Government ICT spending in MEA to reach $15bn by 2023, IDC says

Digital transformation initiatives will be the main drivers behind this growth in expenditure

MEA governments spent $21m on blockchain technology last year. Reuters

Government spending on information and communication technologies in the Middle East and Africa region will surge at a compound annual growth rate of 4.8 per cent to reach $15 billion (Dh55.05bn) by 2023, up from Dh46.97bn last year, predicted International Data Corporation.

"Governments across the region are under mounting pressure to become both efficient and effective," said Jyoti Lalchandani, IDC's group vice president and regional managing director for the Middle East, Turkey and Africa.

However, this is proving to be a “troublesome task” as many government organisations are simply not prepared for digital redesign, said Mr Lalchandani, adding that whether it's finding ways to integrate “5G, artificial intelligence, and blockchain or protect against intrusions, government agencies have a whole new set of IT skills to learn."

Digital transformation initiatives will be the main drivers behind this expenditure growth, with government spending in this space forecast to grow at a CAGR of 17.6 per cent in the region, found the Massachusetts-based researcher.

With ICT spending touching Dh51.38bn, South Africa is currently the biggest IT market in the region. It is followed by Saudi Arabia (Dh44.77bn) and the UAE (Dh31.19bn).

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Governments throughout the region are also increasingly looking to incorporate various technologies such as blockchain within their digital transformation initiatives. This technology is becoming a powerful government tool for reducing fraud, boosting security and establishing new relationships with citizens.

While MEA governments spent only Dh77.07 million on blockchain last year, IDC expects that figure to cross Dh385.35m in next four years, growing at a CAGR of 49.2 per cent.

Blockchain, the technology also behind cryptocurrencies, is a digital chain of transactions that are linked to each other using cryptography - a mechanism for secure communications - on an open ledger.

Whereas, government spending on AI in the region is forecast to grow at 22.2 per cent annually over the coming years, said IDC.

The UAE is projected to benefit the most in the region from AI adoption. The technology is expected to contribute up to 14 per cent to the country’s gross domestic product – equivalent to Dh352.5bn – by 2030, according to a report by consultancy PwC. The UAE will be followed by Saudi Arabia, where AI is forecast to add 12.4 per cent to GDP.

Investments in AI across MEA will be driven by a wide range of usage, particularly in three cases: automated customer agents; IT automation and automated threat intelligence; and prevention systems, said IDC.