There’s no denying that economies the world over have taken a hit due to the pandemic. The IMF predicts the global economy is going to contract by 4.9%, leaving us 6.5% points behind where we would have been without the pandemic.
More locally, a 2020 report by Wamda and ArabNet shows that 21.1% of surveyed startups have seen a high decrease in demand due to Covid-19, and 21.9% have had to suspend operations entirely.
As a global hub, Dubai is sensitive to global economic trends. And while economic activity is recovering, it is far from its zenith. But as I’ve said before [link to previous piece], Dubai is a hub that is built on persistence, resilience, and the ability to pivot. There are intrinsic strengths to this city that make it ideally suited to thrive even in adversity.
But what’s the roadmap to get us out of this current economic holding pattern? Where is the next boost to economic activity coming from? First, there’s always Expo 2020. But what next? We need to think of a broader strategy that makes Dubai — and the UAE — hum with activity.
So let’s consider another, longer-term option — one that relies on retooling Dubai as a hub for innovation businesses. This is already happening, but here’s a quick reason why it should accelerate.
First, the public sector, is used to spending to boost the economy. There’s a term for it — an expansionary fiscal policy. Even back in the 30s, US President Franklin Roosevelt created a “New Deal” that prioritised infrastructure spending to dig America out of the Great Depression.
Today, when it comes to Dubai and the UAE, it’s time for a new sort of infrastructure to be built. Not bridges. Not roads. We are already have those.
What we need is digital infrastructure. The roads of tomorrow are information superhighways. We know that the 4thIndustrial Revolution is upon us. It’s disrupting how business is done; and how we live work and play. Just as the steam engine was driving force behind the first industrial revolution, so is (check grammar) digitalization the impetus behind this one.
The UAE already ranks 12th in the world and 1st in the region for digital competitiveness in the IMD World Digital Competitiveness Ranking 2019. And according to an HSBC MENAT report, the country also one of the most advanced digital economies in the region when it comes to digital, with an 18% share of the digital pie.
Regionally, appetite for funding startups is growing too, with the 2018 MENA Venture Investment Report showing a 31% jump in funding over the year before. Earlier in the decade, funding available to tech firms grew 10x in just two years to hit USD 1 billion in 2016. Small wonder then that 2017 was a year of exits, according to an O&C report.
So here’s what we’re seeing. We’re seeing the public sector take the lead in developing the digital infrastructure needed for Industry 4.0. And the private sector is following close behind.
The signs are everywhere. The Dubai Future Foundation been bringing agile innovators in contact with public sector partners to answer crucial challenges. Incubators and accelerators — both public and private — are dotting the environment. And last year, the Ruler of Dubai His Highness Mohammed bin Rashid Al Maktoum, announced the Dubai Future District — an ambitious amalgamation of Dubai’s centres of power and innovation ranging from the DIFC to Emirates Towers and the Trade Centre. Add to this mix Dubai’s Blockchain Strategy, and you realise the foundations for a digital revolution are all there.
So, perhaps, amidst all the pain, Covid-19 is also an opportunity. Now, fomenting a digital revolution, and creating new innovation-led business opportunities, is an absolute imperative. It is a matter of survival, and one that will keep Dubai on the top table for innovation and opportunity long into the future.
An interesting question is which areas will see tech investment. I’m having a think about this, and will come back with Part 2 of this piece talking about that. In the meanwhile, which areas of digital and tech do you think are the most promising, and will see the most investment in the next couple of years?
Prajit Arora is the Managing Director at Sentinel Business Centres.