New report says there is an opportunity for GCC governments to develop data sector
The data economy in the GCC is estimated to be worth $4.7 billion, representing 0.3 percent of regional GDP in 2018 and has huge potential for growth, according to a new study.
The report by the Ideation Center, the think tank for Strategy&, part of the PwC network, and INSEAD, the Business School for the World, said that although the data economy is still in its early stages, there is an opportunity for GCC governments to develop the sector.
According to the report, governments can offer incentives to private sector companies, such as infrastructure or solution providers, or data traders that might consider setting up a business in the local markets.
The study added that regional governments could also invest in start-ups that support data democratisation such as encryption solution providers, distributed ledger technologies such as blockchain, data marketplaces, cryptocurrencies, and data analysis and classification solution providers.
Data creates two-fold value as companies can use data to improve internal operations and productivity, or can sell the data they produce, either in raw or analyzed form.
Jad Hajj, partner with Strategy& Middle East said: “A move toward data-driven technologies as artificial Intelligence (AI), will further increase the economic value of data. However, despite the GCC countries producing increasing amounts of data, the economic return remains small.
“We estimate that the GCC data economy is worth $4.7 billion (around 0.3 percent of regional GDP), a smaller proportion than in the European Union, where it is estimated at 1.9 percent of GDP.
“GCC countries have lagged behind because stakeholders lack awareness of the value of their data, and do not sufficiently understand their data’s commercial potential.”
Data consumption in Saudi Arabia is forecast to grow by 28 percent a year between 2018 and 2022, faster than the expected growth rate of 20 percent in the UK and 23 percent in the US. The consumption of data in Saudi Arabia, the region’s largest economy, grew by 35 percent from 2014 to 2018.
According to the Strategy& report, there are five roadblocks hindering the development of a full-fledged data economy, both globally and in the GCC. These are related to ownership, accountability, benefit, privacy, and security.
It said the data economy in the GCC will start realising its full potential when regulators can guarantee that the rights of actors are well protected and actors are compensated fairly, companies identify opportunities and then shift their focus to building their data-driven culture, and individuals become more comfortable sharing their data.
According to the Strategy& 2018 GCC data sentiment survey, users are aware of the value of their data but are unwilling to share too much.
Only 23 percent of GCC respondents would be willing to share more data if they were in control of it. Only 19 percent of respondents would share more data if they were getting paid for it. The same proportion would share more data if they understood better how their data is used.
Alice Klat, director of the Ideation Center, said: “GCC-region countries can reap benefits from the proliferation of data if governments, companies, and individuals alike understand the value of data. Governments will need to build a legal and regulatory environment in which companies and individuals will be willing to share data and participate in building the data economy.”