The UAE is the most attractive Information Technology market in the Middle East and Africa region, thanks to its economic diversification efforts, according to a new Fitch Solutions report.
The UAE, second biggest economy in the Arab world, has scored 68.4 points out of a potential 100 points in a Fitch index.
“The UAE’s IT market remains buoyed by economic diversification efforts mapped out in the country’s Vision 2021 strategy as well as with the demand from the enterprise, retail and construction sectors ahead of Expo 2020 Dubai,” said the report.
Rising oil prices and ongoing economic diversification initiatives, pursued by regional governments, have supported the IT industry growth in MEA.
Of the 12 markets surveyed, Kenya was least attractive market.
The report added despite downward revisions to some markets' industry and country risk scores, the region's IT risk/reward index has remained relatively stable.
Smart city initiatives in the region are attracting huge chunk of IT investments. Technology investments, related to smart city initiatives across MEA, is predicted to reach $2.7 billion in 2022, with Dubai and Riyadh leading the way, according to Massachusetts-based researcher International Data Corporation.
“We remain positive about the market's growth trajectory, albeit from a low base, owing to IT service and hardware demand from public and private investment into sectors including power, energy and utilities,” said the Fitch report.
The report added that ICT is also becoming increasingly important in the state agenda of Egypt - with greater investment into e-government services, as well as the development of technological investment zones that are expected to fuel the demand from public and enterprise segments for computers hardware and IT services.
“However, retail PC demand (in Egypt) will remain muted owing to uptake of smartphones and cannibalisation of use cases,” said the report.
Currently, with overall score of 49.4 points, Egypt is placed in seventh position in the index.
The report also put emphasis on the growing South African market that is emerging as a hub for cloud services with various tech giants including Huawei, Microsoft and Amazon planning to open data centres in the country.
However, the report’s authors adopted a cautious approach when it comes to South Africa, which is ranked sixth in the current index.
“Current developments bode particularly well for the country’s (South Africa’s) IT software and services segment," said the report. "(However,) we would not rule out the potential for more significant changes to occur in upcoming quarters owing to risks from approaching elections and a volatile Rand which may weigh on investor sentiment."