Digital Governance in the Gulf by Jonathan Lahdo (C'20 W'20)

The Middle East continues to grow and become ever more important on the global stage in numerous fields; the Gulf countries are leading this revolution and are at the forefront of innovation and development in the region due in no small part to the increased digitisation of these countries’ governments.

Increasing the availability of public services through electronic means has allowed the Gulf States to capitalize on a general trend towards increased investment in digitisation initiatives and  not only create positive change in the present, but also explore options for devising solutions to future problems

Facilitating Business Development

One of the largest and most obvious areas in which increased governmental digitisation’s benefits can be seen are in trade and the economy at large. In the United Arab Emirates a strong start-up culture exists, in which entrepreneurs have flourished. Uber-competitor Careem, founded in Dubai in 2013, has not only been able to maintain its dominance over the larger global player in the UAE, but also “expanded in 26 cities across the Middle East & North Africa (MENA) as well as Pakistan” by raising “a total of $71.7 million in funding.” In the e-commerce market, a nascent industry in the Middle East that has still not achieved the ubiquity it has in other parts of the world, Souq.com dominates after starting in Dubai and going on to become the region’s “first unicorn” [1].

To further stimulate business creation and small-to-medium enterprise growth, the Emirati government has taken several steps to streamline registration processes through digital methods. The Department of Economic Development (DED), for example, signed a memorandum of understanding (MoU) with Servcorp, an Australian-based company specialises in serviced and virtual office solutions, that allows the firm’s clients “to complete their business transactions within the least possible time.” By partnering with a company that works with both start-ups and large enterprises worldwide, the DED is leveraging a public-private partnership that can help businesses begin in Dubai with Servcorp and their MoU-conferred efficient services, including “trade name reservation, renewal of reserved trade name, license renewal, and initial approval” among others, before expanding outwards [2].

Developing Location Infrastructure

From an infrastructural perspective, a common theme in the Gulf countries is rapid growth, leading to poor urban planning. A recent example of an initiative taken by the UAE government highlights how digitisation can be implemented to ameliorate fundamental issues in a state. The average UAE resident cannot navigate solely using street names, and often has to rely on nearby landmarks in order to reach their desired destination. The implications for the general public are obvious: it can be difficult to get around, whether it be to a friend’s house or a specific building. As for businesses, the effects can have a dramatic impact; inefficiencies due to difficult navigation can prevent  a company from turning a profit. Furthermore, with the rise of delivery businesses, like Talabat.com, the popular “online food ordering service operating across the [Gulf Coordination Council which] hit a record-breaking 100,000 orders on February 3, 2017,” [3] having a solid location infrastructure has never been so important.

The Emirati government’s response was Makani (meaning “my place” in Arabic), a “smart mapping system that was initially launched to help the delivery-industry, in addition to first emergency responders and courier services, locate residents’ homes;” it also aims “to have all the buildings in the UAE installed with a plate, displaying the location’s 10-digit geo-coordinates,” according to Abdul Hakim Malek, director of the Geographic Information Systems (GIS) Department at Dubai Municipality [4]. In addition to its own proprietary app, the government team behind Makani continues to work on integrating it with popular navigation apps Google Maps and HERE Maps to make the service more accessible to everyone.

Solving Problems Digitally

Looking forward, there are both potential threats and current problems that the governments of the Gulf states are looking to prevent and has the ability to alleviate respectively.

The most recent Interpol Digital Currency Conference, for example, was held in the Qatari capital Doha and was organised by the Qatar National Anti-Money Laundering and Terrorism Financing Committee, a unit of the emirate’s central bank. Deputy central bank governor Sheikh Fahad Faisal Al-Thani was quoted as saying “We expect from this conference to contribute in enhancing the capacity of the relevant competent authorities in conducting investigations in any crimes related to virtual currencies; and in establishing a network of practitioners and experts of this field,” a testament to the Qatari government’s dedication to digital financial security.

Elsewhere in the digital finance sphere, a key area in which the Middle East continues to lag is venture capital, and more specifically digital venture capital. There is evidently a strong interest in tech start-ups, with “half a dozen tech start-ups in the MENA region today [being] valued at more than USD 100 million each, and investors sunk more than USD 750 million into MENA tech start-ups from 2013 to 2015.” These have the potential to be the next potential generation of digital unicorns, of which “the Middle East claims [only] 1 out of 200 globally,” but given that “relative to GDP, the Middle East has only 10 percent of the VC funding of the United States,” it is clear that the government needs to engage in more efforts to encourage digital investment. In general, the strong culture and prevalence of family businesses in the region are a major barrier to the growth of venture capital, but through further modernisation and digitisation the region’s governments will be able to take advantage of the untapped potential of this sector that could further boost their economies [5].

Reflecting and Progressing

It is evident that in the Arabian Gulf, many strides have been taken to further digital development. The investments of the region’s governments in electronic initiatives have bolstered their economies, created an accessible environment for exciting new start-ups, and addressed logistical issues in location infrastructure and urban planning, to name a few examples.

Nevertheless, there are many untapped opportunities and potential areas of growth for these governments to focus on. In the future, their priorities will include a strong push for widespread adoption of the innovative services they have developed, in addition to further research on and investment in pressing issues like cybersecurity and digital finance.

1.     Suparna Dutt D’Cunha, “Is Dubai The Next Big Tech Startup Hub?”, Forbes, 22nd August, 2016

2.     Tamara Pupic, “DED and Servcorp to ease company formation in Dubai”, Arabian Business, 2nd June, 2015

3.     Claudie De Brito, “Talabat.com hits 100,000 orders in a day,” HotelierMiddleEast.com, 12th February, 2017

4.     Mariam M. Al Serkal, “All UAE buildings to get Makani coordinates,” Gulf News, 13th April, 2016, updated 24th February, 2017

5.     Enrico Beni, Tarek Elmasry, Jigar Patel, and Jan Peter aus dem Moore, “Digital Middle East: Transforming the region into a leading digital economy,” McKinsey&Company, October, 2016