transport Services Co. has announced its interim financial results for the period ending on June 30. 

According to a Tadawul statement, the firm’s net profit stood at SR159.8 million at the end of the first six months of 2024, up 13.4 percent from the corresponding period in 2023. 

The increase in net profit is due to the rise in petrol and transport division sales, deposit income, and sukuk, as well as the revenue from the joint venture project investment. 

There was a decrease in the other income and increase marketing, selling, and general costs as well as administrative, financing, and zakat expenses.

Saudi Exchange also announced the listing and trading units of SEDCO Capital Multi Asset Traded Fund as a closed ended investment traded fund on the main market on July 24 with the symbol 4703 and ISIN Code SA162G529FL8, and with +/- 30 percent daily price fluctuation limits and +/- 10 percent static price fluctuation limits.

A bourse filing revealed that these fluctuation limits will be applied during the first three days of listing, and from the fourth trading day onwards, the daily price fluctuation limits will revert to +/- 10 percent and the static price fluctuation limits will no longer apply.


Saudi Arabia awards 4 salt exploration licenses in Eastern Province

Saudi Arabia awards 4 salt exploration licenses in Eastern Province
Updated 22 July 2024
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Saudi Arabia awards 4 salt exploration licenses in Eastern Province

Saudi Arabia awards 4 salt exploration licenses in Eastern Province

RIYADH: Saudi Arabia has granted exploration licenses for salt deposits in Eastern Province’s Sabkha Ras Al-Qaryah to four companies following a competitive tendering process.     

The winning firms are Khalid Al-Zahid and Sons Co., Ibrahim Al-Issa and Partner Salt Co., Riyadh Salt Industry Co., and Rastan Limited, as announced by Jarrah bin Muhammad Al-Jarrah, spokesperson for the Ministry of Industry and Mineral Resources.    

Al-Jarrah noted that the ministry received six applications for the exploration licenses, announced in March through a mining platform. Five applications passed the qualification stage, while one did not meet the requirements.  

This aligns with the government’s goal of maximizing the Kingdom’s mineral resources, valued at SR9.3 trillion ($2.4 trillion), in line with Saudi Vision 2030. The initiative aims to enhance licensing transparency, promote national industries, and contribute to local content development and job creation.    

In its earlier release, the ministry revealed that the total area of the four sites offered for competition is 5 sq. km. The Ras Al-Qaryah complex, a coastal sabkha located approximately 4 km from the sea, has naturally exposed salt deposits in some locations on its surface.   

It added that the salt ore in the area is deposited in a stratified form and is suitable for various industrial applications. It supports the manufacturing and petrochemical industries, as well as the production of high-purity table salt and food-grade salt. This ore is refined into high-quality industrial salt with a purity of approximately 99 percent sodium chloride. 

Earlier this week, Saudi Arabia unveiled its largest mineralized belts to date, covering 4,788 sq. km and granting five new exploration licenses. 

Three of these licenses are allocated to the Jabal Sayid site in Madinah, spanning 2,892 sq. km and containing minerals such as gold, silver, copper, zinc, and lead. 

The remaining two licenses are for the Al-Hajjar site in the Asir region, which covers 1,896 sq. km and also includes gold, silver, copper, zinc, and lead, according to a statement from the ministry.

According to a MineHutte and Mining Journal report, Saudi Arabia has experienced the fastest global growth in mining sector investments. Over the past five years, the Kingdom has enhanced its regulatory and infrastructural environment, achieving the second-best global ranking for mining licensing. 


Saudi giga-project NEOM and Equinox Hotels unveil luxury resort in Magna

Saudi giga-project NEOM and Equinox Hotels unveil luxury resort in Magna
Updated 22 July 2024
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Saudi giga-project NEOM and Equinox Hotels unveil luxury resort in Magna

Saudi giga-project NEOM and Equinox Hotels unveil luxury resort in Magna

RIYADH: Saudi giga-project NEOM and hospitality firm Equinox Hotels have announced plans to open a resort on the coast of the Gulf of Aqaba as part of the recently unveiled Magna development.

In June, NEOM introduced the luxury destination, which will feature 12 locations along 120 km of coastline. It is part of the project’s sustainable portfolio, and will feature 15 hotels, 1,600 rooms, and over 2,500 residences. 

Magna will create 15,000 jobs, add SR2.6 billion ($693 million) to the Kingdom’s gross domestic product by 2030, house 14,500 residents, and attract 300,000 visitors annually, offering a unique investment opportunity with a focus on sustainability.

Equinox Resort Treyam will occupy one of the 12 locations, and the company’s CEO Christopher Norton said: “As a region, NEOM embodies the future of luxury hospitality, and Equinox Hotels is thrilled to create an unparalleled resort experience within this visionary destination.”

Norton added: “Our partnership with NEOM highlights a shared commitment to innovation, sustainability, and redefining the boundaries of hospitality. Located between THE LINE and the southernmost point of the Gulf of Aqaba, our resort will serve as the model for transformative luxury, activating the entire destination with experiences that only Equinox Hotels can offer.”

The resort will feature a 450-meter-long bridge-like structure suspended 40 meters above a lagoon.

An artistic impression of the resort. Supplied

Jeremy Lester, Magna executive director, said the collaboration with Equinox Hotels will “shape the future of luxury hospitality,” adding: “Equinox Resort Treyam embodies the convergence of innovation and luxury, and this partnership will redefine sustainable hospitality with a focus on truly immersive experiences and active lifestyles.”

Chris Newman, executive director of NEOM Hotel Division, described the plan as “a significant milestone in our journey to redefine luxury hospitality” within Magna.

He added: “This resort will be an example of transformative luxury, offering distinctive and inspiring experiences that only Equinox Hotels can deliver. Guests will have the opportunity to fully engage with this extraordinary location, where every detail is designed to enhance their well-being, elevate their journey, and support a high-performance lifestyle.”