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22 April 2024

Mena's ICT growth may drop by five per cent

Malek Al Malek (SUPPLIED)

By Staff Writer

A drop in IT spend is expected in 2009 as the Middle East and North Africa (Mena) region begins to adjust to new market conditions, according to an information and communications technology (ICT) study conducted by Madar Research.

While the previous years were marked by unprecedented growth in PC expenditure wherein Arab countries took advantage of high oil prices and overall economic boom to heavily invest in computer technology, the study pointed out that the scenario has since changed, owing partly to the ongoing global financial crisis. The study concluded that the region is likely to experience a five per cent drop in ICT growth in 2009 as it eases its IT expenditure.

In terms of computer penetration, the UAE has maintained the number one position. Led by the UAE, the top five rankings for PC penetration in the Arab World are dominated by GCC countries. Overall, the Mena region achieved a PC penetration rate of 5.95 per cent – while this figure indicates enormous business opportunities and huge market potential, prevailing economic conditions and a widely anticipated drop in overall expenditure will be the primary growth inhibitors of PC adoption.

The study predicts a slight drop in mobile phone penetration, although this particular slowdown is more dependent on the corrections made on population figures in the GCC region.

The effects of the global financial crisis and changes in population statistics notwithstanding, the ICT study emphasised that mobile phone subscription will remain the main driver of the Mena region's steady progress in overall ICT adoption. In particular, the study cited the recent decisions to award second mobile licences in Palestine and Qatar in 2007 and 2008 respectively – effectively liberalising the two remaining monopolies in the Mena's mobile phone sector – as some of the major developments that will create a long-term impact on the region's ICT adoption rate.

Malek Al Malek, Executive Director at Dubai Internet City, member of Tecom Investments and one of the largest information and communication technology (ICT) free zones in the world, told Emirates Business previously: "Technology industries are affected this time by other industries especially the impact from progressive markets like US and Europe. Compared to those countries, the Middle East is witnessing the biggest growth. In IT and ICT market spending, the market has grown in double digit figures. In the next one and half year the growth will continue but will be slow which will come from telecom and infrastructure."

He explained that with most of the global projects being affected the Middle East will see growth coming from Saudi Arabia, UAE and other GCC nations. "This is mainly because most of the projects are carried out by government support and their budgets are the highest."

The report shows the ICT adoption index achieving steady progress in the adoption of ICT solutions.

Abdul Kader Kamli, President & Research Director of Madar Research Group, said: "It is also clear that mobile phone subscriptions have remained the strongest driving force behind the widespread use of ICT tools across the Arab World. The liberalisation of the industry has certainly played a key role in unlocking its enormous growth potential in various countries."

In a related development, new definitions made by the UAE's Telecommunications Regulatory Authority (TRA) for active subscribers may result in a sharp drop in the country's 2008 mobile phone subscriber figures. Both operators previously defined subscribers as any customer who generated revenues in the financial year, but according to the new definitions put out by the TRA, active subscribers are those who make or receive calls, or send SMS or MMS within the past 90 days. As a result, UAE operator Emirates Integrated Telecommunications Company (Du) has revised its 2008 figures, announcing that while its total first quarter subscribers numbered around 1.7 million, its active subscribers numbered only 1.4 million according to the new definitions. The other UAE mobile operator, Emirates Telecommunications Corporation (Etisalat), has not revised its figures but the new definition of active subscribers is expected to be reflected in the company's subscriber figures for 2008.