How the UAE Has Emerged as the Gulf’s Digital Champion During COVID-19
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How the UAE Has Emerged as the Gulf’s Digital Champion During COVID-19
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By Naam Chakravorty, Gulf Region Analyst, Botho Emerging Markets Group
February 28, 2021
Imagine an Emirati gentleman with a row of self-driving robotic luggage following him across an airport. While this sight may be unusual in most global airports, it would not be out of place in Dubai today. 2020 changed how UAE residents live. From groceries to toiletries to taxis, anything and everything in the UAE can come to your door with a tap on your phone—and at a competitive rate, too. While COVID-19 has accelerated digital adoption across the world, innovation in the UAE is growing at an unprecedented pace and builds on the government’s recent efforts to transform this desert oasis into fertile ground for tech entrepreneurship in the Gulf.
By 2071, the UAE aims to be among the top tech-driven countries in the world. These digital ambitions are reflected in the UAE centennial plan, which focuses on enabling the development of a diversified knowledge economy by creating an agile regulatory framework. In recent years, a slew of government policies have aimed to prioritize digital transformation, promote innovation and embrace technology. For example, the UAE National Innovation Strategy is one of the cornerstones of the UAE’s governance structure. The framework aims to create an enabling environment for innovators by enhancing tech infrastructure and ensuring the availability of funding. This national digital-first focus aims to kickstart the Fourth Industrial Revolution with a strong emphasis on support for advances in education, biotechnology, healthcare, and artificial intelligence (AI). To support this vision, the UAE is currently investing in an AI workforce and has even created a national council for AI to accelerate AI adoption in government operations.
During a recent interview at the Dubai Chamber of Commerce and Industry, Dubai Future Foundation, CEO K.E. Khalfan Belhoul, highlighted the Crown Prince of Dubai’s recent proclamation that “Anything can change in the UAE to bend in front of innovation.” The national bias towards an innovation-first policy is reflected not only by the plethora of government initiatives and statements, but also by the growth of the entrepreneurship support ecosystem. The government has established initiatives with the aim to make ICT infrastructure affordable and accessible. For instance, Khalifa Fund launched an initiative, ‘E-empower’, for entrepreneurs/SMEs in Abu Dhabi to effectively navigate digital transitions by providing interactive e-learning content. Such efforts have contributed to the UAE’s status as the GCC country with the highest ICT use.
While the impact of these newly implemented policies remains to be seen, the UAE ranks first amongst Arab nations in the Network Readiness Index, coming in at 30th place for digital transformation versus Qatar at 38, and Saudi Arabia at 41. Qatar and Saudi Arabia also rank high on information technology usage and skill level among individuals, but the UAE has distinguished itself amongst its neighbors by championing the use of information technology among its residents as well as in the private and public sectors. The UAE also stands out amongst its peers in the transparency of its regulatory practices. In comparison, limited information is publicly available in Saudi Arabia on the implementation of the Kingdom’s ICT strategies. Emirati policymakers also lead the region in creating measurable targets around their ambitious strategies. For instance, the Emirates Blockchain Strategy 2021 is geared towards saving the government 77 million work hours annually and saving $3 billion in processing costs.
The top-down approach to policy decisions might reflect government prioritization, but is not always positive. While swift decisions can lead to effective implementation, larger businesses disproportionately benefit when digital transformation is led by the government and not the private sector. A study by market intelligence firm IDC found that 90% of companies in the region are still evaluating how to digitize their operations. Given that 98% of companies operating in the UAE are SMEs—which collectively contribute to more than 50% of non-oil GDP— the gap is too big to ignore. Entrepreneurs’/ startups' engagement with technology remains largely limited to automating business processes, as opposed to making technology strategically integral to the business model.
Access to technology alone cannot ensure business continuity. In order to aid digital adoption, the Emirati government has expanded its support for entrepreneurs and SMEs seeking to adopt digital tools. In late 2020, the UAE appointed its first-ever Minister of Entrepreneurship and SMEs, who facilitates cross-agency collaboration with other policymakers, such as the Ministry of Artificial Intelligence and Science, to augment the digital agility of entrepreneurs/SMEs. Other improvements include the establishment of the UAE Regulations Lab (RegLab, 2019) in partnership with the Dubai Future Foundation to ensure all regulations reflect the views of stakeholders including the private sector. Furthermore, to foster knowledge exchange, the UAE has seen an emergence of venture studios, which offer end-to-end support for startups, combining business mentorship and finance. For example, Honeybee Tech Ventures, a Dubai-based venture studio formed by local tech entrepreneurs provides support via cross-functional expertise, such as idea validation and strategy, funding, branding, tech-innovation, and ecosystem networking sessions for early-stage ventures.
Keeping pace with accelerated technological developments and simultaneously creating a digital ecosystem is not easy. However, the UAE’s willingness to embrace change and support regulations and programs for innovators has eased technology adoption and facilitated the growth of a resilient entrepreneurship ecosystem that has so far weathered COVID-19. These investments have laid the foundation for a strong post-pandemic future for entrepreneurs in key hubs like Dubai. As the UAE aims to diversify away from its reliance on oil, the tech industry’s share of GDP is forecasted to contribute 14% of the national GDP by 2030. And with this growth will come new strides in innovation. Perhaps the next sight at the Dubai airport may even be hologram calls.