With digitalisation and sustainability currently in focus, can nations in the Gulf Cooperation Council (GCC) pivot away from oil and advance their manufacturing sector while adopting digital transformation strategies to keep pace with the rest of the world?
“What would we be able to produce if oil and gas did not exist?” asks Qatar Development Bank CEO Abdulaziz Bin Nasser Al-Khalifa. With the GCC known for its energy and power industries, it may seem difficult to imagine a time when the region is not producing oil for the world.
But with digitalisation and sustainability now in the spotlight, and more countries pledging to achieve net-zero and reduce their reliance on fossil fuels, the GCC must explore other opportunities to ensure that their economies can still thrive even without their lucrative hydrocarbon sector.
How is the GCC digitalising its manufacturing industries?
As the world emerges from the COVID-19 pandemic, economies are rebounding, and countries are seeing recovery in a broad range of sectors. In the GCC – comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates – this recovery can be attributed to positive developments in the hydrocarbon sector, with around 5.9% overall expansion in GCC economies projected in 2022 according to the Spring issue of the World Bank’s Gulf Economic Update report.
However, a greater focus on sustainability in recent years means that oil revenue cannot be expected to continue growing forever. Economic diversification is thus necessary, and there is great potential in the region’s manufacturing industry.
This has been recognised by several nations in the Gulf and the groundwork has already been laid in anticipation of growing more knowledge-based economies, advancing the area’s manufacturing sectors and digitalising industries. Examples include:
- Qatar: Aims to employ over 100,000 people in its manufacturing sector by 2025 under its National Vision 2030 and expects a 30% increase in the value of production between 2019 and 2025.
- Saudi Arabia: In March 2021, the nation launched the Made in Saudi programme – a National Industrial Development and Logistics Program (NIDLP) initiative managed by the Saudi Export Development Authority – to help support the Kingdom of Saudi Arabia in achieving its Vision 2030 objectives.
- Förenade Arabemiraten: Announced plans in March 2021 to increase manufacturing sector contributions from around US$36 billion to over US$81 billion over the next 10 years.
Accelerating digital transformation in the region
While these are steps in the right direction, more aggressive action is needed if the region wants to more quickly diversify its economies, as well as speed up its digital transformation. According to Strategy&’s ‘Energizing the digital economy in the Gulf countries’ insights paper, countries in the GCC are still not able to keep pace with advanced economies due to a lack of sufficient digital talent, innovation and domestically produced digital products and services.
How can the GCC narrow this digital gulf and keep up with the competition? There are three main areas outlined in the Strategy& paper that provide the means to closing this gap.
1) Introduce standardised regulatory framework
While several industries and countries have created different sets of regulatory guidelines and frameworks, the GCC should adopt a set of universal standards to ensure that companies have a unified benchmark they can adhere to.
With a neutral framework like the Smart Industry Readiness Index (SIRI), manufacturers will have an easier time tracking their digital transformation progress and identifying key areas that they can optimise and improve. This will allow them to not just keep their processes and technology up to date, but also help drive innovation for continuous progress.
2) Grow the talent pool to address the skills gap
The world is facing a talent and skills shortage. With the rapid pace of digitalisation that has seen increased adoption of smart technologies like artificial intelligence, machine learning, automation and the Internet of Things (IoT), talent development is paramount to ensure that consistent improvement is maintained.
By providing upskilling opportunities, introducing formal learning from the primary education level, and encouraging digital talent development within underrepresented demographics, the talent pool in the GCC can be grown to meet this surging digital talent demand.
3) Encourage innovation through partnerships and localisation
Sectors and industries can only progress so far if they work in silos. Through greater collaboration and government support, a cohesive technological strategy can be formed which can help steer innovation and digitalisation at the local levels in the right direction.
Technological benchmarks like Smart Industry Readiness Index are critical in this strategisation. In addition, a platform like ManuVate – a collaborative platform developed to accelerate the global momentum of innovations towards Industry 4.0 for manufacturers worldwide – can foster partnerships between businesses of any size and enable solutions to be gestated.
How the GCC is achieving its transformation goals
Nations within the GCC already know what needs to be done to facilitate this shift and drive digital transformation. Through a range of national initiatives, each nation in the GCC has started to make strides towards economic diversification, enabling them to develop their economies more sustainably.
Bahrain
- The Bahrain government’s digital-first policy, Digital Government Strategy 2022, aims to transform its services through digital technologies, while enhancing the digital environment, advancing digital readiness, and encouraging digital usage. It also aims to leverage the power of mature and emerging technologies to transform the Kingdom’s public and private sectors.
Kuwait
- Kuwait has developed Kuwait Vision 2035 to ensure alignment between its national digital development and the UN’s 2030 Agenda for Sustainable Development. In addition, the nation has focused on developing its telecommunications fibre optic networks to create a stable foundation for future IoT systems – a key part of its national vision.
oman
- The aim of Oman’s eOman initiative is to enhance its IT industry and infrastructure to provide its citizens with the necessary knowledge and tools to successfully utilise digital platforms and e-services. It also seeks to improve government services and infrastructure for greater efficiency and security.
Qatar
- As part of Qatar’s Vision 2030 goals, Smart Qatar or TASMU was established to transform Qatar into a smart city by developing the latest digital solutions to increase the standard of living and increase Qatar’s global competitiveness. This is achieved through technology-led initiatives in five sectors: transportation, logistics, healthcare, environment and sports.
saudi-arabien
- Saudi Arabia’s Vision 2030 has led to the creation of several strategic objectives designed to enhance government effectiveness, grow and diversify the economy, and strengthen its national identity. The developments include digital skills training programmes to drive its digital transformation and an industrial transformation programme to help digitalise industry.
UAE
- De Abu Dhabi Economic Vision 2030 was launched in a bid to shift towards a knowledge-based economy and reduce the reliance on the oil industry. Furthermore, the UAE Strategy for Artificial Intelligence aims to make the UAE a leader in AI investments, while the Emirates Blockchain Strategy 2021 focuses on the promotion of blockchain technology development.
Looking ahead to a transformed GCC
Digital transformation has taken centre stage in recent years and countries within the GCC have launched several programmes, initiatives and plans to ensure that they are equipped to thrive in a digital-first future. However, more needs to be done to ensure that the GCC can keep pace with the rest of the world and accelerate its infrastructure and economic diversification to ensure consistent growth and success.
By addressing three main areas – universal frameworks, talent gaps and innovation – and leveraging neutral benchmarks and standards like Smart Industry Readiness Index and collaborative platforms like ManuVate, further progress can be made to steer the GCC towards their respective visions and create stronger digital economies.
Designa en effektiv transformationsresa för framgång
As a champion of manufacturing transformation, the International Centre for Industrial Transformation (INCIT) has both the tools and the reach to provide support to major industries and manufacturers globally, like those in the GCC, as they accelerate their digital transformation efforts.
To find out how you can design your transformation journey with success, kontakta oss for more information. Additionally, learn more about our recent partnership with the Saudi Arabia’s NIDLP här.
