According to a report by KPMG titled “The Rise of Smart Cities – Digital Transformation in the Public Sector,” global smart city spending is set to accelerate from $81 billion during 2018 to $158 billion by 2022. Annual technology spending in the Middle East and Africa (MEA) alone is expected to double from $1.3 billion to $2.7 billion over the next four years.
A separate report issued by Schneider Electric in 2018 found that the Middle East and North Africa (MENA) region— led by countries from the GCC— are spearheading the global smart cities market, which is set to reach $2.6 trillion by 2025.
Cities like Riyadh, Dubai, and Abu Dhabi have jumped on the opportunity to embrace these new developments. The government of Abu Dhabi— with Masdar City— is pushing the UAE to embrace new research. While Dubai has been working since 2017 to become the first Blockchain powered government in the world with the help of the Global Blockchain Council— an initiative created by the Dubai Future Foundation.
In Riyadh, the Saudi government has been moving rapidly to implement Vision 2030 and the National Transformation Program 2020. Going forward, information technology spending in the Kingdom is expected to grow 14 percent each year, according to Samer Abdallah, Head of Digital, KPMG Al Fozan & Partners in Saudi Arabia.
Read here: Riyadh, Dubai top spenders for smart city development in GCC
When it comes to telecommunications, Saudi Arabia is following in the footsteps of the UAE— which has achieved an FTTH (Fiber to the Home) penetration of 93.7 percent. Emirati telco giant Etisalat has already invested about $7.6 billion (AED 28 billion) towards fiber infrastructure. Similarly, two of Saudi Arabia’s leading mobile telecom providers— Zain Saudi and Saudi Telecom Co. (STC) — have inked agreements to extend FTTH broadband services to households and businesses.
Most recently, the Kingdom has become the first country in the Middle East to adopt 5G network services. International companies like Nokia, Huawei, and Ericsson have all signed agreements with STC to launch the new services, which are expected to generate nearly $8 billion by 2030.
Read here: Saudi Arabia’s 5G commercial roll-out to generate $8 bln by 2030
Riyadh has also made strides to formulate a knowledge-based society among its intellectual elites, apart from the business spectrum. This can be seen at King Saud University, for example, where the Riyadh Techno Valley (RTV) project has been built on campus. King Saud University is part of the North-West district of Riyadh, which has been rapidly evolving into a “smart” district, according to a paper titled “Smart City as Urban Innovation: A Case of Riyadh North-West District,” by Abdulaziz N. Aldusari.
The RTV project is slated to play a role in fostering other developments in Riyadh, like King Abdul Aziz City for Science and Technology has in the past, Aldusari noted.
Still, according to a recent report citing the Ministry of Municipal and Rural Affairs, Riyadh has reached only 15 percent of its smart city transformation program.
Aside from the urban areas, Saudi Arabia is looking to the Red Sea to build NEOM — what Saudi officials hope to be the world’s ultimate smart city. The $500 billion project is slated to integrate new technologies to be applied towards mobility, energy, water, food, and biotech. Observers in the Middle East have wondered if NEOM could be the next Silicon Valley.
While the Kingdom has taken crucial steps to adopt ever-evolving technologies, there are still challenges and risks to take into consideration. Riyadh— just like any other city— could benefit greatly from addressing its unique, as well as general concerns that face many smart cities like London, Tokyo, or New York.
Cultural Clash
In most places looking to apply smart city tech, a “cultural clash” usually happens between the private and public sectors. Governments around the world are still operating under bureaucratic regulatory measures, while private enterprises need more legroom when it comes to creative freedom. Not only that, but the core infrastructure of the city needs to be well-understood by tech companies and vendors. This means that the state must do its part to communicate this well to the private enterprises. Aside from the cultural clash between the private and public sector, governments looking to adopt smart technologies also face the challenge of gaining confidence of citizens, who must also be educated on the benefits of embracing smart solutions.
Digital Security
Effective cyber-security measures have become increasingly crucial for the development and stability of any country or region. Saudi Arabia and the wider GCC have witnessed a growing frequency of cyber threats in recent years that have had damaging consequences. Government entities and companies including oil giant Saudi Aramco, the Kingdom’s Human Resources Development Fund (HADAF), and the General Authority for Civil Aviation have all been victims of these cyber-attacks. The Saudi government in 2017 set up the National Cyber Security Authority through a royal decree issued by King Salman, and strongly backed by Crown Prince Mohammed bin Salman. As a relatively new institution, it will have to address the Kingdom’s cyber security problems, and essentially build new platforms in a somewhat unchartered territory.
Finding Talent
In this regard, there are challenges very unique to Riyadh, different than those faced by its neighbors in Dubai. In the last few years, the recruiting industry in Saudi Arabia has witnessed growth. However, companies and government agencies are now required to meet Saudization requirements or face penalties, due to the unemployment rate among Saudi nationals. This, of course, comes as a challenge for a country that has heavily relied on foreign talent and labor for decades. The tricky task now in Saudi Arabia is to strike a balance between education outcomes in the Kingdom, as well as private sector needs. However, it could take years before the education and training programs already launched in the Kingdom to catch up with the tech sector’s need for professionals. The Kingdom already has a young-tech savvy population, but the challenge will be utilizing and placing that talent in the right place.
Read here: Mobily penalized for violating Saudization requirements
Policies and Politics
In October 2018, during an interview with Bloomberg, Crown Prince Mohammed bin Salman addressed the issues of policy and lifestyle inside the Kingdom. He mentioned that he was looking for a non-Saudi CEO to run a new foundation, but was having trouble because “the quality of life and the lifestyle is not good,” he said. Crown Prince Mohammed added that the Kingdom needs the “best standard as soon as possible” so that people can work and build. Going forward, the success of Saudi Vision 2030 will be heavily reliant on socio-political stability and overall reforms— and the Crown Prince has made that very clear in the past. Technological and economic development in any country goes hand-in-hand with social development.
Smart Infrastructure
While the urban challenges faced by Riyadh provide diverse investment opportunities, they also pose challenges for a city looking to go smart. Implementing the right digital solutions in a city requires persistence and vision. Vision 2030 is on the horizon, and the reform plan aims to have at least three Saudi cities recognized in the top-ranked 100 cities around the world. In the long-term, smart city infrastructure technologies can enable efficiency and cost reduction. This includes easing traffic congestion and improving safety. But such technologies require new networking infrastructure due to the volume and speed of data. This is only the beginning of the tech revolution that Saudi Arabia is undergoing, and many obstacles can be expected. However, if the Kingdom maintains its vision for economic and social reforms, it can ensure a path to success with innovation and technology.
Reem Abdellatif is the editor in chief of Argaam Plus. You can finder her on Twitter: @Reem_Abdellatif
Write to Reem Abdellatif at reem.a@argaam.com
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