Gulf Business‘s article that as an Explainer: Is data the new oil in the GCC? is a good snapshot of the present situation of that part of MENA countries.
We all know that ‘Big Oils’ management and petrol countries alike have underscored scientific research showing the link between burning fossil fuels and a dangerously heating planet. They’ve lobbied and funded reports to either downplay or deny the risks to the climate—and humanity—of using their products. It went on unabated until the advent of clean and accessibility to all the latest technological hard and software for a broad spectrum of commercial activities.
Explainer: Is data the new oil in the GCC?
Technology has now become a key driver of economic growth in the GCC, with data already defining the region’s future, opines Maurits Tichelman, VP – Sales, Marketing, and Communications and GM – Global Markets and Partners, EMEA at Intel
Is the term ‘data is the new oil’ still relevant?
Yes, data has practically become the ‘new oil’. Data is playing a significant role as a crucial source of wealth for oil-rich nations and territories such as the GCC, which has historically been particularly dependent on oil as the main contributor to the GDP.
We are witnessing a significant shift from oil to data in the region as governments embark on strategic initiatives to diversify towards more knowledge-based and tech-driven economies. Data is already playing a key role in this transformation. A concrete example of this process could be autonomous driving. Autonomous vehicles run on data in the same way that today’s cars run on gasoline. Therefore, undoubtedly, data will be the new oil.ADVERTISING
In the GCC, oil has been crucial to economic growth. Will technology/data be able to provide the same level of economic prosperity?
Countries in the region are heavily investing in diversified industries such as technology, manufacturing, education, and healthcare, among others. As the Gulf states transform and diversify, the importance and impact of technology will take on an even greater role. Data is already defining the region’s future, complemented by mega projects planned with greater focus on smart infrastructure (smart cities), advanced telecoms services, and somewhat
accelerated by the rapid rise of remote learning and working due to the Covid-19 pandemic.
Furthermore, technology has now become a key driver of economic growth, from providing goods and services efficiently, to optimising advanced technologies to help businesses and governments access natural resources that can benefit people. Additionally, increased efficiency of labour has improved productivity and profitability.
While we are producing ample amounts of data in the region, are we currently maximising its benefits?
We are surrounded by data and it continues to grow exponentially. According to estimates, in 2021 alone, there will be 74 zetabytes of generated data and it is expected to reach 149 zetabytes by 2024. As a result, the need to understand and optimise data has become even more significant as every business uses data to some extent. However, there is a lack of knowledge and skills in utilising the data to its full potential. With the rise of digitalisation, companies and governments across the region and worldwide are investing in digital transformation, a positive indication that more organisations are now realising the importance of data.
The Covid crisis has highlighted the importance of technology – but will it retain its relevance post-pandemic across industries?
The pandemic has undeniably prompted companies to invest more in technology adoption across industries including healthcare, education, retail and real estate, among others. The use of innovation technology such as virtual medical/doctor consultation has helped people during lockdowns. The Covid crisis has forced organisations and governments to adapt and prepare better to tackle future calamities with the aid of technology.
Businesses have seen the advantages and have started deploying smart and intelligent technologies such as artificial intelligence (AI) to improve safety standards and increase productivity. Thus, it is clear that technology has become an absolute necessity rather than a mere option; its relevance has never been so crucial and without a doubt the use and benefits will play a bigger role post-pandemic across industries locally, regionally and internationally.
What are the biggest challenges hindering tech adoption/data-driven growth in the region?
Although organisations are implementing advanced technologies, the vast majority still operate on outdated and traditional models, which prevent them from utilising the benefits of the latest available technologies. Secondly, reluctance and resistance from employees in adopting technology poses challenges for companies. Lastly, a lack of skilled professionals is a key factor that has restricted organisations in the region from completing their digital transformation.
Looking ahead, GCC states are seeking to become global knowledge hubs. How can that journey be accelerated?
GCC governments are accelerating their digital transformation journeys with progressive strategies and initiatives. Smart Dubai, Dubai Data Strategy, Saudi Arabia’s The National Strategy for Digital Transformation and the Qatar Smart Program (TASMU) are examples of the regional commitment and ambition to explore all possibilities of technology and its impact on daily life and business. These strategies, roadmaps and ambitions are the key drivers and accelerators of their technological transformation journey.
What Is the Internet of Taxes? A question answered by Toby Bargar in his article dated May 13, 2021, explains how in this day and age, the Internet generally is gradually spreading wider and wider to cover most daily life. But to this extent, who would have thought so?
So, let us see what it is all about.
What Is the Internet of Taxes?
According to a McKinsey Global Institute report, IoT could have an annual economic impact of $3.9 trillion to $11.1 trillion by 2025. Adoption is accelerating across several settings, including factories, retailers, and even the human body. In fact, smart cities will reportedly create business opportunities worth $2.46 trillion by 2025, and by 2030 more than 70% of global smart city, spending will be from the United States, Western Europe, and China. With AI and the rollout of 5G facilitating faster speeds and scalability, we will see even greater demand across sectors for IoT solutions.
The ability to tax IoT may require changing laws and regulations. As we continue to adopt smart solutions, companies have to get smart about the nuances and risks of IoT taxability.
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An oft-repeated phrase says that nothing is certain but death and taxes; however, in the case of IoT, we can say that nothing is certain but growth and taxes – we don’t yet know how it’s all going to shake out. The demand for IoT is going to tempt federal, state, and local jurisdictions to tax it. With voice communications taxable revenues declining, taxing IoT is an attractive option to replenish their coffers.
In 1998, Congress passed a moratorium banning state and local governments from taxing internet access. This ban was extended several times. The Permanent Internet Tax Freedom Act (PITFA) converted the moratorium to a permanent ban and was fully implemented nationwide on July 1, 2020. Since the initial moratorium, the internet has risen to be a critical communication tool over other more highly taxed wireless and landline voice options, which continue a steady decline.
The ability to tax IoT may require changing laws and regulations. This process could take some time, but there is a complicated web of laws, regulations, and tax liabilities surrounding IoT in the interim. As we continue to adopt smart solutions, companies have to get smart about the nuances and risks of IoT taxability.
There are two easy questions that will help you to begin to understand your IoT taxability risk.
1) Is your company selling internet access?
2) Is your connectivity embedded or over-the-top?
Over-the-Top or Embedded Connectivity
If your device is networked over a user-supplied connection, then access is over-the-top or bring-your-own Internet connectivity. The over-the-top connection can be wired, Wi-Fi, or purchased separately from a wireless service. For example, if you sell a wireless printer, users connect through their home or office network. You are not supplying the internet, but the device. In these cases, as an IoT device maker, you likely have no responsibility for the customer’s internet connection.
Different than over-the-top, an embedded connection is part of the device. If you sell a device that comes with its own data connection as a component of the sale or service plan, it is embedded. Smartphones are a great example of an embedded connection. The relationships between device makers and network operators can feature widely variable structures. The device provider may need to account for any taxes that need to be collected related to the connection.
The World Wide Web of Gray
Defining internet access may appear intuitive, but not all connectivity is considered internet access. If you are selling a service that meets the statutory definitions of ISP service, the federal law provides a moratorium against state and local taxes.
Private connectivity, however, is often taxable. Unlike the public internet, private connectivity occurs via a Local Area Network (LAN) or Wide Area Network (WAN). This type of access is considered a taxable communication service in most states. If the network is interstate, this will also subject you to the Federal Universal Service Fund fee (FUSF), which is currently 33.4%, an all-time high for this fee and growing higher every quarter.
However, there are questions about whether connections to devices that do not enable a WWW experience – you connect to the internet, but the end-user can’t log onto Facebook or perform a Google search – meet the federal definitions of ISP service. If you do not meet those definitions, then your likely tax destination could be LAN/WAN.
Avoid the Dead Zone
IoT is here to stay. As you develop and deploy IoT solutions, it will be critical to stay informed on the web of tax rules that may or may not apply to your business. Monitor federal and state agencies that have jurisdiction over internet taxation and stay abreast of any changes on the horizon.
With so much uncertainty, it can be tempting to push the envelope, but a conservative interpretation of tax guidance can proactively protect you from being caught off guard.
Finally, to avoid hitting a dead zone, don’t try to navigate the changes on your own. Consult with your tax and legal advisors to ensure that you are aware of the latest developments and plan your course of action accordingly.
The MENA region, like much of the undeveloped world, is characterised by an omnipresent Informal Economy with however differing specifics. This label dates back to most countries Planned Economy. So why is now the Fintech industry poised for significant growth in the MENA region? And how?
All world economies have an informal economy, and the duties of all business and governments alike leaders are to sustain, help and assist in its good maintenance and eventual development. Informal Economy is not Black Market and can easily be formalised to become the locomotive of any nation’s economic life. Could Fintech be of serious help here?
Any way, the reasons are tied to those specifics at this conjecture as well summarised by Ayad Nahas below.
The Financial Technology (Fintech) industry in the Middle East and North Africa (MENA) looks well placed to enjoy a period of substantial growth.
- As many as 69% of adults remain totally unbanked in the region
- Internet penetration in Saudi Arabia stood at 95.7% in January 2021
- Fintech is going to be the “game-changer”
Fintech industry poised for significant growth in the MENA region
By Ayad Nahas, Communication Strategist
The Financial Technology (fintech) industry in the Middle East and North Africa (MENA) looks well placed to enjoy a period of substantial growth.
Part of this growth could come from a large unbanked population.
According to the World Bank, only 8% of adults belonged to the banked population in 2018 and as many as 69% of adults remain totally unbanked in the region.
GCC expatriates with low and middle-income salaries constitute a large proportion of the unbanked such as in the UAE, where around 80% of the population is outside the current financial system.
Yet, regional smartphone and internet penetration is very high, reaching 2 mobile-cellular subscriptions per UAE inhabitant in 2019, while Internet penetration in Saudi Arabia stood at 95.7% in January 2021.
Regional governments spotted this opportunity and introduced regulation to substantially attract investments into the sector.
Fintech is a term that describes new technology which seeks to improve and automate the delivery and usage of financial services. At its core, fintech helps companies, business owners, and consumers better manage their financial operations, processes, and lives by applying specialized software and algorithms on computers and, increasingly, smartphones.
Fintech’s adaptability across a slew of consumer sectors is propelling its widespread acceptability. Managing finances, trading shares, furnishing payments, and shopping online (often on your smartphone) has never been more convenient.
At the forefront of the fintech disruption are agile innovations such as peer-to-peer (P2P) lending and crowdfunding, providing alternative lending platforms, and widening access to fundraising.
While they may currently still need some centralized form of finance, at the minimum, P2P lending and crowdfunding can use fintech and blockchain to quicken the process, avoid paying high banking fees, and garner the interest of digitally-minded Millennials and future Z-generations.
A recent report by consultancy firm Deloitte also states that the UAE houses over 50% of the region’s fintech companies, with nearly 39% of the population using fintech for P2P money transfer.
According to a report by Crowd Funder, a leading online source for the fintech industry, the number of financial technology companies in the Middle East increased from around 105 companies in 2015 to 250 firms in the year 2021.
Hanna Sarraf, a senior banking executive from the MENA region, said fintech is going to be the “game-changer” that will decide the winners and losers within the financial services industry, globally and in the Middle East, in the short and long terms.
He points out that new technologies and advanced data analytics are transforming the traditional banking business models from the way banks interact with customers to the way banks manage their middle and back-office operations.
The global fintech market is expected to reach $309.98 billion at a CAGR of 24.8% by the year 2022 according to many key sources from the banking industry. In the MENA, the fintech industry is expected to hit a record valuation of $3.45 bn by 2026.
The growth of this sector is currently being propelled by the rapid rise in fintech startups as a result of the very high internet penetration in the region. Another major factor is that several traditional banks are undergoing digital transformations or even becoming neo-banks, a trend especially evident in the UAE.
In a survey by the Boston Consulting Group (BCG) last October, 70% of respondents said they are actively searching for a new bank, and 87% said they would be willing to open an account with a branchless digital-only lender.
Today, the UAE is leading the pack in financial technology and developing itself as a digital-first nation when it comes to banking, payments, and fintech, as evidenced by the UAE’s first digital bank to provide both retail and corporate banking services and which will soon be launched and led by Former Emaar Chairman, Mohamed Alabbar.
According to many experts, the fintech market in the MENA region is set to account for 8% of the Middle East financial services revenue by 2022. COVID-19 turned out to be a wakeup call to switch from traditionally deployed financial services to more sustainable finance and technology platforms
The fintech revolution is set to continue to disrupt, and traditional banks must keep up with the pace of technology in order to stay relevant and competitive. In this rapidly evolving, ever-changing market, it’s time to innovate, integrate and accelerate into the future.
Published by AMEInfo on 28 April 2021.
E-commerce in the MENA’s Gulf took off despite certain difficulties to the point where Gulf Business‘ article titled Explainer: What is the scope of growth for the GCC’s B2B E-commerce industry? sustains that
The pandemic has helped boost digital marketplaces in the region, opines Muhammad Chbib, CEO at Tradeling.
7 November 2020
The pandemic has propelled the use of e-commerce in the region and globally. What are the key trends you have seen?
The most significant trend is the growth of homegrown capabilities in e-commerce in the region. Globally, while e-commerce has been recording strong growth – accelerated no doubt by the pandemic – the region has witnessed a transformational growth in the evolution of the digital economy. Not only have our homegrown companies demonstrated strong resolve to meet the needs of the people and support them, we have seen a tremendous amount of entrepreneurship – with new startups entering the market and building their own niche.
The second trend is more consumers warming up to the possibilities offered by e-commerce. While digital commerce was gaining momentum, one of the factors that has stymied its growth in the region is the relatively lower credit card penetration in some markets. There have also been typical concerns associated with conducting everyday business online. However, one thing the pandemic has brought about is the adoption of digital payments and the increased confidence of consumers to shop online and conduct e-commerce transactions.
In the B2B e-commerce space, how high is the penetration in the GCC market? Has it grown significantly this year?
While B2B e-commerce was evolving at a slower pace compared to consumer-oriented digital business, this year has witnessed a real transformation. I believe it is a case of supply and demand. What matters is that in the new reality, business customers too want to access products and services easily, quickly and efficiently. We see a growth in the B2B marketplace – here in the UAE – and growing enquiries from across the GCC.
Which are the verticals within the sector where you see most scope for growth?
It is really a matter of bringing more options to the customer, whatever the vertical. Customers like to shop around and feel they get value for money and exemplary service. But it is also a matter of sourcing new products and services that aren’t in the region yet.
For those entering the digital B2B industry, what are the main challenges?
The main challenges are finding the right talent with expertise and insights into the B2B sector, which is a different terrain compared to B2C e-commerce. An in-depth understanding of the global market is essential in addition to knowledge of the trading dynamics. You must be flexible and agile to overcome any unprecedented situation. It is also a matter of understanding the customer – the B2B customer is very different from the B2C customer.
Our priority is making the customer journey seamless, taking away their pain points and streamlining processes to ensure efficiencies that save them time and money.
Tradeling launched in April, in the midst of the lockdown – how was your experience? Do you have any immediate plans to expand?
We created Tradeling during the pandemic to connect regional and global suppliers to MENA-based business demand. Today, we have close to 400 suppliers from over 25 countries with gross merchandising value increasing from zero to a high two-digit million figure in just three months.
The key to overcoming the challenges was to enhance market confidence and we took decisive steps in this regard. Today, we have gone from a team of 40 to nearly 100 people and we continue to hire.
From logistics to financing support to ensuring a fully secure payment gateway, we are the first of our kind B2B platform across the region. This is our USP and this integrated approach to business has enabled us to address the challenges.
Looking ahead, what is the future of digital marketplaces in the region?
Digital marketplaces constitute the future of retail and in the new reality, they will record a stronger rate of growth compared to brick-and-mortar retail. But the key for success is to define your own unique niche for the marketplace; increasingly, we see online aggregators trying to capitalise on the opportunity, which will only lead to market fragmentation. What we need is bold, innovative ideas that will help accelerate the momentum of e-commerce growth in the region.COVID-19DIGITAL MARKETPLACEE-COMMERCEGCCTRADELING
In Manama, 5G and edge: unlocking new possibilities could have been perceived by all elites of the Gulf media as a reassuring means to help reach landscapes of a better future.
With 5G we’ll see an entirely new range of applications enabled by low latency of 5G and the proliferation of edge computing – transforming the art of the possible, said professional services firm Accenture in a new report.
“5G standards have been finalized late last year. We’ll soon start to see a growing number of devices rolling out across the regions. By 2025, it’s estimated that there will be 1.2 billion 5G connections covering 34% of the global population,” said Tejas Rao, Managing Director – Technology Strategy & Advisory, Growth Markets at Accenture in the company’s Business Functions Blog.
From digital to augmented consumer
The evolution of the consumer is one major leap forward. 3G and 4G helped to create the digital consumer, always connected to the internet through their mobile devices. But with 5G we’ll see an entirely new range of applications enabled by the low latency of 5G and the proliferation of edge computing – transforming the art of the possible.
Rather than simply experiencing digital through their devices, consumers will have their experience of the world around them enhanced and augmented through real time data and the technologies such as augmented reality/virtual reality (AR/VR) that it enables through edge computing.
The edge cloud forms
The evolution of the network in this context is synonymous with the evolution of the cloud. So rather than what we typically see today in the public cloud, which is services residing in centralized data centers, those cloud services will move to the edge of a mobile network – the ’edge cloud’ – to drive real time cloud computing capabilities. And that development will support a wide range of new use cases across every industry, with network connectivity itself becoming the platform on which others can build new services and solutions.
From capacity and coverage to network as a platform
Accordingly, we are starting to see the strategic intent of maximizing capacity and coverage that informed network build in the 3G/4G world shift. Instead the focus is now on how to unlock 5G to deliver innovative solutions and services.
With networks no longer having to be the same everywhere, they can be built or sliced to support new use cases and opportunities for specific industries. Today’s web platform companies are already exploring this and making investments in order to capitalize on the transformational changes that 5G’s low latency can offer.
Low latency–currency for the 5G world
Ultra-reliable low latency is the new currency of the network world, underpinning new capabilities in many industries that were previously impossible. And these are not in the realm of science fiction. They are becoming possible today, ranging from real-time language translation to remote robotics and from autonomous logistics to AR-enabled industrial maintenance.
As they plan their future networks, operators need to understand how to intelligently direct 5G network investments from just pure coverage and capacity, and towards unlocking new revenue streams and business value. This is a significant departure from previous generations of network deployment. The network has moved from being a pipeline to instead becoming a platform and gateway for solution innovation and real-time connectivity services.
Partnering and collaboration will become more important than ever as operators sit at the center of new ecosystems developed around the ultra-reliable low latency, real time data at scale and responsiveness that the ‘edge cloud’ delivers.
New landscape of opportunity–and challenge
This emerging landscape of mobile edge networks can unlock many new opportunities to create value. These consist of new services to drive revenue and new possibilities for managing network costs. But the new networks also pose some novel challenges to preserving margins.
Today’s cloud world is characterized by the presence of a limited number of mega data centers in remote locations with data travelling from device to cloud and back again in order to execute a computational process or data analysis. Data typically makes the round trip travelling at 50 to 100 milliseconds over today’s 4G mobile networks.
Data travelling over 5G at less than five milliseconds facilitates the edge cloud and the ability to create new services that it empowers. But achieving that requires a proliferation of micro data centers numbering in the tens of thousands. To support edge capabilities, these will need to be deployed closer to the consumers and enterprises that use them and densely installed in urban settings.
They will need to handle the progression from millions to billions of connected devices. And move from remote connectivity to providing ultra-reliable, low-latency capabilities at the edge as data flows accelerate to real-time in order to execute time-sensitive services, from autonomous vehicles to real-time visual analytics.
Deciding where and how to play
As they create these capabilities, operators need to understand where they want to locate the edge and what the operational implications of their choice will be. That means understanding the likely demands of the territories they cover and the use cases for specific industries that are likely to be most relevant.
The one-size-fits-all approach of the 3G/4G world is no longer useful. Instead, operators need to take a more targeted view of where they want to play and the likely returns they can generate from placing much more specific bets than in the past.