The future of real estate development is digital, with demand for cost-effective, innovative and sustainable buildings inspiring data-led business models that will fuel the growth of the Middle East construction industry, say, industry experts. So is Digital innovation ‘key to ME construction sector’?
“Innovation and sustainability in construction, specifically in connection with new digital solutions, are driving the future of real estate in the Middle East,” said Dierk Mutschler, CEO, Drees & Sommer, a leading construction and real estate consultancy.
“A gentle slowdown in some regional markets coupled with the emergence of new technology and business models will pave the way for forward-thinking companies to capitalise on these shifts. From 2020, the increasingly competitive environment will result in more demand for quality products, leading to a longer-term focus on investment in sustainable business models.
“After all, future business models, products and services will be measured not only by their economic success, but by their impact on our environment,” asserted Mutschler.
“Old business models will become obsolete,” he continued. “Real estate developers and contractors will need to truly understand data and what digitisation means for the construction industry. They will need to design and construct buildings with the capacity to adapt to new technology and future needs for the next 50 to 80 years.
“Ultimately, digitisation means ‘software’. If smart buildings are in danger of becoming outdated, a software update can make them state-of-the-art again. In our Drees & Sommer innovation laboratories, we are researching the use of regenerative technology, which will help ensure buildings are adaptable and future-proof– offering significant cost-saving benefits too,” said Mutschler.
He cited the findings of the KPMG Global Construction Survey, which forecasts six to 10 percent growth in the UAE’s construction sector in 2020 and Global Construction 2020, a report from PricewaterhouseCoopers, Global Construction Perspectives and Oxford Economics, which forecasts $4.3 trillion will be spent on construction in the Middle East and North Africa region over the next decade, as indicative of the positive outlook for the sector.
With regard to the UAE specifically, Stephan Degenhart, associate partner and managing director of Drees & Sommer Middle East, said the current focus lies in the delivery and completion of ongoing projects in anticipation of Expo Dubai 2020, which will attract 25 million visits during its six-month duration.
Following this, he predicted development would focus on delivering the ambitious roadmap of Smart Dubai 2021, which aims to make Dubai the happiest city on earth by embracing technology innovation for a seamless, efficient, safe and personalised city experience.
Degenhart commented: “The opportunities for growth lie within these shifts and changes. We predict that buildings will be completely reimagined and investors will need to consider how their business models will serve the new demands of end users. Existing buildings will also need extensive repositioning and revitalisation in order to compete in the digitised environment of the future.”
There are a host of smart technology solutions already available, from 3D laser scanning and digital modular fabrication to intelligent construction equipment and BIM models for design and construction, not to mention the use of IoT systems, robotics and data-driven business models for operation. Challenges lie in achieving the successful integration or networking of multiple systems from different technology providers and critically, according to Degenhart, in realising a change in mindset.
“Digital solutions have the power to dramatically impact the way we plan, construct and operate buildings. According to recent research by McKinsey & Company, adopting digital solutions throughout every phase of the construction process could increase market productivity by as much as 15 per cent and reduce project costs by up to 45 per cent,” Degenhart said.
“At Drees & Sommer, we are looking forward to working with developers and investors seeking to expand or enhance their portfolio in 2020, as well as supporting those new to the region. Our goal is to deliver cost-effective and sustainable buildings, profitable real estate portfolios, people-oriented working environments, visionary mobility concepts and liveable cities,” concluded Degenhart.
A Frenchman is credited with being the first to discover the photovoltaic effect that produces electricity from sunlight. The first solar panel was built in the US. But when Abu Dhabi decided to build the world’s largest individual solar power project, they looked east for help.
The country partnered with Chinese and Japanese companies to construct a facility, which opened this year, with a peak capacity of 1.18 gigawatts generated by 3.2 million solar panels. That’s because Asia, more than any other region on the planet, and China, more than any other nation, currently represent the future of solar energy, and are at the heart of the ensuing industrywide transformation from fossil fuels to renewable and nuclear energy.
Decarbonization is changing the face of energy and the world economy in more ways than most consumers — and even most executives — appreciate. Besides the transition from molecule to electron, as this move toward electrification suggests, it is also shifting the industry’s economic base from West to East and reconfiguring the hierarchy of companies and geographies that define energy.
Asia is the 800-pound gorilla in the energy story. First, its continued economic growth and rising standard of living will make its constituent nations pre-eminent energy consumers for the foreseeable future. A study by BP indicates that Asia, including China and India, will represent 43% of global energy demand by 2040, and through that year, the region will account for more than 50% of the growth in demand. In contrast, energy demand among the 36 nations in the OECD, which includes most big economies in the Americas and Europe, will be flat.
China’s sunny outlook
Second, places like China are already among the most important suppliers of non-fossil fuel-based energy and technology. By 2017, China owned 72% of the world’s solar photovoltaic module production; in comparison, the US has 1% and Europe 2%. Of the eight top producers, six are Asian. Not including hydropower, China has somewhere around one-third of the world’s installed renewable capacity; the EU has a little over a quarter; and the US accounts for 14%. China also leads in the generation of hydropower.
As the electrification of transportation advances and demand grows for renewable energy storage solutions, China looks likely to monopolize here, too. China produces at least two-thirds of the world’s production capacity for lithium-ion batteries, which are used in electric vehicles (EVs), mobile phones and laptop computers (some estimates put their share at closer to 70%), and it looks likely to hang on to that lead through at least 2028. And besides being the largest market for EVs, China also controls the bulk of production.
China is the third-largest miner of the primary raw material used to produce those batteries, lithium — often referred to as white petroleum because of its mounting economic importance. Chinese producers are also buying up lithium reserves in Chile, the world’s second-largest lithium miner (Australia takes the top spot).
A fundamental overhaul
Of course, climate change is forcing the energy industry to undergo an existential transformation that may eventually see the elimination of fossil fuels entirely. While most executives at oil companies will be dead or at least retired before that transition proceeds to what seems its inevitable end, the slowing of demand is already being felt.
By contrast, the demand for electricity seems insatiable. Electrification rates continue to rise across the globe, with Asia expected to be close to 100% coverage by 2030. Much of that growth in demand may be supplied by renewables and nuclear power rather than fossil fuel-generated power, although natural gas is expected to play a role for years to come. It also may be accomplished through a decentralization of generating capacity, such as recent rural electrification projects in places like Malawi and Bangladesh where farmers and villages use solar panels and small generators to provide their own electricity.
What’s the World Economic Forum doing about the transition to clean energy?
Moving to clean energy is key to combatting climate change, yet in the past five years, the energy transition has stagnated. Energy consumption and production contribute to two-thirds of global emissions, and 81% of the global energy system is still based on fossil fuels, the same percentage as 30 years ago.
Effective policies, private-sector action and public-private cooperation are needed to create a more inclusive, sustainable, affordable and secure global energy system.
Benchmarking progress is essential to a successful transition. The World Economic Forum’s Energy Transition Index, which ranks 115 economies on how well they balance energy security and access with environmental sustainability and affordability, shows that the biggest challenge facing energy transition is the lack of readiness among the world’s largest emitters, including US, China, India and Russia. The 10 countries that score the highest in terms of readiness account for only 2.6% of global annual emissions.
Yet despite the urgency of climate concerns and the rapidly falling cost of renewable energy, the speed at which this existential energy transition will happen is uncertain, as pre- and post-tax subsidies on fossil fuels remain in place, discouraging consumers to make the change to a more environmentally beneficial and frequently cheaper source of energy. The International Monetary Fund estimates post-tax subsidies on fossil fuels like coal and petroleum — a result of unpriced externalities, such as societal costs from air pollution and global warming — totalled $5.2 trillion in 2017.
Regardless of the speed of transformation, there’s no doubt it is already well underway. That’s why places like the United Arab Emirates (of which Abu Dhabi is the largest) are building solar power and nuclear facilities, despite being the world’s eighth-largest oil producer — and making the transition with Asian partners. They see the future.
Digital adoption key to cope with growth of mega cities or as put by Fida Kibbi: “As we continue to advance towards a more urbanized world and the impacts of climate change grow progressively, there is a greater need to accelerate digital adoption in line with the Sustainable Development Goals (SDGs).”
The number of megacities is forecast to increase to 43, each with more than 10 million inhabitants by 2030, said an industry expert, citing a report by the United Nations Department of Economic and Social Affairs.
More than half of the world’s population will live in urban areas by 2050, the report said.
“As we continue to advance towards a more urbanized world and the impacts of climate change grow progressively, there is a greater need to accelerate digital adoption in line with the Sustainable Development Goals (SDGs),” said Fida Kibbi, vice president and head of Marketing, Communications and Sustainability & Corporate Responsibility at Ericsson Middle East & Africa.
Digitalization has a unique potential to enable other industrial sectors to move towards the low-carbon economy. According to the “2019 Exponential Roadmap” report, the digital industry has an important role to play in reducing global carbon emissions through existing ICT solutions across energy, manufacturing, agriculture, land use, buildings, services, transportation and traffic management.
According to research by Ericsson, ICT solutions could help to reduce greenhouse gas (GHG) emissions by up to 15 per cent by 2030, amounting to around ten gigatonnes of CO2e—more than the current carbon footprint of the EU and US combined. Examples of areas where the savings can be enabled by ICT solutions are: transportation, energy, industries and agriculture.
Ericsson takes a proactive stance and collaborates with a wide range of stakeholders to scale the impact of our joint programs and initiatives in areas like climate change, agriculture, financial inclusion and, humanitarian response.
Technology innovations have the potential to accelerate global efforts to achieve Sustainable Development Goals:
Technology to address the impacts of climate change
According to a report by the Global Humanitarian Forum, climate change is responsible for some 300,000 deaths each year and over $100 billion worth of economic losses, mainly because of shocks related to health and agricultural productivity. According to a recently published report, Africa is the region at the most immediate risk of droughts and floods.
With the acceleration of extreme weather, sea level rise, and other climate change impacts – precise weather information has become an absolute necessity. Innovators at Ericsson and the Swedish Meteorological and Hydrological Institute (SMHI) have been leveraging microwave data to solve the problem in a unique new initiative being piloted in Rwanda.
Ericsson Weather Data creates detailed and cost-efficient rainfall and flood predictions using the existing telecom infrastructure. Ericsson and SMHI leverage cellular network data to measure rainfall in real time, utilizing signal disturbances in microwave links.
By applying an algorithm, these disturbances can be used to measure exactly how much rain has fallen between two points on a microwave network. Potential use cases include climate mitigation efforts, flood prevention in sewage and stormwater systems in cities, agriculture, transport solutions, tourism, insurance, weather agencies and water utilities.
Banking the unbanked
Mobile financial services are a global game-changer with an open money network being the connection needed between the financial industry and telecom to increase both the commercial and social inclusion benefits.
With mobile money, people can make payments anywhere at any time with their mobile devices connected with Internet. This allows end-users to seamlessly purchase products or services without having to physically hand overcash or swipe a card. The freedom to send, spend and receive money with a mobile phone is quickly becoming an essential part of life for billions of people.
According to data from Ericsson ConsumerLab, more than half of consumers in Africa are using mobile money services through an agent, and some 20 per cent use mobile money themselves on a mobile phone. However, the unbanked are the ones who are least involved in the formal financial system, due to factors such as distance to banks, education, and the inability to authenticate their identity,
Increasing financial inclusion through the use of digital technology is an essential element in furthering the economic development of Africa. And the story does not end here. Mobile money services have become an essential, life-changing tool across Africa, providing access to safe and secure financial services but also to energy, health, education and employment opportunities.
“Ericsson is committed to using technology to contribute to new innovative solutions for a better tomorrow, and our aim is to develop solutions that support the achievement of the Sustainable Development Goals within the context of sustainable business practices,” Kibbi concluded.
Oil traders, OPEC+ members and Big Oils alike are all predicting for the global oil industry to remain dominant in the energy supply market up until 2040. Their newly born Renewables counterparts can’t hear it from that ear. Is it all about that? A fight between 2 vested interests camps or is it about as elaborated by Robin McKenna, University of Liverpool in his Climate change: three ways to market the science to reach the sceptics, a matter of mind over matter. As an obvious illustration of the current situation, the latest COP 25 disappointment is clearly not a surprise.
You might think that the answer is more or better science education. The more you know about climate science, the more likely you will be to think that climate change is real.
But the science says that this isn’t true. If you want to predict what someone’s attitude to climate change is, you are better off asking them about their politics than about science. In fact, in the US, the more numerate and scientifically literate a Republican you are, the more sceptical you are about climate change.
What climate science really needs is better marketing. Researchers might think that the science sells itself. But, while people might trust scientists in general, the picture is more mixed when it comes to politically charged issues such as climate change. With many politicians actively persuading people that the science isn’t that serious, we need to persuade people that these politicians are wrong and the climate scientists are right.
And luckily, there are three key marketing tools we can use to do so.
This framing doesn’t work for all audiences. Just as a good marketer fits their message to their audience, a good science communicator will understand that when communicating an issue so broad and that affects so many, it makes sense to frame climate change in different ways to different groups of people.
Debunks of climate myths abound on the internet. But debunking misinformation is tricky, because once a piece of information has entered someone’s mind, it’s hard to dislodge it – especially if the information confirms previously held beliefs.
An alternative strategy is “prebunking”. Inspired by inoculation theory – the idea that it is better to a prevent a disease than to treat it – prebunking aims to prevent misinformation from spreading in the first place, rather than debunk it once it has spread.
This can be done by identifying common argumentative strategies used by climate change sceptics, such as spurious appeals to expertise or exaggerations about the uncertainties in climate models, and explaining why they are dodgy.
Of course, this information needs to reach the right people. Much like protection against disease, the most effective inoculation starts in childhood, with education. Misconception-based learning, an approach which sets out to avoid misconceptions, provides a framework for doing this. Climate breakdown is not a flash in the pan problem, and our strategies to combat it need to be designed for the long haul.
Master the messenger
Finally, it’s important to focus not just on the message, but the messenger too. We would rather listen to people who share our political views than “experts” who disagree with us. This means that if you want to effectively communicate a pro-science message, you need to have people from different corners of the political spectrum making the case.
It’s great that activists like Greta Thunberg are spreading the word, but not everyone wants to listen to them, and there are politically diverse groups out there who share the same message. For instance, when he was president Barack Obama reached out to religious leaders, who played an active role in promoting environmental issues in their communities.
Marketing isn’t always a bad thing
Marketing is manipulative. It can try to trick us into buying things we don’t want. So using it to sell climate science and interfere with our basic right to make up our own minds might seem suspect.
But it’s important to remember that while climate change is a contentious political issue, its effects are real and severe no matter what you, I or anyone else think. We have the right to decide how or even whether to change our behaviour in light of a destabilising climate. But we don’t have the right to decide that our actions have no impact on the climate. As the saying goes, we are not entitled to our own facts.
What’s more, there is a difference between the aims of marketers and those of scientists trying to communicate with the public. The marketer wants to sell us stuff. The scientist wants us to break through our ideological biasesand apathy to engage with the truth.
The strategies I have outlined are designed to create the conditions for these breakthroughs. They don’t detract from our ability to make up our own minds. In fact, they may enhance it, precisely because they neuter our ideological biases. Sometimes, we need a little help to think for ourselves.
Of course, good marketing is no guarantee of a sale. Even if scientists use these methods, climate change sceptics may refuse to buy it. But good marketers also don’t give up. If these methods don’t work, we can always look for some other ones.
Flying drone shipments to grow 50pc in 2020: Gartner predicts, after worldwide shipments of IoT enterprise drones take off, as these flying electronic-mechanical eyes are increasingly in demand in all field industries such as those mainly related to the built and non-built environment.
Worldwide shipments of Internet of Things (IoT) enterprise drones (defined as flying drones) will total 526,000 units in 2020, an increase of 50 per cent from 2019, said Gartner, a leading research and advisory firm in a new report.
Global shipments are forecast to reach 1.3 million units by 2023, it added.
“The construction sector is an early adopter of drones, which causes construction monitoring to be the largest use case by shipments worldwide across the forecast,” said Kay Sharpington, principal analyst at Gartner.
“Shipments are estimated to reach 210,000 drones in 2020, and more than double by 2023. Drones are taking over tasks such as site surveying and earthworks management as they are faster and safer to carry out with a drone than on foot.”
To save costs when surveying sites, the number of global construction employees per drone will decrease from 2,400 to 640 between 2018 and 2020.
In the short term, most use cases will be based around surveillance and monitoring due to the technical complexity of other applications. In 2020, the second and third use cases by drone shipments will be fire services monitoring and insurance investigation.
The insurance industry is the second largest use case by shipments with 46,000 drone shipments forecast for 2020. Shipments are expected to nearly triple by 2023, to reach 136,000 that year.
“Drones are used to carry out inspections on buildings and structures after a claim has been made, to assess the extent and cause of the damage. They can also be used to evaluate the type and condition of the building when providing an insurance quote,” said Sharpington.
“Their benefits are valuable. For example, they reduce the cost of scaffolding, ladders and employee time and provide a comprehensive photographic record of the building condition.”
To survey claim areas at a lower cost, Gartner expects insurance drones will grow from one per 152,000 people in 2018 to one per 72,000 people worldwide in 2020.
Police and firefighting agencies globally are deploying drones in public safety operations, wildfire management, crime scene investigation, and search and rescue operations. Gartner estimates that the number of drones used by police and firefighters will grow from one per 210,000 people to one per 47,000 people between 2018 and 2020.
“Fire service drones use cameras and thermal imaging to identify fire sources, extreme heat areas, trapped people and the positions of firefighters in the field,” said Sharpington. “Consequently, firefighting agencies can deploy resources in the right areas in emergencies and investigate incidents while minimizing risk to lives.”
Adoption of drones in the retail sector to rise rapidly after 2023
Drones used for retail deliveries will provide customers with rapid service and allow retailers access to customers in remote areas. However, the regulatory restrictions and logistical challenge of coordinating flight paths, managing airspace over densely populated areas and managing various payloads means that retail, overall, is a longer-term opportunity for drones.
Drone shipments will total 25,000 in 2020 and will rise to 122,000 units in 2023. Following this predicted trajectory, the biggest opportunity for retail will come after 2023.
In addition, Gartner estimates that the number of employees per drone will decrease from 73,000 global retail employees per drone in 2018 to 18,000 global retail employees per drone in 2020. – TradeArabia News Service
Greater Cairo (GC) is the largest urban area in the Middle East and one of the most populated cities in the world. The urban growth patterns of the metropolitan area reveal a fragmented city of heterogeneous parts that developed unplanned over the years. GC public transport network offers a large variety of means of transportation throughout three governorates but its lack of efficiency is forcing more and more people to use private cars. The extreme density of the urban fabric and the widespread congestion on the road network end up making the city’s livability very difficult.
Pamella de Leon, Startup Section Editor, on October 29, 2019, wrote in Entrepreneur Middle East, an international franchise of Entrepreneur Media the following.
Aside from private cars, taxis, and other four-wheeled vehicles, a ubiquitous sight on the streets of Cairo (and in other parts of the MENA, as well as the world at large) are the three-wheeled tuktuks and two-wheeled motorcycles to navigate daily traffic- and taking a bite out of the opportunity in the alternative transport market is Egypt-born startup Halan. The ride-sharing app for tuktuks, motorcycles, and tricycles -a first in the region- was launched in November 2017 in underserved communities in Cairo where roads tend to be too narrow for cars, and provided a cheaper alternative to cars and buses.
It grew across Giza, Alexandria, Minya, Luxor and Qalyubia governorates, and expanded to Sudan in 2018. It also offers on-demand logistics solutions to support large organizations and small businesses alike in their distribution and supply chain. Founded by Mounir Nakhla and Ahmed Mohsen, the former had the lightbulb moment when the idea was proposed to him by one of Gojek’s seed investors.
After meeting Nadiem Makarim, the CEO of Gojek, a startup that has been dubbed Indonesia’s first unicorn venture and has grown as an on-demand tech company for the transport, payment, and food sector, Nakhla was inspired from its success, and saw potential for a similar impact in Egypt. With Egypt’s population of more than 100 million, internet penetration, fast-growing sales of smartphone devices and a growing use of mobile apps, all the elements were positive, he notes.
“Transportation is one of the fastest ways of acquiring customers by solving a real need, and we wanted to be the app of choice for the underserved,” he says. “Egypt has north of 700,000 tuktuks already operating as taxis, and just over 1.5 million two-wheeler vehicles, used for both personal transportation and for delivery services, and this is where Halan comes in.”
As part of the startup’s efforts to organize the market and ensure safety, Nakhla says they also have a meticulous screening process when recruiting drivers. Besides offering convenience to customers, Nakhla says they also provide incremental business for their drivers, and thus increase their incomes.
The founder and CEO is no stranger to working with Egypt’s mobility scene and underserved communities- he co-founded Mashroey, an Egypt-based light transport financing business, and Tasaheel, an Egypt-based micro-financing venture, which Nakhla says, has served more than 1 million customers combined. And the rest of the founding team are veterans in the transport field too: co-founder and CTO Ahmed Mohsen has published several papers in IEEE on AI, was part of the founding team and a shareholder in SecureMisr, a security consultancy company in Egypt, and founded MusicQ and CircleTie.
Plus Mohamed Aboulnaga, Careem’s former Regional Director and Fawry’s Business Development Manager, joined as co-founder and COO. They also have key members who have worked previously with Uber and Ghabbour Auto, which has resulted in a team that is comprised of “technically very competent, passionate, creative, results-driven individuals with a high work ethic. Each one with a unique strength, that when brought together make for an unrivalled team.”
After launching in 2017, Nakhla says that the company was doing around 50,000 rides by March 2018, and they closed their Series A round in the same year in a round co-led by Battery Road Ventures Holdings (BRVH) and Algebra Ventures. As for their funding, Nakhla put in 20% of the seed capital and raised the rest from Raouf Ghabbour, founder of GB Auto, as well as BRVH.
According to Nakhla, Halan has so far raised single-digit millions in total, and are currently in the process of their Series B funding round. The company’s business model involves taking a percentage of the ride fare as commission. Currently serving more than 100,000 customers, Halan has exceeded 10 million rides and operates in around 20-25 cities in Egypt and Sudan. As for its on-demand logistics offering, Halan is currently partnering with prominent names in the fast-food industry, including McDonald’s, KFC, Pizza Hut, Hardees, and many more. The startup has also been recently awarded Fastest-Growing Mobility Solution in the Market during the second edition of the E-Commerce Summit in September this year.
Mark Anthony Karam in an October 21, 2019, article that is a response to his “Does micro-mobility have a place in the GCC?” elaborates on possibilities of moving around obviously the plush urban centres of the GCC. But only during certain times of the year unless a personalised Air Conditioning apparatus is provided with the ‘cyacle’. The image above is credit to The National.ae .
With the rest of the world continues to see the micro-mobility sector enjoy growing success, could we see a similar success in the GCC?
Micro mobility was an ideal solution to the last-mile issue in countries like China or the US
The GCC might not be as ideal for a replicated success
There are several factors today that pose obstacles impeding its growth
Micro mobility, which involves light-weighted means of transportation like electric scooters and bikes for short trips, usually in urban areas, has continued to grow internationally. Countries like China, the United States and many EU nations are finding great success with this novel sector, which builds on many of the concepts of the sharing economy that innovators like Uber brought into the mainstream.
Lime and Bird, US rivals in the sector, reached unicorn status in a handful of years each since their founding. One of the reasons for their sudden success is that they solved the long-standing last-mile issue, capitalizing on a neglected market gap.
The GCC goes mobile Today in the GCC, some are attempting to solve this last-mile problem as well. Earlier this year, Careem announced that it had acquired Abu Dhabi bikeshare startup Cyacle, which would add a micro-mobility offering to their services. Launched in December 2014, Cyacle is a fully-automated docked bike-share service currently operating in Abu Dhabi. Stations run 24-hours a day via an app, a touch screen kiosk and docking system that releases bikes using a ride code or a member key.
At the time, Careem had also announced that it was partnering with Dubai’s Roads and Transport Authority (RTA) to install 350 bike docking stations across the Emirates, where citizens would have access to 3,500 bicycles to bike share.
Another firm, Dubai-based Arnab Mobility, is also providing a similar service.
“Global cities are currently trying to find solutions to the global warming problems mainly caused by fossil fuel vehicles,” Dr. Dheeraj Bhardwaj, Group CEO of Arnab Mobility, tells Gulf News. He ponders an age-old question: “Also, city inhabitants and visitors struggle with first/last mile transportation, congestion and expenses. How efficient is it for a one-ton hulk of metal to take one person two to three miles? Conventional transportation systems are currently insufficient with people dealing daily with traffic, a lack of parking spaces, as well as long walks from bus stops and metro stations.”
Yet, while these solutions offer a service on par with international counterparts, it is important to remember the financial, cultural, and climate situation of the region.
Firstly, it is important to remember that the GCC region is known for its oil-derived wealth, with many nationals owning multiple vehicles and often employing personal drivers to help family members commute. Secondly, travel distances for major outings are already quite short.
“With urbanization on the rise, the majority of trips people take fall within the category of micro-mobility and thus are prime candidates for bike and scooter usage. In the US, for instance, roughly 60% of all trips are 5 miles or less,” CBinsights explains.
One of the reasons micro-mobility solutions are so attractive abroad is because of their perceived value for the service provided. Instead of paying a whopping fee for a taxi get you across 4 city blocks in New York, a US citizen would opt to rent a Lime scooter for a fraction of the cost. In the GCC, with its small-sized nations, large roads and affordable taxi services, this is not yet a problem. The countries in the region, save for Saudi Arabia, are sometimes comparable to entire Western cities in size. Bahrain, for example, has an area of 765.3 km², which is half the size of London (1,572 km²).
Therefore, from a financial and spatial perspective, micro-mobility services might struggle.
Then arises the issue of culture perceptions. While women have been driving for more than a year now in Saudi Arabia for example, breaking gender bias and perception is still an ongoing challenge. The country is certainly moving towards progress, but micro-mobility firms will have to consider this nonetheless. Also, consider that environmental awareness and consideration only just recently began to receive mass attention in the region in the past few years. Getting people to opt for bikes over a more convenient car ride will still prove a struggle.
Finally, and perhaps the most glaring of the issues plaguing micro-mobility companies in the region, is the climate and weather. The GCC is infamous for its scorching desert sun and sweltering heat. While public transportation like the Dubai metro or public buses offer some reprieve from the heat with their AC units, an e-scooter or bike doesn’t. When it’s 50 degrees Celsius outside and you need to just get home after a long day at work, a taxi or Uber, even for the higher fee, will prove the go-to choice. That remains the sector’s greatest obstacle. How it addresses it is still in question.
Mark Anthony Karam has 4 years of experience in the field of visual and written media, having earned his Masters degree from the UK. You can get in touch with him here: email@example.com
This year marks a decade since Yahoo acquired Maktoob, in a deal worth $164 million. It was the first time that a technology company based in the Middle East had attracted such significant interest from a giant of its day.
At the time, the deal paled in comparison to the acquisitions and mergers typical in the region, between telecoms operators, industry and real estate. But for the entrepreneurship ecosystem, it was a seminal moment, validating the region as a place for technology and startups.
Back when this happened, there were no venture capital (VC) funds, mobile and internet penetration was low, Apple’s iPhone was still out of reach for most people and unicorns were mythical creatures with the power of flight.
Maktoob was founded in Jordan by Samih Toukan and Hussam Khoury as an Arabic webmail service. It grew to become the main destination for Arabic speakers on the internet and amassed 16 million users. Beyond the main portal, Maktoob offered online payments through CashU, an e-commerce platform that resembled US-based eBay called Souq and gaming company Tahadi MMO Games.
Yahoo was only interested in the main portal and so Toukan and Khoury established Jabbar Internet Group to absorb Maktoob’s other assets. In hindsight, Yahoo failed to see the consumer trends that unfolded in the region and the inevitable rise of online payments and shopping.
Souq became the biggest asset in Jabbar’s network. Emaar Malls reportedly made an offer of $800 million in 2017, but it was Amazon that would come to acquire the e-commerce site for $680 million of which $580 million was paid in cash. Emaar’s chairman Mohamed Alabbar decided to pump $1 billion into launching his own e-commerce platform, noon, as a result.
In between these two acquisitions, the technological landscape in the region had changed drastically. Internet penetration was on the rise, mobile penetration was close to or exceeded 100 per cent in every country of the Middle East and North Africa (MENA). Smartphones were also popular and Nokia’s dominance in the mobile phone market had been dismantled across the region, replaced by the app-friendly iPhones and Android-based Samsung and Huawei phones. With the introduction of 4G technology, the cost of mobile broadband fell from an average of $9.50 for half a gigabyte in 2016 to $5.27 for double the amount of data.
Empowering The Youth
Amid the protests and revolutions that disrupted the region’s economies in the so-called Arab Spring, the high youth unemployment highlighted the importance of the private sector for job creation. Entrepreneurship was presented as the silver bullet to stymie the rise of unemployment and a way to empower the youth, who make up two thirds of the region’s population.
Government policies and regulations across the Middle East and North Africa (Mena) slowly became friendlier to entrepreneurs and investors. Efforts to cut down startup costs continue as regional competition to become a hub for entrepreneurship has ignited. Startups have been recognised as a way to create not only employment but a means to solve for problems that societies and economies face in the Middle East.
The general shift in attitude and government policies created fertile ground for companies like Dubizzle, Talabat and Babil to emerge, most replicating models and ideas that had proved successful in other parts of the world. Germany’s Rocket Internet arrived in 2011 and began founding startups aggressively, replicating successful business models to launch companies like Namshi, which was recently acquired by Emaar Malls, wadi.com and Carmudi. Serious investors began to emerge and institutionalise and the region became home to VCs and angel investors with an eye to reap lofty returns. Today, there are several funds dedicated to entrepreneurship and a few governments have established fund of funds, to co-match VCs and help develop a local ecosystem that can generate economic growth.
One of the most prolific of these early angel investors was Aramex founder and Wamda chairman Fadi Ghandour. He was one of the initial investors in Maktoob and then in Jabbar Internet Group before establishing Wamda Capital.
“The world was changing and I had felt the internet change the world, I already felt it affecting Aramex, so when Samih and Hussam came for investment, for me, it was a no-brainer,” he says.
Still On The Backfoot
But even after all these years, there has only been a handful of exits valued at more than $100 million across the Middle East. Oil still accounts for the majority of gross domestic product (GDP) in the GCC, youth unemployment is the highest in the world at 26.5 per cent according to the World Bank and costs to start a business in the current hub of the region, Dubai is among the highest in the world. For almost every country, regulations still need improvement beyond registering a business. Innovation is also lacking, the highest-ranking MENA country in the Global Innovation Index is the UAE at 36th place, behind smaller economies like Cyrpus and Malta.
Yet, there is hope.
“There are more mature companies and more mature VCs, so there are better deals happening. Exits like Careem and Fawry, those kinds of big companies that are having a real impact is one key metric of a potentially successful ecosystem,” says Abdelhameed Sharara, founder of RiseUp. “I think we are still very early compared to the US and China, but it’s a very promising space compared to the past.”
The region also has a more active female population in the startup sector, with 23 per cent of startups in Gaza and the West Bank led by women, while 19 per cent are led by women in Beirut, both ahead of New York which stands at 12 per cent. Even at RiseUp, women accounted for almost 40 per cent of the attendees last year.
“The region has really become a place where entrepreneurs can thrive and provides supportive environments for startups,” says Amina Grimen, co-founder of e-commerce beauty site, Powder. “In the beauty space, looking at the accomplishments of big female players like Huda Kattan and Dr Lamees Hamdan is truly inspiring.”
There is a global standoff going on about who stores your data. At the close of June’s G20 summit in Japan, a number of developing countries refused to sign an international declaration on data flows – the so-called Osaka Track. Part of the reason why countries such as India, Indonesia and South Africa boycotted the declaration was because they had no opportunity to put their own interests about data into the document.
‘Digital colonialism’: why some countries want to take control of their people’s data from Big Tech
With 50 other signatories, the declaration still stands as a statement of future intent to negotiate further, but the boycott represents an ongoing struggle by some countries to assert their claim over the data generated by their own citizens.
Back in the dark ages of 2016, data was touted as the new oil. Although the metaphor was quickly debunked it’s still a helpful way to understand the global digital economy. Now, as international negotiations over data flows intensify, the oil comparison helps explain the economics of what’s called “data localisation” – the bid to keep citizens’ data within their own country.
Just as oil-producing nations pushed for oil refineries to add value to crude oil, so governments today want the world’s Big Tech companies to build data centres on their own soil. The cloud that powers much of the world’s tech industry is grounded in vast data centres located mainly around northern Europe and the US coasts. Yet, at the same time, US Big Tech companies are increasingly turning to markets in the global south for expansion as enormous numbers of young tech savvy populations come online.
Accusations of ‘digital imperialism’
Take, for example, the case of Facebook. While India is the country with the biggest amount of Facebook users, when you look at the location of Facebook’s 15 data centres, ten are in North America, four in Europe and one in Asia – in Singapore.
The economic argument for countries in the global south to host more data centres is that it would boost digital industrialisation by creating competitive advantages for local cloud companies, and develop links to other parts of the local IT sector.
Many countries have flirted with regulations on what sort of data should be stored locally. Some cover only certain sectors such as health data in Australia. Others, such as South Korea, require the consent of the person associated with the data for it to be transmitted overseas. France continues to pursue its own data centre infrastructure, dubbed “le cloud souverain”, despite the closure of some of the businesses initially behind the idea. The most comprehensive laws are in China and Russia, which mandate localisation across multiple sectors for many kinds of personal data.
Countries such as India and Indonesia with their massive and growing online populations arguably have the most to gain economically from such regulations as they currently receive the least data infrastructure investment from the tech giants relative to the number of users.
The economics aren’t clear cut
Supporters of data localisation cite developing countries’ structural dependency on foreign-owned digital infrastructure and an unfair share of the industry’s economic benefits. They dream of using data localisation to force tech companies into becoming permanent entities on home soil to eventually increase the amount of taxes they can impose on them.
Detractors point to the high business costs of local servers, not just for the tech giants, but also for the very digital start ups that governments say they want to encourage. They say localisation regulations interfere with global innovation, are difficult to enforce, and ignore the technical requirements of data centres: proximity to the internet’s “backbone” of fibre optic cables, a stable supply of electricity, and low temperature air or water for cooling the giant servers.
Attempts to measure the economic impact of localisation are extremely partisan. The most cited study from 2014 uses an opaque methodology and was produced by the European Centre for International Political Economy, a free trade think-tank based in Brussels, some of whose funding comes from unknown multinational businesses. Not surprisingly, it finds gross losses for countries considering localisation. Yet, a 2018 study commissioned by Facebook found that its data centre spending in the US had created tens of thousands of jobs, supported renewable energy investments and contributed US$5.8 billion to US GDP in just six years.
Like the equivalent arguments for and against free trade, taking a dogmatic position for or against the issue masks other complexities on the ground. The economic costs and benefits depend on the type of data stored, whether it’s a duplicate or the only copy, the level of government support for wider infrastructure subsidies, to name just a few factors.
India has been the most vocal supporter for localisation, promoting its own regulation as “a template for the developing world”, but it’s in a strong position to do so given the country’s relatively advanced digital industrialisation and technical manpower. Other emerging economies with large online populations, such as Indonesia, have vacillated on their localisation regulations under pressure from the US government which has threatened to pull preferential trade terms for other goods and services if they went ahead with restrictive regulations.
What governments do with the data
While the international economics of personal data may follow some of the same general dynamics as oil production, data is fundamentally different from oil because it does a double duty – providing not just monetary value to businesses, but also surveillance opportunities for governments. Some civil society activists I’ve met as part of my research in India and Indonesia told me they were sceptical of their own governments’ narratives about data colonialism, worrying instead about the increased access to sensitive personal information that localisation gives to governments.
It’s not just large corporations and states that have roles to play in this bid for “data sovereignty”. Tech developers may yet find ways to support the rights of individuals to control their own personal data with platforms such as databox, which gives each of us something akin to our own personal servers. These technologies are still in development, but projects are springing up – mostly around Europe – that not only give people greater control over their personal data, but aim to produce social value rather than profit. Such experiments may yet find a place in the developing world alongside what states and large corporations are doing.
DUBAI, UNITED ARAB EMIRATES – As data connectivity is becoming the Fourth Utility in cities across the Middle East, businesses and homes across the region are rushing to implement it. The region is prioritizing innovative technologies that pave the way for the future of smart cities as network operators start the commercial rollout of 5G.
“The Middle East is focused on high speeds, low latency and building connections that support smart city transformation,” said Ehab Kanary, vice president of Enterprise, CommScope. “With the acquisition of ARRIS and Ruckus Networks, CommScope has the resources of a Fortune 250-sized company that is well placed to drive the future of connectivity in the region.”
Below are three trends that will impact smart cities in the Middle East:
City planners must continue to make investments for the long term: Governments in the region are playing a key role in leading and funding smart city projects. City planners must continue to educate themselves about the future possibilities of – and requirements for – smart city infrastructure, consulting with IoT vendors and network connectivity vendors, and working to develop a plan for the long term.
Governments and the private sector must join forces: Connectivity is the basic requirement for smart cities, and fiber-fed 5G wireless is the infrastructure that will make it possible. But to enable 5G universally, cities and service providers will have to work together. Shared infrastructure makes 5G a viable business model for both cities and service providers.
As 5G technology spreads, cities will leverage it to become “smarter”: Most people think of 5G as a new wireless service for faster smartphones, but it is also a medium that enables a city to become smarter. Citizens and visitors will demand virtual reality, augmented reality and autonomous vehicle applications also be integrated into city services and capabilities. In the near future, countries in the Middle East are engaged in projects aimed at improving public services, security and quality of life.
During GITEX Technology Week 2019, CommScope will highlight its latest solutions to enable a smart future for network operators across the region:
Fiber for High-Speed and Robust Connectivity: Smart cities will be built on fiber. CommScope will be demonstrating fiber technologies for faster connectivity in buildings, the data center and central office.
Ultra-Connected Homes are Becoming a Reality: Consumers are experiencing an increasingly digital life and network operators are seeking ways to unlock the best user experience. CommScope will demonstrate how the company is delivering reliable, high-bandwidth Wi-Fi to every corner of the home and showcase how the smart media device brings connected home technologies together for a unique personalized experience.
Powering Connectivity for Smart Cities: As smart cities add new mobile-connected devices like security cameras and air quality sensors, they must have access to electricity. This is not always an easy task considering devices may be several hundred meters away from a power source. Network operators are using CommScope’s powered fiber cable systems to speed and simplify installation, and power these types of network devices.
Digital foundation for Smarter Buildings: As the number of connected devices grows, the location of these devices is becoming more important. CommScope’s automated infrastructure management (AIM) system knows exactly what is connected, how it is connected and where it is located. The software automatically tracks changes, issues work orders and documents the entire network. It also provides root-cause analysis in the event of failure, helping restore services faster.
Journalists are invited to learn more about these trends and technologies from CommScope’s experts in Hall 7, Stand H7-D43, taking place in Dubai on October 6-10, 2019.
CommScope (NASDAQ: COMM) and the recently acquired ARRIS and Ruckus Networks are redefining tomorrow by shaping the future of wired and wireless communications. Our combined global team of employees, innovators and technologists have empowered customers in all regions of the world to anticipate what’s next and push the boundaries of what’s possible. Discover more at http://www.commscope.com.
News Media Contact: Komal Mishra +971 43602440 Komal@activedmc.com
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