Transport: Technology is solving congestion in the Middle East, but governments and the private sector have a long way to go, writes Mudassir Sheikha, co-founder and CEO of Careem
Two interwoven themes are likely to dominate the business and political landscape of the Middle East through 2019 and beyond. The first is around the well-being of the region’s citizens, and how smart governments will continue to improve and simplify the lives of their people.
While regulation and investment will play huge roles in this improvement, it is technology and collaboration with the region’s tech community which will act as the critical enablers to lifting the Middle East’s fortunes. This second theme, equally as significant, has already begun, and will pick up pace in the year 2019.
In today’s world, the prosperity of any given city largely depends on its ability to drive a technology agenda alongside its social and economic goals. From the environment to education, from healthcare to housing, and from tourism to transportation, technology has a powerful role to play in improving how people live their lives, and ultimately, how economies thrive.
Already, we are witnessing initiatives across the region where government and private sector are coming together to build solutions that elevate the digital capabilities of a country. In the UAE, Careem has just entered a partnership with the Roads and Transport Authority (RTA) to bring technology to the mass transportation network of Dubai. This partnership will improve mobility options for the city’s three million residents, and provide financial efficiencies for the local taxi companies and the 11,000 cars they operate.
Job losses must not hold back the progression of tech in the developing world
But the region still has a long way to go. Until today, much of the Arab world has largely missed out on the transformational impact of the internet revolution. Only 14 percent of people in the region, from Morocco to Pakistan and from Turkey to Sudan, have access to a bank account, according to the World Bank. That’s about 600 million people without the ability to make digital payments or store cash securely.
There are also around 20 million unbanked adults who send or receive domestic remittances using cash or an over-the-counter service. In a study conducted by Careem in collaboration with the Egyptian government, it was found that 40 percent of the Egyptian population does not have access to a proper public transport service. As a result, people in Cairo spend around 50 hours in traffic every month, while 60 percent of trips only have one passenger per car.
This means the annual cost of congestion in Cairo is as much as $8bn. The Egyptian government is acting on this to enable the right regulatory framework for technologies such as e-hailing for buses, in order to improve lives of Cairo’s 20 million people.
What is clear is that change is coming fast, and this presents a massive business and investment opportunity.
By 2020, mobile internet penetration is expected to reach 48 percent, up from 38 percent in 2016. E-commerce in the region, which is currently at just two per cent of all retail sales, is set to grow by 16.4 percent over the next three and a half years, making the market worth around $43bn by 2022, according to Fitch Ratings.
In 2016, a McKinsey report said a unified digital market across the Middle East could contribute up to 3.8 percent annually in GDP, amounting to approximately $95bn. It went on to say that digital technologies can also have a positive impact on inclusion, reduction of poverty, improvement of quality and access to healthcare and education, as well as a cutback in CO2 emissions.
What is critical about this analysis is the role technology is playing in the developing world versus the developed world. Pathways to Prosperity, a commission on technology and development, argues that while job losses dominate the conversation in the developed world, this sentiment must not hold back the progression of technology in the developing world, where technology is a catalyst for positive change.
Rules for the private and public sector need to be established to protect all people
The commission highlights the need for developing countries to play a greater role in the creation of global digital infrastructure and standards, so that the specific nuances of these markets are factored into the mix. With even basic services becoming more and more digitally enabled, from running your bank account to seeing a doctor and taking public transport, it is crucial to address the needs of all people to ensure they are not excluded in this new and digital way of living.
The majority of leaders and governments across the Middle East are very much aware of these issues and opportunities presented by technology. When private sector businesses and governments work collaboratively to advance digital transformation, both parties are able to effect radical change. Today, around three quarters of Careem’s revenue is earned in regulated markets, compared to almost no regulation in 2016. What we are seeing is how leading governments are increasingly coming on board with business partnerships to benefit from the long-term contribution the private sector can make to the prosperity of a city.
So rules for the private and public sector need to be established to protect all people, ensuring tech advancements are inclusive and driven by a purpose to progress society as a whole.