Evolving strategies: GCC countries adapt to the challenges and opportunities presented by rapidly advancing technologies

The Fourth Industrial Revolution (4IR) will pave the way for technology that has the power to greatly transform economies and societies worldwide. These technologies, which include artificial intelligence (AI), blockchain, big data tools, the internet of things (IoT) and robotics, can improve overall quality of life and increase the efficiency of governments and businesses. However, the technologies can also be disruptive, requiring recalibrations of the workforce and changes to existing regulations.

One mounting concern is the loss of jobs to automation. According to US consulting firm Mercer’s “2019 Global Talent Trends” study, around 50% of CEOs in the Middle East believe that more than 20% of current jobs will cease to exist by end-2024. Therefore, factoring 4IR technologies into their economic development plans is vital for governments in the region. GCC countries have been quick to adapt to these changes as they transition from resourcebased to knowledge-based economies.

POTENTIAL IMPACT: According to PwC, AI will add over $277.1bn to the GDP of GCC countries in 2030. In absolute terms, Saudi Arabia will accrue the largest gains from AI, adding approximately $135.2bn to its economy in 2030. In relative terms the UAE will see the biggest impact, with AI contributing 13.6% – or $96bn – to GDP in 2030.

While the upsides are likely to be significant, automation will see many jobs in the labour market come under pressure. Based on a study of five GCC economies – Kuwait, Oman, Saudi Arabia, Bahrain and the UAE – global management consultancy firm McKinsey estimates that 42.6% of work in the GCC will be automated by 2030, somewhat ahead of the estimated global average of 32%.

Workers with a high-school-level education or below are most at risk of losing their jobs to 4IR technologies, and some 57% of those workers are expected to have their jobs replaced by automation by 2030, compared to just 22% of those who hold bachelor or graduate degrees. Employees in the services, administration, construction and manufacturing sectors are most at risk.

Although automation and other 4IR technologies come with significant economic potential for GCC countries, authorities are aware that the shift will require careful management as they work to transform their economies, equip workers with new skills and create new technology-augmented jobs.

DIGITAL STRATEGIES: Recognising the wide range of challenges and opportunities presented by 4IR technologies, GCC governments have been working to incorporate digital transformation into their social and economic development planning.

Digital transformation of the economy underpins all the region’s various economic development blueprints. For example, under the $160bn New Kuwait 2035 plan, Kuwait’s government envisions a nationwide digital transformation to wean the economy off oil dependency, while developing digital infrastructure underpins Saudi Arabia’s Vision 2030 goals. Similarly, Oman is hoping that its own long-term economic development strategy – Oman Vision 2040 – will transform the economy and be a boon for the country’s growing IT sector.

While setting the stage for digital transformation in the private sector, GCC governments are also leading by example through public sector transformation. Building user-friendly e-government platforms has been a key part of this. For example, Abu Dhabi’s TAMM portal provides hundreds of online services to both businesses and citizens. Furthermore, blockchain technology is also helping governments in the region increase their service delivery efficiency and reduce overall costs. Under its national strategy for blockchain, Bahrain has begun using the technology at its General Directorate of Traffic to facilitate the streamlining of vehicle registration processes.

LAYING THE GROUNDWORK: Harnessing the potential of 4IR technologies requires significant investment in both physical and digital infrastructure. 5G is a key enabler of 4IR technologies across a number of economic sectors, from health to manufacturing and transport. With speeds up to 1000 times faster than 4G and the ability to support 1m devices per sq km (compared to just 4000 per sq km in 4G networks), 5G enables businesses to harness big data in real time and feed this into AI processes, as well as connect devices across the IoT.

With 5G networks, manufacturers can use IoT solutions to track assets and predict maintenance in their smart factories; autonomous public transport vehicles can navigate streets and highways more efficiently; and governments can use 5G-enabled smart grids to monitor and predict rapid increases in electricity demand. Telecoms operators across the GCC were among the first in the world to launch 5G commercially, investing billions in upgrading infrastructure such as network towers. Furthermore, the UAE was the first in the region to launch 5G services and now ranks third out of 32 countries globally in terms of connectivity – after the US and China – according to the Connectivity Index by London-based mobile retailer, Carphone Warehouse.

IOT: Although some of the technologies 5G can enable may sound futuristic, a number of promising case studies are already being implemented in GCC countries. For example, Bahrain is planning to launch the nation’s first satellite in 2020, which will be used to implement IoT-related projects such as monitoring gas emissions from factories. In addition, Oman’s newly established Ministry of Technology and Communications is working with six of the country’s hospitals to use big data and IoT technology to diagnose breast cancer more quickly.

Smart cities, which integrate 5G-enabled IoT technologies into urban planning to optimise efficiency, are a growing trend worldwide. According to Bloomberg, the global market size for these developments is set to reach $252.6bn by end-2025.

A number of smart cities are either being planned or are under construction in the GCC. In Kuwait contractors are developing the region’s first both eco-friendly smart city. Underpinned by IoT technology, the $4bn South Saad Al Abdullah City will span some 64 sq km and will be home to approximately 400,000 people by the time it is completed in 2029. Sensors, smart lighting and other devices will monitor and increase efficiency, while solar panels and other green technology will provide clean energy.

AI: The world’s first graduate level, research-based AI university is slated to open in Abu Dhabi in 2020. The Mohamed bin Zayed University of AI (MBZUAI) aims to become a centre for collaborative research – bringing academic, business and policymaking experts together to develop practical and innovative AI solutions for sustainable development. The MBZUAI forms part of broader federal government efforts and policy-making to establish the UAE as a world leader in AI innovation, underpinned by the UAE AI Strategy 2031. Under the strategy – launched in April 2019 and the first of its kind globally – the government aims to increase the efficiency of government services and harness AI technology across key economic sectors such as transport and health.

According to government estimates, AI could reduce the UAE’s annual government costs by approximately 50% and is already being integrated into state-owned businesses. Saudi Arabia is also pushing ahead on the AI front and recently revealed the world’s first citizen robot.

Saudi Arabia is also continuing construction on the new $500bn NEOM smart city, located in the north-west of the country, which will feature automated drones, driverless cars and various other robotics. The GCC’s readiness to adopt 4IR developments is putting the region in a strong position to successfully keep abreast of global economic changes and achieve long-term sustainable economic growth. “Our goal is for people to associate the UAE with AI,” Omar Sultan Al Olama, the UAE’s minister of state for AI, told OBG. “We want to export our AI solutions to the world.”

The UAE and wider GCC is already demonstrating its capacity to lead innovation with the way it is handling the ongoing Covid-19 crisis. New technology is proving crucial in helping to combat the virus. For example, 3D printing is being used to produce medical equipment, while scientists monitor the spread of the virus using big data tools.

Abu Dhabi-based AI and cloud computing company Group 42 has also been attempting to tackle the outbreak head-on. In December 2019 Group 42, in partnership with the UAE’s Department of Health, launched an AI-powered population genome programme, which is now being used to provide rapid genotyping, helping researchers gather the necessary data to develop a vaccine against the virus.