Double-digit predictions for digitisation in the MENA region are a constant reminder that many of the area’s businesses have a strong appetite for change.
The number of people using smartphone has reached nearly 100% in some Gulf nations – a cultural phenomenon that is having an indirect effect on attitudes of younger executives and government leaders. Having matured in societies where sophisticated digital devices are commonplace, key business figures are tuned into the opportunities for digital technology to link their own trade infrastructures with the rest of the world’s.
Major impetus for this comes from the region’s states ambitious targets to diversify their economies and shift from the historic dependence on oil and gas. Saudi Arabia and Qatar both have Vision 2030 masterplans, while the UAE has Vision 2021. Egypt and Jordan also have digital strategies.
Dubai and the UAE are generally thought to be ahead when it comes to digitisation within MENA, showing interest in smart city technologies, artificial intelligence and semiconductors. In Dubai the aim is for all government transactions, where possible, to be digital by 2020. Saudi Arabia, meanwhile, has positioned digital transformation as one of the Kingdom’s four main objectives in the National Transformation Program.
Digitisation is a real chance for MENA to leap ahead
While these countries’ digital economies remain very small when set against those of the larger G7 countries, in the Gulf states there is no lack of broadband connectivity or ICT talent. They also have some forward-looking regulators in the trade and finance sector who understand the challenges and are backed up by a robust legal system and a willingness to enforce rules.
This digital awareness presents some major opportunities to leap ahead of nations stuck with more conservative practices. By digitising trade transactions and documentation for example, countries can remove the slow, insecure and costly paper-based processes, replacing them with digital documents that take hours instead of days - removing all kinds of paper process problems. Not only do paper processes open up all kinds of problems in relation to fraud and accuracy, they are easily lost and very expensive to administer.
Enthusiasm for real-world solutions is growing
Banks especially seem open to giving customers all the cost-savings of trade digitisation. Hardly surprising when growing wealth has generated increases in imports ranging from materials for massive infrastructure projects to luxury goods, vehicles and appliances.
Saudi British Bank (SABB), for example, is now bringing electronic trade document solutions to corporate clients, slashing transaction times and delivering major benefits to all parties.
SABB’s adoption of a digital platform last year was a first for trade digitisation in the Kingdom and a real trailblazer, since the bank is dominant in trade finance within the Kingdom. All the banks in the MENA area are increasingly adopting an open-minded approach to digitising trade finance and removing time-consuming and error-prone, paper-based processes that are susceptible to fraud.
A real catalyst
The active approach is seen in the number of conversations at events in the region about electronic bills of lading and electronic presentations. We could be on the verge of great change, where the trading operations of banks and corporates in MENA become part of a “network of networks” enjoying all the incredible benefits of integrating operations with the Internet of Things and similar technological developments.
Electronic document presentation has already been adopted as far afield as South America, India and Asia, with organisations such as BHP and Rio Tinto using the technology to accelerate secure and trusted execution of transactions. If these regions can realise all the advantages of a widely-accepted digital trade platform, then it would be very strange indeed for the MENA nations to miss out.
But the pace of change will depend largely on attitudes within governments across the Middle East. Continued organic growth in this region will not be enough to transform it into one of the world’s major digital economies, said consultants McKinsey in 2016: “Unlocking the full potential of digitisation will require comprehensive, concrete, collaborative action – and it must begin immediately.” The time is ripe for all trade transactions to be conducted in the MENA region at the touch of a screen.
Moving to a proven digital trade platform could be one of the first and most significant moves in a wider digital set of initiatives that transforms the entire region.
Ian Kerr is CEO of Bolero International