Internet connectivity could add $380b to Middle East economies

Dubai: The Middle East could add $380 billion to its regional economic output by 2020 if it can find a way to bring more than 200 million unconnected (62 per cent of the regional population) online.

The current internet penetration rate (people who have access to the internet) in the Middle East is put at 38 per cent. The global average is 44 per cent.

To bring the rest of the world online, Bahjat Al Darwiche, Partner at Strategy&, told Gulf News that internet access has to be easier and cheaper, it should provide people with reasons to go online, and support people as they discover the internet and use it for the first time.

According to a study conducted by Strategy& on behalf of Facebook, global internet growth is slowing down despite the ongoing digital revolution and the number of new internet subscribers has grown in single digits since 2013. The slowdown stems from barriers to internet access that is created by deficiencies in the critical markets that deliver a meaningful internet experience.

“Internet is a major driver of growth and creator of new, high value jobs around the world, which makes digital inclusion a powerful tool for development and poverty reduction,” Al Darwiche said.

Rawia Abdul Samad, the director of the Ideation Centre at Strategy& in the Middle East, said that the Internet’s truly revolutionary potential will only be unleashed when the remaining 56 per cent of the world’s population is also connected.

With global internet inclusion, she said that there could be five internet users in developing markets for every user in developed markets. The current ratio is two to one.

“These new users will seek more content related to work, economic opportunity, and social needs. Data hungry content, such as entertainment, will likely be downloaded from WiFi hotspots or through other technologies and consumed offline,” she said.

Rawia said that every 10 per cent increase in internet penetration results in 0.53 per cent increase in GDP per capita. Affordability remains the “main barrier” for accessing the internet for countries in the Levant and North Africa. In the GCC, affordability is not an issue but relevant content is an issue, especially for blue-collar workers in their primary language.

Affordability is measure by whether a user can afford to pay five per cent of their income for internet access.

He said that internet growth can be encouraged by solving structural challenges in the three key markets that enable the internet:

• The market for connectivity needs to modernise the technology base by replacing 2G with 3G or 4G/LTE investment to extend higher capacity cellular coverage that can handle larger data volumes and provide users with a high quality experience. Retail internet prices also need to fall nearly 70 per cent to make the internet affordable to 80 per cent of the population.

•The market for content needs to foster local content systems in developing countries to create relevant and compelling material that will bring people online. In particular, content must provide people with economic opportunity, such as to enhance their income.

•The retail market must adopt new consultative sales approaches; brand subsidised access, and simpler value propositions to reach the poorest customers.

“Energising these three markets can remove the existing barriers to internet adoption and reignite internet growth in the developing world,” he said.

Andrew Bocking, product manager for Internet.org at Facebook, said that energising these three markets can remove the existing barriers to internet adoption and reignite internet growth in the developing world.

“We need to find new approaches in the markets for connectivity, content, and retail if we are to harness the power of the internet for development and poverty reduction” he said.