Mena digital economy expected to double by 2018
The region’s digital economy is set to double over the next three years, passing the US$30 billion mark by 2018 after registering nearly 30 per cent growth this year, according to Deloitte’s Middle East Technology, Media & Telecommunications (TMT) predictions 2015.
Deloitte categorises the digital economy as online consumer spending on lifestyle products and services. While the digital economy has still to become entrenched in the psyche of the Middle East and North Africa (Mena) region, as shown by the paucity of online spending, the hardware to facilitate it, such as laptops, tablets and smartphones, have now become a necessity rather than a luxury in many places.
The GCC is also making strides in its development of smart cities, with Deloitte predicting that new smart-city greenfield developments in the region will double within the next two to three years with specific state-endorsed mobile apps created.
“M-government is actually a subset or extension of e-government to mobile platforms, where mobile is a channel, another means of improving government activities, processes, service delivery, and its ability to connect with its stakeholders,” said Santino Saguto, a consulting partner and TMT leader for Deloitte in the Middle East.
“The Middle East region alone represents 24 per cent of the global m-gov services base, with the GCC countries, at over 85 per cent of the region’s m-gov services, driving regional m-gov developments.”
The digital economy’s benefit to global GDP from traffic and trade flows was estimated by the management consulting firm McKinsey to be about $450bn a year. The firm also forecast the value of trade flow through digital channels to be $85 trillion by 2025 – three times the value in 2012. The expanding nature of the internet’s reach is becoming more obvious across the Mena region.
“I only opened up my platform six weeks ago, but 600 businesses have joined Jado Pado marketplace,” said Omar Kassim, the founder of Jado Pado, an online retailer based in Dubai. “That is because, although we are spoiled in the UAE for the amount of retail options, that is not true for most of the region and the demand is there for many products.
“The rising rents in the malls and the expense of opening a business means that the digital sphere creates a compelling case to be explored.”
Deloitte’s predictions do not focus solely on trade and commerce but also on the application of digital processes that are changing the way this country interacts with the wider Middle East. It anticipates huge growth potential in the nascent 3D printing sector, for example.
“We have seen the demand for 3D printing grow in the UAE,” said Ashish Panjabi, the chief operating officer of Jacky’s Business Solutions. “Initially our main penetration into education was universities, but in the last year we moved into the secondary school segment.
“The dental sector has been another promising segment for us, where we have seen the advantages 3D printers possess over traditional milling machines that dental labs used,” he added.
“Apart from this, we’ve seen the printers move into government, manufacturing enterprises as well as the oil and gas sector.”