How is the business landscape changing in the Middle East?

The Digital Middle East Report by McKinsey brings forward a lot of facts that we may not have known. The first important point that can be highlighted is that cross-border data flow connecting the Middle East to the world has increased by 150 times over the past decade. This is certainly a huge number.  This points to the fact that companies are interacting and doing business globally, new companies are being set-up and there is an all round development in the region.

The focus area of this analysis today will be start-ups and newer companies that are changing the regional business landscape. We will try and understand how petro dollars are flowing into new age businesses.  Scaling-up digital funding into new age startups and increase visibility of startup funding is a great way to improve the landscape. The Middle East ranks very high in consumer digital adoption but when it comes to the enterprises the penetration is very low.  The figure below shows the digital contribution in the Middle East Economy vis-à-vis other countries.

The time is right for businesses to move for digital adoption and create platforms that will take their companies to the next level of growth. In my discussions with many Feasibility Study Consultants in Saudi Arabia I have seen an impetus on investments in different sectors that include both online and manufacturing projects. The UAE is also doing major investments in new age industries with initiative such as the Dubai Technology Entrepreneurship Center and several others.  With major focus on raising investments, startups are working with consultants and designers to create Pitch Deck design and Business Plans in Saudi Arabia, Dubai and other countries of the region. In Dubai initiatives from DTEC are requesting startups to submit their plans in specified formats to start their enterprises. As a result there is a sudden spurt in requirement for Feasibility Study Consultants in Dubai.

The startup scenario is fairly active in the Middle East. The shift from the oil economy is encouraging young entrepreneurs to start-up. The success of different companies have further encouraged entrepreneurs to get started. Some of the companies that have reached the $100 million valuation milestone in the Middle East are SOUQ, Careem, Wadi, Fawry, Namshi, Bayut etc.

In May 2017, the World Economic Forum convened 100 of the top Arab start-ups at the Middle East North Africa Summit, hosted at the Dead Sea in Jordan. They came together to discuss common challenges and opportunities for growth and reform, joined by leading CEOs and policymakers in the region.

Since then, the start-up scene in the Arab world has continued to evolve. Start-ups are increasingly partnering with large corporations, lobbying governments successfully and securing investment from non-traditional sources, while continuing to tackle regional challenges with regional solutions.

As per the World Economic Forum, there are some key startup trends that we notice in the region. The incumbent businesses are interested to tie-up with start-ups to access their technology and ideas. Businesses are becoming aware that to succeed in the digital age, it is increasingly important to access technology that can give them the edge over competition. It is not always easy to develop technology for established business quickly and therefore they tie-up with startups to access technology quickly.

Governments are also discussing future policies regarding digital trends and start-up policies with entrepreneurs. Young entrepreneurs with fresh ideas and seasoned bureaucrats are working together to define the new policies.  Some of the new initiatives are the Dubai based DTEC which is encouraging startups in UAE, a similar initiative in Egypt, known as the Startups Manifesto, has been gaining traction. Lamsa, an Abu Dhabi-based start-up operating across the region to support the development of Arabic-speaking children, recently partnered with the United Arab Emirates’ Mohammed bin Rashid Innovation Fund. The $550 million fund is an initiative conceived and sponsored by the Ministry of Finance to support local innovators. Apart from these initiatives, there are several other initiatives in different countries in the Middle East that are encouraging start-ups.

Finally, the success of some of the companies like Souq.com and Careem is creating lot of excitement. E-Commerce success of Souq.com has encouraged multiple companies to start-up their venture. A multitude of startups in the E-Commerce domain is laying the foundation of a vibrant start-up culture in the region.

GCC economies are anticipated to lead stronger growth in the region, supported by easing fiscal adjustment, infrastructure investment such as the UAE Expo 2020, and reforms to promote non-oil sector activity. Growth among the GCC countries as a group is forecast to pick up to 2 percent this year from 0.7 percent in the year just ended. This is as per a World Bank Report that was published in January 2018. Definitely start-ups will shape-up the next phase of growth for the region.