GCC countries are likely to reap about $23.5 billion in economic benefits by 2030 as investments in generative artificial intelligence continue to grow, a new report has found.
Saudi Arabia and the UAE are set to benefit the most from the growth in the emerging technology, PwC unit Strategy& Middle East said in a report on Thursday.
Saudi Arabia is projected to benefit the most from generative AI's “extraordinary” potential economic impact in the region, underpinned by growing investments in the region, according to the consultancy.
The region could realise about $9.9 of economic growth for every $1 invested into the technology, the pace of which could unlock $23.5 billion per year by 2030, it said.
The kingdom, which has been heavily investing in its technology ecosystem, is projected to reap more than half of that amount, or $12.2 billion.
The UAE, which has also been boosting its initiatives to adopt the latest innovations, has the next biggest potential with $5.3 billion, the report found.
Estimated economic gains for the rest of the GCC countries are $2.6 billion for Qatar, $1.6 billion for Kuwait, $1.3 billion for Oman and $600 million for Bahrain.
“These statistics underline the extraordinary potential of generative AI to revolutionise the Middle East's business landscape,” said Tony Karam, partner at Strategy& Middle East, wrote in the report.
“Executives who seize this opportunity without delay can gain a substantial competitive advantage, while companies that merely watch risk falling behind.”
AI has long been used by businesses in their operations, but it has gained momentum with the advent of generative AI.
The technology – made popular by ChatGPT, created by Microsoft-baked OpenAI – can produce various kinds of data, including audio, code, images, text, simulations, 3D objects and videos.
Investors have put more than $4.2 billion into generative AI start-ups in 2021 and 2022 through 215 deals after interest surged in 2019, recent data from CB Insights showed.
This has prompted countries to tap into its potential. Saudi Arabia and the UAE, the Arab world's biggest economies, have introduced several initiatives to promote the use of technology as they prepare for the future economy.
Companies in the kingdom are moving faster when it comes to adopting cutting-edge technologies compared to their global counterparts, consultancy KPMG said in a recent report.
In the UAE, nearly three in four companies and organisations have either maintained or increased their investment in AI initiatives in recent months, technology company Dataiku said in a report in May.
Major technology companies are also taking notice of the region's potential.
On Thursday, Alphabet-owned Google launched its generative AI platform Bard in Arabic to address the needs of native speakers.
On a global level, the growing adoption of AI technology can help boost economic growth and raise labour productivity, Goldman Sachs said in a previous report.
Widespread AI adoption can eventually grow annual global gross domestic product by 7 per cent in the 10 years after at least half of companies worldwide begin using AI technology, the US bank said.
“Success in generative AI hinges upon talent acquisition … in this global race for talent, establishing robust strategic partnerships is imperative for GCC companies aiming to swiftly deploy experienced talent and capabilities,” Mr Karam said.
“Simultaneously, cultivating an environment that attracts and retains top-tier in-house data science talent is crucial.”
Sector-wise, the GCC's media and entertainment industry is projected to record the biggest transformation as a result of using generative AI, with an estimated economic of $8.5 billion, Strategy& said.
This is followed by health care ($3.8 billion), banking and financial services ($3.5 billion), and IT and telecoms ($2.9 billion).
However, the study cautioned that generative AI is not without its risks and regulatory concerns, including the threat of deepfakes, harmful content and exacerbated economic inequality and bias.
Despite this, the technology’s expected economic impact remains substantial, and organisations must address these challenges to unlock generative AI's full and positive potential.
Executives who seize this opportunity without delay can gain a substantial competitive advantage, while companies that merely watch risk falling behind
Tony Karam,
partner at Strategy& Middle East
On the executive level, chief executives have to collaborate with their chief data, information and technology officers to quickly address any shortcomings in their companies' data capabilities, especially those linked to data governance, Strategy& said.
“Generative AI now signifies a revolutionary force that is poised to redefine the business landscape. Its true potential can help propel organisations to the forefront, endowing early adopters with a formidable competitive advantage,” it said.
UAE currency: the story behind the money in your pockets
Types of fraud
Phishing: Fraudsters send an unsolicited email that appears to be from a financial institution or online retailer. The hoax email requests that you provide sensitive information, often by clicking on to a link leading to a fake website.
Smishing: The SMS equivalent of phishing. Fraudsters falsify the telephone number through “text spoofing,” so that it appears to be a genuine text from the bank.
Vishing: The telephone equivalent of phishing and smishing. Fraudsters may pose as bank staff, police or government officials. They may persuade the consumer to transfer money or divulge personal information.
SIM swap: Fraudsters duplicate the SIM of your mobile number without your knowledge or authorisation, allowing them to conduct financial transactions with your bank.
Identity theft: Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
Prize scams: Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
* Nada El Sawy
What is a black hole?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
BIO
Favourite holiday destination: Turkey - because the government look after animals so well there.
Favourite film: I love scary movies. I have so many favourites but The Ring stands out.
Favourite book: The Lord of the Rings. I didn’t like the movies but I loved the books.
Favourite colour: Black.
Favourite music: Hard rock. I actually also perform as a rock DJ in Dubai.
