A report published by one of the four biggest accounting firms in the world has highlighted the Middle East’s leadership in embracing and adopting artificial intelligence.
In its monthly Middle East Economy Watch report, PricewaterhouseCoopers (PwC) said proactive government initiatives and a strong ICT infrastructure have made the GCC “a hub for AI innovation, positioning the Middle East to benefit from enhanced efficiency and growth”.
“A combination of robust ICT infrastructure, strategic government leadership and capital have come together to make the GCC an attractive destination for CEOs of leading AI firms. The region is also well positioned to reap some of the economic benefits of AI, enhancing efficiency and driving innovation across various sectors,” the report added.
It added that experts believe that the UAE could emerge as the third most important country for AI, following the United States and China.
PwC said that despite several bold projections, assessing AI’s likely future economic impact in the region is difficult. However, there is good reason to believe that it could surpass previous technological developments.
Five key factors
The PwC report pointed out five main reasons why the Middle East was getting ahead of the curve.
Abundant investment capital: The region has significant capital for investment, particularly through its sovereign wealth funds, family offices and venture funds, and has a track record of investing in technology at home and abroad.
World-class ICT infrastructure: Even before AI became a priority, the GCC states already had some of the best ICT infrastructure in the world, including the fastest internet connections and extensive data centre capacity.
Embracing new technologies: By leveraging AI, businesses in the Middle East have automated time-consuming and labour-intensive tasks. In PwC’s 27th Annual CEO survey, 73 per cent of CEOs in the Middle East were keen to embrace new technologies and recognise that technologies such as GenAI will change the way businesses create, deliver, and capture value over the next three years.
International relationships: The GCC states have strong links with countries and companies that are central to the AI revolution, such as Microsoft, Oracle and Amazon. Countries like the UAE have offered incentives and access to its rapidly advancing AI-powered infrastructure.
Proactive government initiatives: Governments recognised the potential of AI early on. The UAE launched a national AI strategy in 2017 and appointed 27-year-old Omar Bin Sultan Al Olama as the world’s first minister for AI that year. Other Gulf states have now introduced their own AI strategies and invested in educational institutions, such as the Qatar Centre for Artificial Intelligence.
Partnerships with US AI firms
Abu Dhabi’s MGX taking part in the OpenAI’s latest record funding round of $6.6 billion is yet another example of how GCC companies are investing in the sector. MGX was formed earlier this year by Mubadala and G42 with the specific objective of investing $100 billion in AI-related businesses. There have also been recent reports that the company is in talks with Samsung and TSMC to build a chip-manufacturing facility in the UAE.
But even before AI became the buzzword, GCC companies had established strong relationships with major US tech companies, such as Google, Microsoft, and Amazon, to deliver cloud computing data centres. This provided the basis for cooperation in AI.
In October last year, G42 signed an agreement to partner with OpenAI to deliver cutting-edge AI solutions in the UAE and regional markets.
Qatar’s Ooredoo recently announced a partnership with Nvidia to roll out its AI technology across its data centres in Qatar, Kuwait and Oman. Saudi Arabia’s Alat has a focus on sectors including AI infrastructure and semiconductors. This year, Mubadala bought a 3 per cent stake for $500 million in Anthropic, a leading GenAI firm.
It’s been a two-way street with the US companies. In April this year, Microsoft said it would invest $1.5 billion in G42, which also received $800 million by US private equity firm Silver Lake in 2021.
UAE’s ADNOC estimated that its use of AI tools improved its efficiency in ways that saved $500 million in 2023 and reduced its carbon emissions. Kuwait Oil Company has developed AI tools with IBM to enhance its reservoir management, reducing operational downtime.
While many GCC companies have reported savings through AI deployment, the countries are also working on developing their own GenAI tools.
Jais in the UAE (developed by G42) and Bayan by the Saudi Data and AI Authority are some of the GenAI tools developed at home using Arabic large language models. Abu Dhabi-based Technology Innovation Institute launched a second iteration of its large language model Falcon 2. Tested against several prominent AI models in its class, Falcon 2 surpasses the performance of Meta’s Llama 3 with eight billion parameters.Abu Dhabi’s MGX taking part in the OpenAI’s latest record funding round of $6.6 billion
The future
Looking ahead, PwC said: “The GCC will continue to play a leading role in the global AI landscape, driven by concerted investments and strategic initiatives.
“The national visions of regional governments are driving the region’s efforts towards AI research, attracting global investment, while governments are also fostering an environment where startups and tech companies can thrive.
“Sovereign wealth funds are also likely to contribute substantial capital to invest in building AI infrastructure, including chip manufacturing and data centres.
“However, as data continues to drive innovation, efficiency, and competitiveness, organisations must be mindful of scalability constraints, a shortage of skilled professionals, and concerns around energy sustainability.”
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