PUBLISHER: Knowledge Sourcing Intelligence | PRODUCT CODE: 1479852
PUBLISHER: Knowledge Sourcing Intelligence | PRODUCT CODE: 1479852
The Middle East and Africa data monetization market is projected to witness a compound annual growth rate (CAGR) of 18.61% to grow to and reach US$16.793 billion by 2029, up from US$5.085 billion in 2022.
The Middle East and African region is poised for a significant surge in demand for data monetization, driven by the escalating adoption of cutting-edge technologies such as the Internet of Things, artificial intelligence, and big data. This trend is further bolstered by the region's increasing embrace of cloud-based solutions, which are becoming indispensable due to the exponential growth in computing needs and data generation.
According to the International Telecommunication Union (ITU), the percentage of individuals using the Internet in Arab states stands at 69%, slightly surpassing the global average of 67%. This underscores the region's growing connectivity and digitalization efforts. Notably, the traditional business landscape in the Middle East has undergone a profound transformation, shifting from sectors like oil, retail, and property towards a greater focus on IT and digital advancements.
Countries in the region are actively striving to maintain a competitive edge in technological innovation, with substantial investments in emerging technologies such as AI (artificial intelligence) and machine learning. For instance, the United Arab Emirates (UAE) has demonstrated its commitment by earmarking investments in AI across nine key sectors and establishing the world's first Ministry of Artificial Intelligence. These initiatives are expected to catalyze growth in the data monetization market.
Moreover, mobile ownership in Arab states surpasses the global average, reaching 82%, compared to 78% worldwide. This heightened mobile penetration underscores the region's readiness for digital transformation. Governments across the Middle East and Africa are proactively driving initiatives to foster their digital economies. For example, Kuwait has embarked on developing its digital economy through the formulation of national-level policies for sectors like e-health and e-government.
Growing demand from the BFSI sector in the region
The growing demand for data monetization from the BFSI sector of the region is one of the prime factors supporting the market growth. BFSI companies are major adopters and investors of data monetization techniques across the region. Middle East is considered one of the world's fastest-growing markets in the banking and capital sector, owing to which there will be a huge demand for data monetization solutions across the region. Factors such as increasing diversity in financial products and services, a better educated and demanding population, growing regulatory requirements for better monitoring of processes and the development of secure financial systems, and increasing investments by banks and financial institutions across the region are projected to have a positive impact on the overall market growth.
Moreover, rising initiatives taken by countries across the region to accelerate innovation in banking with applied AI & analytics strategies will further contribute to the overall market growth. For instance, the government of Dubai is going to conduct the 3rd Middle East Banking AI & Analytics Summit in May 2022, which will help to collaborate 250+ senior-level executives with decision-makers from the banking & financial services sector to move one step forward toward adopting futuristic technologies like Artificial Intelligence, RPA, Machine Learning, Big Data & Analytics.
RUSSIA-UKRAINE WAR IMPACT
The ongoing conflict between Russia and Ukraine is expected to have a nuanced effect on the data monetization market in the Middle East and Africa. The global economic instability caused by the war, coupled with increasing inflation and disruptions in supply chains, may result in reduced investments in emerging technologies, such as data monetization solutions by regional businesses.
Furthermore, heightened geopolitical tensions raise concerns about the risk of cyberattacks, potentially causing businesses to hesitate in initiating data monetization projects due to fears of data breaches amid heightened cyber threats.
However, amidst these challenges, the conflict could underscore the significance of data-driven decision-making for governments and businesses across the region. This heightened awareness may drive greater interest in data monetization tools designed to analyze data and extract valuable insights.
Additionally, the war may present opportunities for data monetization in specific sectors such as agriculture, where data analysis can enhance crop yields and food security, and in healthcare, where data can play a vital role in disease surveillance and outbreak prediction.
Given the potential disruptions in traditional IT infrastructure due to the conflict, businesses may increasingly turn to cloud-based data monetization solutions, offering enhanced flexibility and scalability. It's important to note that the precise impact of these dynamics is likely to vary depending on individual countries and their unique economic and political circumstances.
The Middle East and Africa data monetization market for the solution segment
The use of new technologies in the region is advanced and competitive. Furthermore, the commercialization of AI, IoT technologies, and big data, as well as the need for future improvements to fully utilize these technologies, are expected to increase the penetration of data monetization solutions. For instance, in November 2020, to diversify its oil-based economy, Saudi Arabia launched a multibillion-dollar investment portfolio in artificial intelligence (AI) and data by 2030. The country plans to train 20,000 specialists and experts, launch 300 firms, and attract USD 20 billion in national and international data and AI investment. Moreover, according to the Digital Government Authority of Saudi Arabia, the government spends the most on technology in the world, accounting for 21.7 percent of the overall technology investment. In addition, as per the same source, by 2025, the Saudi government will spend SR93 billion ($24.7 billion) on technology.
The primary drivers of data monetization solutions include increasing internet connectivity, cloud computing, and small and medium businesses. For example, in January 2022, Oracle announced the launch of its first cloud region in Africa, in response to the continent's fast-expanding demand for enterprise cloud services. The Oracle Cloud Johannesburg Region will help organizations improve their performance and drive innovative solutions while also accelerating cloud adoption in Africa. Such developments by major players will aid in the rise in data volumes, which will further aid the demand for this segment during the forecasted period.
Technological advancements in the region are also a major factor responsible for the development of the market. In December 2020, Edgematics announced plans to launch PurpleCube, its newest product to the Middle East market, to become one of the region's first innovative end-to-end data analytics solutions. This solution merges Data Management, Business Intelligence (B.I.), Machine Learning (ML), and Artificial Intelligence (A.I.) all in one pack.
Similarly, the relevance of data monetization solutions in generating new revenue streams from a firm's data volume has increased dramatically, boosting the data monetization market's expansion. For example, in June 2021, Carbon, an AdTech startup responsible for establishing the first Revenue Management Tool for Publishers, teamed with Narratiive, an audience-measuring network for emerging and fast-growing countries. The partnership aimed to bring the most extensive publisher-focused DMP, revenue analytics, and demographic data in a unified solution to MENA and South Africa.
In addition, growing partnerships in the region will also propel market demand for the solutions segment during the projected timeframe. For instance, in January 2021, Bango, the AIM-listed worldwide platform for data-driven commerce, and TPAY formed a strategic relationship. This arrangement established TPAY as Bango's payment and data monetization provider in the Middle East and Africa.
The Middle East and African data monetization market for the BFSI industry
With emerging economic growth, especially in the Middle East and North African region, and a surge in adoption of digital platforms owing to an increase in knowledge and rising internet penetration, the digital BFSI sector has witnessed robust growth over the past decade and is projected to increase digitalization during the forecasted period which is expected to increase data flow and hence create demand for data monetization market. Significant growth in travel and tourism, along with the millennial population's preference for digitalized platforms, has opened new opportunities for the e-BFSI sector, creating a lucrative demand for data monetization in the sector. However, e-threats and a rise in data leaks have the chance of constraining the market to realize its full potential.
With the rise in internet penetration and significant growth in e-knowledge, the Middle East and North African region have witnessed a revolution in their BFSI sector. Online banking and payments are on the surge as the younger generation and tourists in the region are increasing their digital transitions. A survey conducted by one of the leading digital payment card service providers, VISA, in November 2021, revealed that 71% of shoppers in the Middle East region pay using e-platforms. Of these, 54% use contactless cards, while 46% prefer mobile wallets. Furthermore, the survey observed that 61% of online shoppers preferred digital payment through a card or wallet while shopping online.
An increase in digital transitions and digital operations is projected to significantly surge the inflow of data and hence create promising demand for data monetization for channelizing, analysis, and obtaining benefits. With the rise in digitalization and booming data inflow, banks and financial institutions are collaborating with companies to handle the data. Axia, in July 2021, partnered with leading data monetization company, UBDI, to inculcate UBDI data monetization resources in the Axia ecosystem. In December 2021, for instance, SNB Capital, Saudi Arabia's leading investment banking firm, collaborated with BNY Mellon, to inculcate the latter's data platform and IT infrastructure to develop a safe and secure data ecosystem. In February 2022, Saudi Fransi Capital collaborated with Al Moammar Information Systems Co. to establish Saudi's first data center fund, under the initiative undertaken by the Ministry of Communications and Information Technology.
The African BFSI sector is anticipated to grow at a noteworthy rate with economic development and a rise in internet penetration. The North African region, in particular, is expected to witness a data boom with growth in digital banking knowledge, a rise in digital banking, a surge in tourism, and growing penetration of the internet. The increasing partnership between data monetization companies and the BFSI sector is also projected to bring in lucrative demand. A report by Bright Bridges states that of the US$4.9 billion invested in the African BFSI sector in 2021, 62% was channeled towards FinTech.
The UAE data monetization market
The financial services business is undergoing a rapid transformation in the UAE. The region's data monetization industry is being aided by the continuous digitalization of financial services such as banking, insurance, and asset management. Multiple alliances are forming financial ecosystems, for instance, Stripe's entry into the UAE market in 2021, when 13,000 merchants expressed interest in joining their platform for payments and related services. The banking sector's profitability has improved significantly in 2021 with an expected increase in aggregate net income by 48.6% year-over-year. Lower provisioning and increased operating income helped the UAE banks achieve good earnings growth.
Furthermore, the proliferation of innovative technologies such as AI, Blockchain, 5G, and others in areas like financial services, healthcare, manufacturing, and storage is propelling the industry's growth. Moreover, the UAE has become one of the popular investment destinations in the Middle East due to the data center industry in Dubai and Abu Dhabi. Oracle, Alibaba Cloud, Microsoft Azure, and IBM are among the main cloud service providers in the UAE. Du and Wipro unveiled their multi-cloud platform in July 2021, to accelerate digital transformation and cloud adoption across the UAE data monetization market.
Government initiatives will assist amplify the economic impact of data. For instance, the 'Dubai Data Policies' developed by the DDE in partnership with Dubai's Supreme Legislation Committee intends to protect data as a critical component of the city's digital wealth. Further, The UAE stated in September 2021, that it would adopt a new federal data protection law, marking the country's first-ever comprehensive data privacy and protection law. According to this, businesses will be able to monetize personal data if they get user consent.
Dubai's investment in its data ecosystem, due to smart city initiatives, according to the Dubai Data Establishment (DDE), may boost the city's economy by 1.2 percent annually. Smart Dubai's pioneering efforts have piqued international interest. In 2019, IBM announced its plans to construct a data science lab in Dubai where it would organize a Chief Data Officer Summit, and with an AWS Region opening in the first half of 2022, Amazon Web Services is growing in the Middle East, bringing new infrastructure to the United Arab Emirates as the city emerges as a global leader in the data economy. Dubai Pulse, the emirate's city-wide data platform built and administered by Smart Dubai, is attracting an increasing number of private-sector firms. Dubai Pulse is emerging into a decentralized market where the public and private sectors can exchange and monetize their data, based on the safe foundations of Dubai's data legislation.