START-UP DEVELOPMENT IN THE MIDDLE-EAST: WHAT TECHNOLOGY CAN DO FOR THE REGION
More Phones, More Internet, More Opportunity
The Middle East is a geographically vast and culturally diverse region, and this complexity is reflected in its relationship to technology. Looking at broad trends, however, the region is adopting technology and many of its governments are actively investing in opportunities to further technologically driven growth and innovation.
They have good reason to: The Middle East has more than 120 mobile phone subscriptions for every 100 inhabitants, one of the highest levels in the world. Despite the high phone subscription levels, internet access is restricted to a smaller, but rapidly growing, sector of the population. In five years the region is expected to have 549 million internet users. This is 32% of the population, up from 23% in 2017.
Despite these projections some countries, such as Algeria, continue to have some of the slowest internet speeds in the world. Thus in addition to positive trends, there is a lot of room for improvement.
Creating Jobs and Youth Empowerment
Governments can capitalize on technological innovation to drive growth and create jobs. This could play a major role in empowering future generations and facilitating stability in the region. Currently, 300 million people in the Middle East under the age of 24 are suffering from a youth unemployment crisis. By diversifying from their traditional reliance on fossil fuels and branching out into technological spaces, governments in the region could alleviate this crisis. Encouraging entrepreneurship and facilitating start-ups could also reduce the over-reliance on the government for jobs; two-thirds of Saudi workers were employed by the government in 2018. According to one study, the digital job market could generate 1.3 million jobs in the Gulf by 2025, with 700,000 jobs created in Saudi Arabia alone. 3.9 million economically inactive men and women could also benefit from digital self-employment.
As a report published by the Internet Society argues: “while the total number of jobs created by startups is still small, there is huge potential for these firms to create more – and high quality – jobs and drive an entrepreneurship culture where recent graduates are more likely to create their own jobs than to emigrate.”
Exciting New Developments
There are some encouraging signs and trends for startups in the Middle East looking to facilitate digital growth. The ride-hailing app Careem and online marketplace Souq have made their presence felt globally, selling for $3.1 billion and $580 million respectively. New technologies such as Artificial Intelligence, 5G and Financial Technology are promising new developments on the horizon.
The region is expected to have 30 million 5G subscriptions in five years, greatly expanding the number of digital consumers. Advances in AI will help companies make better decisions and usher in new innovations. AI is thus expected to contribute as much as $320 billion to the Middle East’s GDP by 2030. Fintech is also poised to make a big mark on the economy in coming years.
Bahrain alone hosts more than 90 fintech startups, encouraging their growth by the application of favorable laws and data regulation policies. Given how many in the region lack traditional banking services, fintech could prove to be extremely beneficial in promoting financial inclusion, serving the region’s expatriate population, and facilitating payments in the digital realm.
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