After three years of decreased spending on information and communications technology (ICT) in the Middle East, Turkey and Africa, more money is expected to pour into the sector in 2019 signaling a modest recovery and a renewed push for digital transformation, according to a new report.
"ICT and telco services [spending] contracted by around 2 per cent in 2018 … however, this year, we are expecting a year-on-year recovery by about 2.5 per cent” to $213 billion, said Jyoti Lalchandani, group vice president and regional managing director, META region, at Massachusetts-based researcher International Data Corporation (IDC), which issued its forecast on Wednesday.
IDC noted several regional headwinds – currency fluctuations, weak consumer demand and political uncertainties - are impacting the amount of spending on technology infrastructure in the region.
“META is going through currency fluctuations in different markets, we had it in Egypt in 2017 and it was followed in Turkey last year. Now we have elections coming up in Nigeria, South Africa and local votes in Turkey, adding more to the uncertainties in the market,” said Mr Lalchandani. Weaker consumer demand has adversely impacted spending on devices such as smartphones in particular, he added.
Estimates for 2019 are still hovering around 2016 levels and less than a peak in 2015 of $221bn.
In the region, telco services, like telephone lines and wireless signals, constitute 60 per cent of overall ICT spending with the remainder going to IT - including both hardware and software.
South Africa, which is expected to spend $14.7bn alone on IT services, will be the biggest spender in this segment in Meta, followed by Saudi Arabia ($11bn), Turkey ($8.3bn) and the UAE ($8bn).
“Growth will come in infrastructure (servers, storage and networks), services and software segments. Whereas hardware spending will continue experiencing contraction in 2019,” said Mr Lalchandani.
“Many factors like softer consumer demand, introduction of VAT and (fluctuating) disposable incomes has affected IT hardware spending.”
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One of the key drivers for ICT spending in Meta will be digital transformation initiatives to bring business and government initiatives online, with spending expected to surpass $25bn, up from nearly $20bn last year.
Saudi Arabia, the Arab world’s largest economy, will spend 1 per cent more reaching $34.5bn in 2019. Some of the major growth drivers are the adoption of new technology and government-driven initiatives like Vision 2030 and the Neom smart city mega-project.
“Global data vendors are investing in expanding data centre capacity in and around Saudi Arabia. We are also seeing IoT (Internet of Things) becoming more and more pertinent and this trend will continue in 2019,” said Hamza Naqshbandi, country manager for IDC Saudi Arabia.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
Abu Dhabi GP Saturday schedule
12.30pm GP3 race (18 laps)
2pm Formula One final practice
5pm Formula One qualifying
6.40pm Formula 2 race (31 laps)
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
The specs
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Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
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COMPANY%20PROFILE
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LAST-16 EUROPA LEAGUE FIXTURES
Wednesday (Kick-offs UAE)
FC Copenhagen (0) v Istanbul Basaksehir (1) 8.55pm
Shakhtar Donetsk (2) v Wolfsburg (1) 8.55pm
Inter Milan v Getafe (one leg only) 11pm
Manchester United (5) v LASK (0) 11pm
Thursday
Bayer Leverkusen (3) v Rangers (1) 8.55pm
Sevilla v Roma (one leg only) 8.55pm
FC Basel (3) v Eintracht Frankfurt (0) 11pm
Wolves (1) Olympiakos (1) 11pm
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Cracks in the Wall
Ben White, Pluto Press
Brief scores:
Liverpool 3
Mane 24', Shaqiri 73', 80'
Manchester United 1
Lingard 33'
Man of the Match: Fabinho (Liverpool)
