Rise and Decline of Tech Investments in UAE during Pandemic

The UAE continues to be one of the top-ranking ICT markets in the Middle East region. The pandemic has only consolidated this position as industry models of businesses and operations resorted to digital capacity and remote working. Businesses across industries in the UAE have been forced to innovate, digitally transform to ensure continuity. The crisis has awakened business executives to prioritize investments in technology like Clouds, AI, IoT, Blockchain, to name a few. As per GlobalData, the ICT spending (investment)in the UAE is expected to grow by US$23bn by 2024. The investment trend picked up while saw some decline, too, during the pandemic. Let’s elaborate on it!

Combating the Virus through Technology

The UAE is considered to have excelled in terms of digital transformation as compared to the rest of the world (Source- ‘Digital Transformation Index 2020 by Dell Technologies). As per the study, a massive 90% of all the organizations in the UAE have fast-tracked a minimum requirement for digital transformation programs. These programs could be completed in few months only that would otherwise take years to complete during normalcy (we are talking about the pandemic time). 85 % of companies in the country have agreed that they reinvented their business model because of the disruption, and that amounts to 6% ahead of companies globally(as they stand at 79%). This can show how the UAE was prioritizing technology investments for sustenance and staying competitive during the pandemic as well!

Growth

1. Healthcare

Digital technologies allowed business continuity in the healthcare industry in the UAE during the pandemic.

The following detail can explain the actual scene:

  • 5 field hospitals were built in Abu Dhabi & Dubai
  • A UAE based Production facility  group invested USD 1 Million for medical kits and masks
  • Thirteen drive-through test facilities were opened
  • Buildings of  Dubai World Trade Hotels were donated as quarantine medical centers
  • Varied clinics, laboratories made bids for a novel testing system to detect COVID-19 at an early stage
  • Healthcare Organizations were provided with financial help/reliefs by banks

2. Finance

As per Dubai Future Foundation’s report, the pandemic served as a significant opportunity for several entities in the private sector to accelerate the process of digitization of their financial services. Ever since the start of lockdowns, there had been a sharp increase in financial apps downloads.  As per data shared by a renowned financial advisory firm,deVere, there was a 72% surge in fintech apps usage throughout the country during the last week of March 2020. The UAE’s first full-service digital bank gained significant traction during the pandemic as its customer acquisition grew by 50%. So, this is an example of how the finance industry increased investments in digital tech apps to sustain and thrive in the difficult COVID times.

3. Retail

In the UAE, there was a sharp rise in consumers’ online shopping spending during the 2020 pandemic. This was hugely driven by the fact that several online shops emerged in the retail sector. As per Mastercard, it was a 21 % of annual leap in the number of online shops, and an added 44 % annual increase in the number of e-commerce trading partners. Digital technologies boosted the e-commerce market and there was a sharp increase in the investments for the same to match consumer online shopping demand.

4. Education

Investments increased for this sector as Edtech, e-learning, started getting traction as a popular medium of learning tool, teaching tool. More focus started on greater adoption of digital tools and technologies like AR/VR, Blockchain, IoT, etc. VR/AR apps influenced the online classroom functionalities while the   AI-ML-based online learning, e-content dominated the education sector in the country during the pandemic. More technology spending was there owing to the rising demand for the online mode of learning/teaching.

DECLINE

1. Food & Beverages

Tech Investment decreased in the F&B( Food & Beverage) industry as it was hugely impacted by the virus. The UAE had to postpone events that directly impacted the very industry. Expo 2020 was postponed to 2021 for October. Significant MICE activities (Meetings, Incentives, Conferences, and Exhibitions) put on hold or postponed. Majority of the F&B outlets which were located in malls closed due to a complete shutdown affecting the industry. HoReCa(Hotel, Restaurant, Cafeteria) which represented 30% of the F&B demand in the UAE, faced an acute crunch during the pandemic. Overall, technology investments stalled in these areas in the wake of the crisis.

2. Real-Estate & Construction

Tech investments in this sector saw a sharp decrease due to the pandemic effect. Many purchasing decisions were canceled despite the falling interest rates and fear of coronavirus. For instance,  Emaar Properties, whose stock price retracted by 48% during the pandemic. Office Spaces reduced as organizations shifted to remote work mode, massive lay-offs were leading to vacating rental spaces adding to lower revenue generation in the sector.

3. Travel & Tourism

The pandemic-led lockdowns led to airline shutdowns, travel was restricted completely and tourism stagnated to the lowest form. Rise in the cases of coronavirus, the UAE government declined tourist visas, canceled booked flights. This led to a sharp decline in tech investment in the sector. The pandemic significantly affected all the tourism sectors viz. airlines, transportation, cruise lines, tourist attractions points, travel agencies and tour operators, online travel companies, etc.

Digital Led the Way

Digital empowerment of specific industries led the way throughout the pandemic in the UAE. The demand for digital healthcare systems like online consultations, healthcare mobile apps, telemedicine, etc, surged. Healthcare businesses increased their tech investments for developing innovative healthcare apps & solutions. Remote work- mode had led to increased investments in teleconferencing and communication software. E-Commerce, online shopping increased while local delivery apps like Talabat, Instashop, Uber Eats, etc. emerged. Digital led the way in times of global crisis.

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