ICT sits at the heart of the government’s 2035 strategy, New Kuwait, launched in 2017, but Kuwait has already made great strides in the digital economy. In the “Global Information Technology Report 2016” by the World Economic Forum (WEF), the country was among the biggest risers, and regulatory reforms are being put in place to usher in an era where tech companies help speed up the evolution towards a diversified knowledge-based economy. State funding is being used to create an ecosystem that will help start-ups develop, while larger firms and state agencies work to boost efficiency and productivity through a growing range of solutions that streamline processes and allow real-time analysis of consumer behaviour.

Although ICT covers all sectors of the economy, its true significance is partially captured by government data on the industry. According to the Central Statistical Bureau, the communications sector generated KD1.294bn ($3.92bn) in GDP in 2015, the latest data available, up from KD1.292bn ($3.91bn) the previous year. This was equal to 5.2% of non-oil GDP and 3.2% of overall GDP at current prices.

NEW KUWAIT: The 2035 strategy is also an acknowledgement that if the country’s growing number of youth are to have rewarding careers, many of them will need to look beyond the public sector. In the next five years the IMF predicts that less than 25% of Kuwaitis joining the labour force will find government jobs. Alongside ambitious infrastructure improvements in transport and reforms to administration, housing and health care, New Kuwait identifies finance, renewable energy and IT as sectors that can help make Kuwait a centre for innovation, excellence and know-how. The state urges improving school curricula, investing in university research and educating young Kuwaitis about opportunities in the private sector.

IMPROVED RANKINGS: The WEF’s “Global Information Technology Report 2016”, together with business school INSEAD and Cornell University of the US, uses 53 indicators to rank 139 countries. In the 2016 report’s network readiness index, Kuwait rose 11 places to 61st. It ranked first in mobile coverage, second in mobile subscriptions and broadband, and 14th for the number of households with personal computers. Having substantially improved its internet bandwidth per user, it leapt 50 places in this category to 51st, according to data from the UN’s International Telecommunications Union.

In assessing these advances, the WEF ranks Kuwait 84th for their social impact and 102nd for their economic impact. Its report notes that individuals, rather than institutions, are driving Kuwait up the rankings, with businesses charging ahead while state agencies lag. Individual usage ranks 32nd while business ICT readiness in Kuwait places much lower at 72nd. Government ICT usage ranks 81st, putting it in the bottom half of countries in this category. Globally, the networked readiness index suggests a widening gap between ICT usage among individuals and the public sector.

Economies that do not adapt to the rapidly changing IT landscape, the WEF warned, risk being bypassed in the coming fourth industrial revolution – a term coined by WEF founder and chairman, Klaus Schwab. According to Schwab, this next period of rapid change will involve a new ecosystem in which digital, biological and physical technologies work together in new combinations, increasing pressure on firms to innovate constantly. This new economic model, the report adds, will require urgent innovations in governance and regulation.

NEW REGULATOR: Seeking fresh engagement in this sphere, Kuwait’s government set up a new ICT regulator called the Communications and Information Technology Regulatory Authority (CITRA), a role previously filled by the Ministry of Communications (MoC). Created by Amiri decree in 2014, CITRA began operations in February 2016 and is managed by an independent board of directors, ending a potential conflict of interest, as the MoC is also the country’s sole provider of fixed-line telephony. CITRA’s role will include internet management, public sector IT development, “smart” government strategy, national cybersecurity, standards oversight, and development and investment in IT. A year after CITRA’s creation, businesses in ICT are cautiously optimistic about its potential as an enabler of innovation and growth, while acknowledging they needed time to adjust to the body’s new responsibilities.

CAIT: Another key body in the ICT sector is the Central Agency for Information Technology (CAIT). Founded by Amiri decree in 2006, CAIT is attached to the Minister of State for Cabinet Affairs and is responsible for devising, implementing and monitoring e-government policies and IT services. Projects it administers include the Kuwait Government Online Portal (e.gov.kw), Kuwait Government Call Centre, Kuwait Information Network, Kuwait News Project, Legislation Sources System and Kuwait National Information Technology Governance Framework. CAIT also runs the data centre serving state agencies and has developed a disaster recovery plan.

As a further responsibility of its role, CAIT published a comprehensive survey of National ICT Indicators in 2016 based on nearly 30,000 primary interviews with households, state agencies, businesses, schools and hospitals, as well as drawing on other government data and information. The aim was to produce an accurate picture of the ICT landscape in Kuwait and identify areas of the sector that could be improved.

INTERNET SERVICES: The resulting CAIT report shows that the MoC’s public switched telephone network has 849,023 lines, of which 56% are active, reflecting a recent shift from fixed-line voice calls to mobile phone and over-the-top services, such as Skype. Of the active fixed lines – about 472,000 in all – 42% were residential and 13% were on commercial or government premises.

The MoC also manages fixed-line connectivity for the four internet service providers (ISPs) in the country (FAST telco, QualityNet, Gulfnet and KEMS), five subsea international cables (FLAG, FOG, SMW4, Falcon and GBI) and a land cable connection to Saudi Arabia. The government began rolling out fibre-internet connectivity to homes and businesses in 2007, although by 2013 only 15-25% of the population had it. In 2013 the government invested KD24m ($79.4m) to upgrade the fibre-to-the-home network by laying fibre to new properties and replacing copper in some areas. By 2015 there were 130,000 fibre connections in Kuwait, a figure expected to rise to 200,000 by 2019 through additional investments of KD102m ($337.4m), alongside another KD4.5m ($14.9m) to build the international gateway.

A stark contrast exists in the rate of change of the state-owned fixed-line segment and the mobile market, where three private firms compete for customers and market share. With mobile penetration of 240% and nearly 100% geographic coverage from a 4G LTE network, Kuwait has some 840,000 mobile data subscribers and twice as many fixed-line customers.

At home, many customers buy a Mi-Fi router (a Wi-Fi router with a SIM card), allowing mobile access as a hotspot or through a USB dongle.

HOUSEHOLD SURVEY: The report’s survey, which covered over 15,000 households of both Kuwaitis and expatriates, found that 100% of homes had at least one smartphone, 35% had a fixed-line telephone, 60% had a computer and 54% had a tablet. In addition, 91% of homes had a television and 79% had a satellite dish with free channels, 36% had a dish receiving paid channels and 4% had online television streaming services.

Concerning computer usage, the survey noted that Kuwait’s household penetration, at 60%, was low compared to its neighbours: Qatar’s 97%, Bahrain’s 95%, the UAE’s 88% and Saudi Arabia’s 80%. Of all computers in homes, some 90% were laptops and just 10% were desktops. When smartphones are included, internet penetration in Kuwait’s households is among the highest in the world at 98%, on par with Qatar and above the UAE (94%), Saudi Arabia (90%) and Bahrain (81%).

Meanwhile, some 99% of Kuwaiti households and 96% of all households in the country have Wi-Fi. Of the homes surveyed, most used mobile phone operators to access the internet: 54% used Viva, 38% used Zain and 26% used Ooredoo, while ISP usage was split between Quality Net (7%), FAST telco (5%), KEMS (3%), Mada (2%) and Gulf Net (2%). The ICT survey also interviewed more than 10,000 individuals about their mobile phone and internet habits, finding that nearly all used their phones for internet services – browsing the web, using social media, sharing photos, sending text messages, listening to music and finding directions – almost as often as for its voice features. According to the survey, 85% of mobile internet users made voice-over-internet-protocol (VoIP) calls, 58% made video VoIP calls and 53% went online to check emails.

In the entertainment category, 83% browsed social media; 75% used social media to send messages; 65% downloaded music, video or images; and 63% posted to social media from their mobile phones. For more practical functions, 30% used their phone to access government services; 28% bought goods online; and 25% used phones for internet banking. The survey found that the use of social networking sites was high in Kuwait, including among older age groups. Among Kuwaiti responders, the most popular social networks were WhatsApp (97%), Instagram (93%), Twitter (73%), Snapchat (71%), Facebook (41%) and LinkedIn (20%). Facebook was by far the most popular site among expats, with 97% of Asian overseas workers and 88% of Arab expats using the site.

The survey found that Kuwaiti citizens, in particular, conduct transactions online, with 81% paying bills, 64% buying products, 65% banking, 66% booking travel, 45% ordering groceries, 30% selling goods, 17% checking investments and 16% making investments online. When asked about their attitudes to online retail, 85% of Kuwaitis said they shopped online to access a wider range of goods, with 80% valuing an easier ordering process and 61% valuing cheaper prices.

“The explosion of mobile accessibility has changed the market. Now there is the expectation that consumers are able to access services quickly and easily regardless of their location,” Sabah Al Ghunaim, chairman of Automated Services Network Company, told OBG. “The banking and financial services sectors have been the earliest to adapt in Kuwait, although the impact is being felt across many sectors.”

BUSINESS USE OF ICT: More than 3000 ICT decision makers were also interviewed for the report. When verticals were compared, it was found that finance, information and communications, and oil and gas businesses had the largest ICT budgets. Overall, company ICT budgets were spent on connectivity (49%), hardware (33%), software (11%) and IT services (7%). The survey found that 33% of companies would increase their overall ICT budgets in 2016 by an average of 21%, while 49% would maintain steady budgets for ICT.

The penetration rate of PC computers for businesses was 86%, while 83% have fixed-line telephones and 84% have corporate SIM cards for mobile phones. In terms of network penetration, 83% of companies had used the internet in the previous 12 months, though only 30% have intranets and 12% have extranets. The survey found that 45% of businesses used mobile broadband, 32% had ADSL or DSL fixed-line connections, 14% of businesses had fibre connections, and just 13% were using speeds of 100 Mbps or higher. When it came to internet use at work, 82% of companies went online to search for information, 82% used email, 62% posted information or messages, 60% used online banking and 59% made VoIP calls. Just 44% of businesses had a web presence, while 61% placed orders online and 59% received orders online. The survey found 41% of companies used packaged business process applications and 34% used mobile packaged applications, while 26% had custom-developed process applications and 27% had custom-developed mobile apps.

Finance and accounting packages were used by 80% of companies, while procurement, order management, human resources management and customer relationship management tools were used by at least half of businesses. The oil and gas, information and communication, and finance sectors made the greatest use of mobile business process applications. Although more than half of the companies surveyed said their use of data had grown by an average of 24%, use of big data analytics is low at 7%, with a further 4% planning to use them. Furthermore, 19% of businesses are using cloud services, with 17% of cloud users operating private in-house cloud facilities. Of the businesses interviewed, 22% had a mobility strategy with a further 6% planning to implement one, while 39% had a social media presence with an additional 4% intending to develop one.

When it came to security issues, 61% of firms had experienced malware issues, 27% had had no cyberse-curity issues, 21% had experienced data loss through employee error, 12% had experienced hacking and 9% had been targeted by cyberattacks.

CYBER STRATEGY: In March 2017 the Kuwait Cabinet directed the Public Authority for Communications and Information Technology to establish a national cybersecurity centre. The centre will be responsible for monitoring and assessing cybersecurity risks, and protecting government agencies from cyberhazards. This will complement CAIT’s work in providing disaster recovery strategies, including the use of the Kuwait Information Network (KIN) to communicate internally and with other GCC countries as part of a disaster response strategy. KIN runs on top of secure DWDM/ MMPLS technology that provides Layer 2 and Layer 3 virtual private networks connecting the data centres and IT systems of various government departments and agencies, as well as connecting to the internet.

A strategic object of the KIN project is the centralised enforcement and protection of confidentiality and security of government transactions, data and information. KIN’s Network Operations Centre provides around-the-clock monitoring of all KIN devices and sends alerts to a management console when issues are detected. CAIT’s National Data Centre enables agencies to replicate and back up critical data to minimise the impact of any breach of national cybersystems. The agency also trains individual departments in crisis management to ensure they have business continuity plans that are reviewed and tested regularly.

SKILLS & EMPLOYMENT: The ICT sector accounts for 0.9% of Kuwait’s workforce, compared to 1.5% in Saudi Arabia, 4.6% in Norway and 6.7% in Finland. The government employs the largest number of ICT experts, with just under 7000 employees, followed by the information and communications industry – including mobile network operators – with 4500 ICT staff, and the finance and insurance sector, which employs just over 2500. The estimated ICT workforce in Kuwait is 22,000. Of those working in ICT roles, 40% are Kuwaiti citizens, mostly in the public sector, with male and female Kuwaitis taking an almost equal share of the roles. However, among the expatriate cohort men outnumber women, bringing the overall share of male ICT workers to 73%.

The ICT workforce is highly educated, with 71% possessing a university degree and 41% having a masters degree or above. It is also a young workforce, with 67% of workers having less than 10 years of experience. The most common software-specific certifications held by Kuwait’s ICT workers are for Microsoft (48%), Oracle (26%) and Cisco (25%), followed by IBM (16%) and SAP (5%). The survey conducted for CAIT predicted the ICT sector would require an additional 7000 professionals between 2016 and 2018, while demand would grow in that period by a compound annual growth rate of 9.7%. The roles in greatest demand are for ICT marketing and sales, followed by IT department heads, and software and applications development managers.

MULTINATIONAL OPPORTUNITIES: International companies offering solutions for consumers and businesses see Kuwait as an important market. IBM opened an office in the country in 2015 when the estimated IT spend in the country amounted to KD332m ($1.1bn), a 4% increase on the previous year. Microsoft also has an office in Kuwait, where it offers services through 120 local partner companies. “There is a very interesting ecosystem here, and we find the crossover with telecoms companies particularly fascinating because they understand concepts such as churn and ARPU [average revenue per user], which are new for us, and they really understand customer service,” Charles Nahas, general manager at Microsoft Kuwait, told OBG.

For mobile operators, ICT service solutions offer an attractive opportunity to diversify. Zain established a co-location data centre in May 2016, while in October 2016 Ooredoo Kuwait bought the ISP FAST telco, which has its own data centre, for KD11m ($36.4m). Chinese firm Huawei, which has been in Kuwait for more than 10 years providing infrastructure solutions for mobile operators and other services, also has a data centre. In 2017 it officially launched its Innovation and Training Centre in Kuwait, from which it will offer training programmes for 1000 people per year in both the public and private sectors. The centre also showcases Huawei’s solutions for smart cities, smart government and applications for the internet of things. Huawei signed a memorandum of understanding with CITRA covering knowledge sharing, technology and consultancy to support the government’s New Kuwait vision.

International companies, state agencies and Kuwaiti firms have also had the opportunity to discuss the new generation of smart technologies and cybersecurity at conferences hosted in Kuwait. The fourth E-Government Forum, EGOV4, focused on e-services and took place in November 2016, while in March 2017 the third Kuwait Industrial Automation and Control Systems Cybersecurity Conference allowed international experts to discuss the opportunities and challenges of smart city and internet of things technologies.

OUTLOOK: Data from the WEF and CAIT both show the people of Kuwait to be tech-savvy and eager to embrace change and innovation. However, fixed-line and fibre-optic broadband services that are under government control are lagging, and according to the WEF, the gap between citizens’ expectations and government delivery of smart solutions and services is in danger of growing. Yet with the establishment of a new regulator and the work CAIT is doing to quantify and understand ICT usage in Kuwait, the sector will have a chance to promote digital solutions across the country and create new private sector jobs for Kuwaiti citizens.