Transition from Oil to AI: Middle East Can Be the Next Great AI Hub
The development of the Middle East transition.
What does your mind recall when you hear about the Middle East? A Fox News report? Terrorist groups? Or maybe Iran’s nuclear program? These are all true, but in less than one decade, the name of the Middle East may be associated with artificial intelligence, and this region could become one of the greatest AI hubs in the world.
Here is transition from oil to AI and how the Middle East can be the next great AI hub.
The development of the Middle East transition.
The AI in the Middle East is still at the initial development phase. Good progress has been made. Despite a bad reputation and the stereotype that illustrates the Middle East as an oil-dependent and a bare of innovation region, the scope of AI impacts on the Middle East is on the rise.
This region is opening its way in innovations to become the leader of nascent tech in the near future. UAE recently launched its first Mars mission, as the first Arab country that aims to explore space. Also, in the coronavirus pandemic, Middle Eastern countries were proactive in using AI to fight the virus.
AI Replaces Oil in the Middle East
The Middle East is traditionally known for its oil and non-renewable resources, but this pattern is going to change.
The oil price shock caused serious problems for states in the Middle East and forced Persian Gulf states to reconsider their economic structures. Arab kings know oil isn’t a reliable source of income anymore, and they must look for tech-driven, sustainable sources to diversify the economy.
Governments conducted long-term plans for using AI and machine learning as an economic stimulus or improving workforce efficiency and the agility of government structure. Now, AI programs are carried out with the direct support of governments, but companies in the region will have their own AI departments in the short term.
Countries with the highest dependency on oil are at the forefront of adopting AI.
Saudi Arabia has ambitious plans for embracing AI. They established a government institute called the Saudi Data and Artificial Intelligence Authority (SDAIA) to develop, oversee, and raise awareness about AI.
This institute is associated with Saudi’s National Data Management Office and National Information Center. Moreover, Saudi Arabia is building a smart city called NEOM as a part of its Vision 2030 program to reduce the country’s dependence on oil revenues and turn it into a technology hub.
Qatar Artificial Intelligence Center was established in February 2019.
Teaching the principles of AI to students, adapting university courses to the AI, and acquiring talents are the main responsibilities of this center.
But maybe we can mention UAE as the fastest-growing and most progressive country in the region for adopting AI. They established the world’s first AI university in Abu Dhabi and appointed a 27-year-old as minister of artificial intelligence. This is the first time that a country has established a dedicated ministry of AI.
UAE Vice President and Prime Minister and Ruler of Dubai, Sheikh Mohammed bin Rashid stated that “We want the UAE to become the world’s most prepared country for artificial intelligence.”
Currently, more than 60 AI-driven companies are located in the UAE, and the number is growing year-by-year.
One of them is Derq. Derq is a local startup based in Dubai that aims to bring AI to Emirates roads. Its platform uses inputs from traffic cameras and sensors integrated with machine-learning algorithms to predict road movements.
Then, through V2X technology, it sends alerts to traffic control centers and connected vehicles. Road owners access the insights via a real-time dashboard.
2030 Horizon: A $320 Billion Market
AI investment is on the rise in the Middle East, and recognizing the power of AI to modernize and diversify the economy is highly embraced by Middle Eastern countries. Therefore, they are striving to incorporate AI at the heart of economic policies.
But it’s not always about economics, and deploying AI will play more role in health, space, education, environment, and transportation of the region.
AI’s contribution to the Middle East economy will have a huge impact by 2030 — and it is expected that Saudi Arabia, UAE, Qatar, and Egypt overtake many countries and seize the largest gains in AI.
According to a report by PWC, the potential impact of AI on the MEA region will be around US$320 billion by 2030, which is equivalent to 2% of global benefit. Indeed, AI will consist of more share from GDP. PWC’s expected annual growth for AI contribution across the region is 20-34% per year.
PWC predicted that AI would contribute $135.2 billion to Saudi Arabia’s economy, which will be 12.4% of its GDP.
With its Artificial Intelligence Strategy 2031, UAE has more potential to make the most out of AI. AI’s contribution to the UAE GDP is expected to reach 13.6% by 2030 that equates to $96.0 billion.
The expected AI share from Egypt’s GDP is 7.7%, which is equivalent to $42.7 billion by 2030. Some Gulf Cooperation Council (GCC) nations like Bahrain, Oman, Kuwait, and Qatar are also major players at AI 2030 vision. The estimated AI contribution to these countries’ GDP is $45.9 billion or 8.2%.
AI Becomes Strategic
The UAE has a solid strategy to become the leader of AI in the region. They have conducted broad collaborations with tech firms and startups to change the landscape of the country.
Their plans for adopting AI include transforming Dubai to a fully smart city, taking construction to the next level with 3D printing, and optimizing transportation with Dubai’s Autonomous Transportation Strategy.
Saudi Arabia is not left behind, and it has a well-defined strategy called Vision 2030.
The goal is to diversify and strengthen the economy and develop infrastructures in health, education, and tourism. As a part of the Vision 2030 plan, Saudi Arabia even decided to bring Aramco, the government-owned crude oil production company, to the stock exchange market.
“We’re embracing AI and exploring how to use it in an innovative, responsible, and ethical way that will advance our Vision 2030 objectives. So far the Government has invested around USD 3 billion in building the infrastructure so that the country is AI-ready and can become a leader in AI use.” Saudi Arabia’s Deputy Minister of Technology, Industry and Digital Capabilities, Dr. Ahmed Al Theneyan, said in an interview.
Investing in AI and innovative-driven strategies help countries in the region establish their position and minimize the economic impacts of the post-oil era.
From a political perspective, having a diverse and powerful economy can shift the balance of power in the Middle East to countries that have invested more in innovations and artificial intelligence. As the oil dries up, AI is taken more seriously.
The application of AI in the Middle East and Africa follows two different paths.
Middle Eastern countries are using AI mostly for business purposes, including engaging customers, optimizing operations, and transforming products and services. But in Africa, the primary focus of AI is on agriculture to increase farm efficiency to produce more crops and ensure food security.
Early Adopters and Business Benefits
From research and development (R & D) to HR and IT operations, AI will make fundamental changes to the roots of business in the Middle East and extend capabilities to accomplish more while consuming fewer resources.
According to a survey conducted by MIT from executives in the Middle East and Africa, 82% of large companies across the region have launched AI programs by the end of 2019. Also, 44% of respondents expected the AI to contribute to 21%-30% of their business processes in the next three years.
Likewise, IDC predicted that spending on AI in the MEA region to reach $374 Million in 2020. Banking, retail, government, and telecommunication industry are the leaders of spending on AI.
Despite the potentials and excitement for embracing AI-driven innovations, organizations in the MEA region are at the early stages of adoption.
Deploying AI knowledge at different layers of the organization and shortage of AI skills are the most prominent challenges they might face.
Governments in the region, the UAE and Saudi Arabia at the forefront, are early adopters of AI.
The primary use of AI for governments is to make cities smarter or even safer, but other uses like social welfare and eliminating paperwork are also considered. AI can bring sustainable development and assist in innovation-driven economics.
A growing number of businesses in the MEA region have started their journey to incorporate AI methodologies at the center of their operations. Changing the industrial landscape and accelerating digital transformation are the main incentives across the region to move toward AI.
The Emirates Group, as the greatest aviation holding in the region, started its efforts since 2015 to put AI in use and bring tech-driven travel experience.
They established a dedicated team called Enterprise Change Management to implement strategic initiatives across the organization. At the same year, Abu Dhabi-based Etihad Airways also signed a $700million deal with IBM to enhance its technologic experience.
The fundamentals of the MEA region economy are mostly built on oil, tourism, and real estate.
These sectors have accounted for the bulk of the investments in the region over the past decades. But AI is about to make its impacts on the investment standards in the Middle East.
Oil price drop, an unprecedented health crisis such as the Coronavirus, and slow economic growth are serious threats to investing in the future of the Middle East, forcing investors to reconsider their plans to invest in the region.
As AI prepares to be a game-changer, it will redefine the investment patterns in the region.
Investing in AI companies has grown significantly in recent years, and tech corporations are voraciously acquiring AI-oriented startups. The Middle East is expected to take the same path, and investors’ money flows to AI-driven startups instead of real estate.
Since the potential of AI in the Middle East is still untapped, there is a great chance for investors to aim for more ROI. By the same token, the racial and ethnic diversity, educated workforce, and population of more than 400 million people are good incentives for prospective investors.
The total number of investments in AI in the MEA region from 2008 to 2018 was $9.07bn, and the number is growing year-by-year.
According to Artificial Intelligence in the Middle East and Africa report by Microsoft, In terms of adoption and application, IT is leading with 47%, R&D and product development (30%), and operations and Logistics (20%).
Forbes surveyed 100 C-suite executives in the Middle East, and results showed that regional businesses aren’t falling behind their global competitors in terms of AI adoption. 26% of respondents said they fully implemented AI, while for 55% of them, AI is still at the piloting or testing stage.
The top three business benefits of AI for surveyed executives are to improve operational efficiency, enhance customer acquisition, and improve customer experience.
By the same token, regulatory requirements, impact on personnel, and upkeep of the systems are the major business risk expressed by executives.
Customer service, public sector, IT management, manufacturing, logistics, supply-chain management, and finance are the most anticipated candidates to receive the most assistance from AI in the coming years.
Putting AI in use requires the businesses in the Middle East to get to know AI basics and its capabilities first, then make changes in their business model and strategies to be aligned with AI.
Hiring new talents, educating employees, and involving AI at high-level or strategic decisions are some other steps that need to be taken by regional organizations.