Four steps the Mena region must take to develop intelligent economies

A general view of Riyadh, Saudi Arabia. Reuters

The Mena region faces multiple challenges, from conflict to economic woes, humanitarian problems and mounting climate-related issues, all of which are exacerbated by a lack of cohesiveness. As the World Economic Forum’s forthcoming Special Meeting on Global Collaboration, Growth and Energy for Development in Riyadh highlights, not only must the region navigate this context, but also prepare for an emerging economic era, which could be called the “age of intelligent economies”. The idea behind intelligent economies is to have multiple intelligence systems – like artificial intelligence (AI), 5G and the internet of things (IoT) – working together, a situation that is more likely to result in far greater gains and innovations. Currently, however, these technologies are developing in isolation.

AI, particularly generative AI, is receiving a lot of attention, after leaping to the forefront of the wider consciousness during 2023 through apps like ChatGPT. These models are expected to develop to the point where they significantly boost productivity and growth, empower individuals and address major social challenges. Although the region’s take-up of the tools of the intelligent economy is, like much of the rest of the world, lacking uniformity and a coherent strategy, this hasn’t dampened prospects for parts of the region – growth figures for AI have the potential to reach $320 billion by 2030 – and notably, Saudi Arabia, in March, pledged a $40 billion AI investment fund.

The region is already using AI to address specific problems, including its rapidly dwindling supply of potable water. Growing water scarcity is a well-documented problem and it is estimated that by 2050, Mena will need an extra 25 billion cubic metres of water annually. This equates to 65 desalination plants the size of the world’s largest, Saudi Arabia’s Ras Al Khair plant. Currently, AI is being used to make the desalination process more cost effective and energy efficient. In time, it is envisaged that AI will optimise the process, reduce its environmental impact and help detect potential infrastructure vulnerabilities.

As real-world applications multiply for intelligent economy technologies, it is feared that their access and take-up, along with development and growth, will be uneven. For this region, looking at the issue and pace of digital transformation, attention is mainly focused on the Gulf. There has, for example, been significant investment in data centres in these countries since 2022, creating large-scale projects worth hundreds of millions of dollars.

Gulf states are also publishing plans for how modernise public services through technology. They are also producing measures to promote the growth of the ICT sector, supporting 5G adoption, enhancing the accessibility of digital services to their citizens and enacting accompanying legislation, particularly in data and cybersecurity. This activity isn’t mirrored in the poorer states.

To take full advantage of the benefits of intelligent economies, the region must pursue four key shifts. The first of these is to play to its strengths. Mena has a massive advantage in having cheap electricity and abundant, unused land, both of which are key inputs for data centres. It should more swiftly green its energy supply, which would in turn compound its natural advantages, resulting in a more sustainable, lower-cost energy market.

In terms of policy changes and underscoring its strong relations with countries and blocs as diverse as China, Europe and the US, this region would be well positioned to offer to both “greenshore” and “friendshore” critical industries, such as certain types of semiconductors. To support this transition, it should replace fossil fuel subsidies. The region has made progress in this area, according to the Forum’s Energy Transition Index 2023, but continues to spend $500 billion to $600 billion a year, money that could be better spent on social security or intelligent economy investment.

Secondly, the Mena region needs to pursue more initiatives that will support the push to make AI work in an inclusive and non-biased way. Currently, just 0.7% of the top content for large language learning (LLMs) models is in Arabic. In May last year, Abu Dhabi made its AI model, Falcon 40B, open source; in July 2023, Jais, the first LLM to support Arabic, was released; and in March this year, Saudi developers released Mulhem, an LLM trained exclusively using Saudi data sets. Mena is ideally placed – in terms of technological know-how and influence – to pursue this further.

This type of activity is ripe for public-private partnerships, as are the changes to facilitate intelligent economies more widely. This is an important third point and will require a significant shift in thinking. The changes that are under way are too large to be handled solely by the public sphere. The private sector needs to be a partner in this transformation, and in doing so, create a strong competitive advantage on the new-look global stage. In this regard, the recent announcement that Microsoft is investing $1.5 billion in Abu Dhabi’s AI group, G42, marks a step in the right direction.

A fourth important area is integration. Mena is one of the world’s least integrated regions with just 18% of intra-regional trade. Scale matters and the larger the market, the more attractive the region will become to investors. Mena operating as a region, rather than piecemeal, makes it more likely it can develop technologies that suit its needs. Its oil-rich states have the capital and talent to develop this type of policy, but it needs to extend this regionwide.

Integration would spread gains more equally throughout the region to support nascent strides that are made in countries like Morocco and Tunisia. The former recently inaugurated the Moroccan International Centre for Artificial Intelligence, aiming to transform the nation into a regional AI hub, while the Tunisian AI and tech sectors have made remarkable leaps; notably, German-based company BioNTech has acquired InstaDeep for $550m.

It is clear that intelligent economies potentially offer Mena a means to address some of its most pressing challenges. This potential can be realised if technologies are developed holistically and the region works together. Failing to do so threatens to exacerbate existing problems and scuttle wider progress. That’s why meetings like the one in Riyadh are ever-more important, providing an opportunity to harness dialogue and cooperation for the most pressing and contentious frontier technology challenges and opportunities.