December 29, 2019

Mobile's Contribution in the MENA Region Will Reach Just Over $220 Billion by 2023

"5G services have become a reality in the Middle East and North Africa (MENA) region," notes a report authored by GSMA Intelligence, the research arm of the GSMA, a UK-based trade organization. "As of October 2019, 10 operators had launched commercial 5G services in five GCC Arab States. Mobile operators in these countries are aiming to be global leaders in 5G deployments, while certain governments view the technology as a potential enabler for their digital transformation ambitions."

The report, The Mobile Economy: Middle East and North Africa 2019, further says, "The 2020s will see 5G activities become more widespread across the region, with trials and commercial launches expected in non-GCC countries. By 2025, there will be 45 million 5G connections across the region, accounting for 6% of total mobile connections."

While subscriber growth is slowing, mobile internet adoption continues to rise rapidly. "The MENA region has some of the most penetrated mobile markets in the world," the report explains. "By the end of 2018, nearly half of the 25 countries in the region had unique subscriber penetration rates of 70% or more. For context, the global average at the end of the same period was 66%. In the more mature markets of the region, subscriber growth has slowed to below 2% annually. However, there are still significant growth opportunities in frontier markets in the region, where subscriber penetration rates remain below 50%. On average, the region will record a CAGR of 2.7% between 2018 and 2025."

On the topic of mobile contributing to economic growth and addressing social challenges, the report says, "In 2018, mobile technologies and services generated 4.5% of GDP in the MENA region – a contribution that amounted to $191 billion of economic value added. The mobile ecosystem also supported 1 million jobs (directly and indirectly) and made a substantial contribution to the funding of the public sector, with just over $18 billion raised through taxation. By 2023, mobile's contribution will reach just over $220 billion as countries increasingly benefit from the improvements in productivity and efficiency brought about by the increased take-up of mobile services."

The report's fourth and final chapter addresses how data privacy and governance take center stage in an expanding digital ecosystem. I concur with the assertion that "[f]or the digital economy to achieve its full potential, consumers must trust the online environment." The report adds: "As of 2019, more than 130 countries have enacted privacy and data protection laws. This number continues to grow, including across the MENA region."

What is more, "The European data protection regime, underpinned by the EU General Data Protection Regulation (GDPR) and its precursor – the EU 1995 Data Protection Directive, influenced the development of analogous legal frameworks around the world, including some countries in the MENA region. However, in most MENA jurisdictions, the protection of privacy and safeguarding of personal data is provided under general provisions of law rather than specific data privacy or data protection laws."

In addition to 5G, the report also addresses two additional trends shaping the digital landscape: cashless payments and blockchain. Regarding the former, citing the World Bank's 2017 Global Findex, the report asserts: "Cash is still the dominant form of payment across MENA, despite nearly 60% of adults owning a bank account. But this is changing rapidly, helped by growing innovation and investment in digital payment platforms as well as government policies to stimulate cashless payments. For example, Saudi Arabia has set an e-payment target of 70% by 2030, from just 18% in 2016, as part of the government's Vision 2030 reform plan. In Egypt, the government signed a law in April 2019 mandating the use of cashless payment by public and private entities."

As for the latter, "Distributed ledger technologies (DLTs) – including the most prominent example, blockchain – originated around the same time as bitcoin in the late 2000s, but are now being explored for financial, enterprise and public administration applications around the world. The MENA region is no different, with the growing application of DLTs across verticals and public sector services."

The report importantly mentions that the "GCC countries are global leaders in the international money transfer market due to the large expatriate population across the region. Saudi Arabia and the UAE are the world's largest outbound remittance markets; the UAE Central Bank reported that remittances from the country grew 3% in 2018 to total $46 billion. Blockchain has emerged as a key technology to facilitate international remittances."

Infographic: GSMA Intelligence

What mobile services or platforms is your business developing or utilizing in the MENA region?

Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.

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