Bahrain’s bid to carve a niche as a regional centre of ICT innovation took a step forward following the decision by Amazon Web Services (AWS) to base its first Middle Eastern cloud technology data centre in the kingdom.
Speaking at the global tech giant’s Summit for the Middle East in Bahrain on September 25, senior officials from AWS said they were looking to open the new centre by early 2019.
The upgraded, locally based infrastructure will be divided into three availability zones that, once operational, will minimise data-processing delays for local businesses, while enabling faster transfer of data.
In addition to providing new employment opportunities, the presence of cloud computing services is expected to support the growth of local tech-based companies, and improve Bahrain’s ability to attract skilled entrepreneurs and expertise from across the region.
“Bahrain is a great launch pad for regional expansion, with its adaptable regulatory framework, solid base of human capital and access to funding,” Hadyah Fathalla, executive director of technology investment firm C5 Accelerate, Bahrain, told OBG.
AWS and Bahrain collaborate on digital governance
The decision to choose Bahrain as the location for regional data infrastructure comes on the back of the kingdom’s moves to digitise all government and ministry operations through the uptake of cloud services under a national strategy launched last April, called Cloud First.
Implemented by the Information and eGovernment Authority (iGA), Cloud First prioritises the use of digital technologies as a means of reducing operating and administrative costs, while also improving data security and productivity.
As part of the programme, the iGA is in the process of migrating 700 servers to AWS, with the aim of decommissioning its hosting platform by the end of 2017, according to Mohamed Ali Al Qaed, CEO of the iGA, who spoke at the summit.
Increased focus on addressing funding and skills gaps
In tandem with the digitalisation of government operations, the kingdom is working to involve private operators in the development of a wider digital ecosystem.
“Bahrain is at a nascent stage in the development of its technology entrepreneurship ecosystem, but all the right ingredients are there,” Fathalla told OBG. “The government’s migration to cloud technology creates a significant increase in associated opportunities for private sector technology companies that will drive growth in the sector. Greater involvement of large private enterprises is the necessary next step.”
In September the Bahrain Economic Development Board (EDB) announced a new $100m venture capital fund, set to be launched before the end of this year.
The fund will target private investment to support entrepreneurs and tech-based start-ups. Industry stakeholders are hopeful that public commitment to the sector will spur growth and increase financing.
At the same time, public agencies are partnering with private actors to upskill local businesses in the sector.
In 2016 international technology investment firm C5, in cooperation with state labour fund Tamkeen, the EDB and AWS, launched the Cloud 10 accelerator programme, a strategy designed to help tech start-ups expand their businesses using cloud services.
The initiative, which aims to train 300 businesses over the next four years, offers small and medium-sized enterprises (SMEs) an intensive, three-month mentorship programme, providing participants with practical skills to capitalise on modern digital trends and networking opportunities with potential investors.
Ulaiyan Al Wetaid, CEO of telecoms company VIVA Bahrain, highlighted the importance of skills training in business development. “Positive changes in regulation together with advances in technology mean that a joint effort is needed to develop new tools for users across sectors,” he told OBG. “Education plays a central role not only in the development of these tools but in creating knowledgeable end users that can properly benefit and take full advantage.”
Regulatory sandbox creates space for fintech experimentation
Financial technology (fintech) is one area that stands to benefit from Bahrain’s move towards greater digitalisation, buoyed by a raft of initiatives and regulatory adjustments aimed at promoting growth.
In June the Central Bank of Bahrain (CBB) created a so-called fintech sandbox – a secure, virtual space to test software or coding – in which national and international companies can develop digital banking offers.
Dubai’s NOW Money and Tramonex, the London-based foreign exchange cash management business, became the first two firms to be granted access to the sandbox in August. The CBB is offering an initial nine-month period to trial solutions, with an option to extend the timeframe by three months.
The sandbox forms part of broader efforts to position Bahrain as an entry point for firms looking to develop and test their fintech products before taking them into international markets.
Bahrain has also eased crowdfunding regulations for both sharia-compliant and conventional business. The reforms, which allow firms to raise small amounts of capital from a large number of sources, are designed to improve access to credit for fintech start-ups and SMEs.
Meanwhile, in a sign of the country’s commitment to expanding its fintech services, Khalid Al Rumaihi, chief executive of the EBD, has also signalled the board’s interest in developing solutions to expand the blockchain segment in the country, raising the prospect of bond issuances on digital currencies.