How AI can become the new oil and gas for the Gulf

TaxGPT, the world’s first AI-powered corporate tax assistant, is helping UAE-based businesses. Photo: Virtuzone

Jensen Huang, founder and chief executive of Nvidia, declared that AI has hit a tipping point as the chip designer reported record sales on Tuesday. “Demand is surging worldwide across companies, industries and nations,” he said.

Mr Huang has advocated an approach wherein each country develops its own AI infrastructure as part of a strategy that ensures that data can only be extracted locally. At the World Governments Summit in Dubai last week, he described this as AI sovereignty.

You could argue that this narrative suits his business ambitions to sell as many microchips that power AI as possible. He almost said as much when he highlighted that “Nvidia GPU is the only platform that’s available to everybody on any platform”.

It may be a great sales pitch, but his perspective might also be vital for the ambitions of Gulf economies such as the UAE and Saudi Arabia, which are keen to be at the forefront of this technology.

PwC agrees with Mr Huang about this being a watershed, with the development of generative AI, in particular, expected to transform businesses and society. As a result of this expectation, at least according to PwC, the GCC countries are investing in research and development initiatives focused on advancing AI. “Saudi Arabia, the UAE and Qatar are leading the drive towards new technologies that align with the objectives of their respective transformation agendas,” it has said.

Peng Xiao, group chief executive of G42, and Sam Altman, co-founder of OpenAI. The two companies are collaborating in the AI space. Photo: G42

Much will need to be worked out, of course, especially related to the legal and intellectual property landscapes

It cited examples such as the UAE’s G42, which is working with OpenAI to deliver AI solutions and has been developing the world’s first high-quality Arabic large language model. Also, the Technology Innovation Institute in Abu Dhabi is investing heavily into its own Falcon LLM. In Saudi Arabia, a GenAI accelerator has been created to invest in early-stage GenAI start-ups, and Invest Qatar has partnered with Microsoft Azure to develop an AI assistant called Ai.SHA.

PwC’s analysis forecasts that various sectors in the region ranging from health care to finance to media and technology sectors will be most affected by AI in the coming year. This includes workforce transformation through training people on how to use GenAI tech and further automation. Imagine employees being “significantly augmented, particularly in areas requiring creativity and data analysis”, as PwC says. Also, in customer service, “GenAI can revolutionise the sector by providing automated, yet personalised assistance”.

Much will need to be worked out, of course, especially related to the legal and intellectual property landscapes. Governments and regulators will need to be nimble and responsive to new risks that emerge as well as nurture opportunities. How consumer data is protected and used is of paramount concern.

For now, this region’s spending on AI is relatively small in global terms but this will change. IDC, the global market intelligence firm, has forecast that AI spending in Middle East and Africa will increase at a compound annual growth rate of 29.7 per cent over the 2022-2026 period, reaching $6.4 billion – the fastest rate of growth in the world. OpenAI chief executive Sam Altman is reportedly seeking between $5 trillion to $7 trillion for AI chip manufacturing. The funding seeks to address the scarcity of graphics processing units.

The launch of Edge in 2019. The UAE's defence industry is much advanced today. Pawan Singh / The National

However, there is an interesting parallel to be drawn from another industry, that of defence, which offers lessons and perspectives that could benefit the development of AI in the Gulf.

According to Strategy&, Gulf countries spend more than $130 billion each year on defence, with a little less than a third of that on procurement and services. At about 7.9 per cent of global spending, the GCC accounts for more than the budgets of the UK, France and Italy combined. But also – according to Deloitte – the historic dependence on defence imports with “black box” technology has meant that GCC countries do not hold the intellectual property behind them.

The consequences of this are instructive for any future investment in AI and how to ensure that the same doesn’t occur – that is, restrictions in the ability to develop and exploit knowledge locally and to potentially commercialise to other parts of the world.

The UAE, for example, has in recent years built a track record for locally manufactured defence equipment. Pushing this ambition into AI would act as a catalyst for advancement across the economy. For instance, could Gulf countries use their investments in AI to put them down a path where they design their own chips for AI?

To ensure that there is a virtuous circle to deliver on such ambitions, perhaps it would be worth exploring if some aspects of the offset fund concept – where foreign defence companies invest locally – could be replicated for AI.

A successful Gulf model for this new era could be the standard bearer for the West. In the future, they might even be importing AI-related tech as easily as they buy oil and gas from this region.