IT / AI

As part of the UAE’s efforts to establish a competitive knowledge economy, it has invested heavily in creating a world-leading regulatory framework for IT / AI ventures, as well as providing infrastructure to build the best possible tech-investment ecosystem for start-ups, SMEs, and multinational corporations.

Artificial Intelligence is the next major revolution of our times – our goal is to the one of the most advanced countries in this regard.

HH Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai

99% internet usage

almost the entire population is connected

USD 96 billion

AI's expected contribution to the UAE’s economy by 2030

14% of GDP

will be linked to AI related industries by 2030

10th in IT FDI

ranking by capex, from 2011 to 2020

USD 73 million

in AI investments in 2020

2nd in ICT adoption

ranking in the Global Competitiveness Index 2020

7th globally

rank according to the Telecommunication Infrastructure Index 2020

23% annual growth

in predicted e-commerce sales until 2022

In 2017, the UAE released its Strategy for Artificial Intelligence, which sought to integrate technology into various industries in novel ways, whilst also ensuring that the government could provide tailored regulations to these emerging industries. As part of the Strategy, the UAE has established a number of regulatory ‘sandboxes,’ which have been developed for companies to test their products and businesses, while allowing regulators the opportunity to assess their legal regulatory framework in a controlled environment with relatively relaxed rules.

The success of these ‘sandboxes’ is indicative of the broader investment framework which feeds into an established start-up ecosystem, which includes various programs, accelerators, incubators, and start-up competitions. This ecosystem has given the UAE an edge over regional competitors, with many start-up incubators offering funding, guidance and mentorship, access to industry experts, residence visas, office space, as well as platforms to advertise to potential clients and investors. Incubators such as the Futurism Program, AIM Startup, and StartAD, have all seen early success in producing startups. Applications for such incubation and acceleration programs are open to start-ups from all over the world, as long as they offer innovative ideas.

Success has not been confined to early-stage startups. E-commerce ventures in the country have performed particularly well due to high rates of smart phone penetration, cashless payment adoption, and the country’s highly developed logistics infrastructure and distribution network. Investment successes include UAE-based e-commerce platform Noon, which in 2016 raised USD 1 billion in funding through a joint venture between its founder and Emaar Chairman, Mohamed Alabbar, the Public Investment Fund of Saudi Arabia, and a number of other private investors. Noon has been the best funded start-up in the UAE since 2016. Additionally, in 2017, Amazon acquired UAE-based e-commerce website Souq.com for USD 580 million.

With an impressive track record of both home-grown and international success in the fields of IT and AI, the opportunities are only increasing as the UAE and emirate-level authorities pursue technology-based visions.

What You Need to Know

  • According to the 2021 Sustainable Development Report, 99.15 percent of the UAE’s population uses the internet.
  • Demand prospects of AI and Blockchain technologies are high in the UAE as emirate-level governments implement various strategies for their development and integration.
  • AI spending in the MENA region is expected to grow almost 43 percent per year, as private investments in AI-projects increase.
  • PwC projects that AI will contribute USD 96 billion to the UAE’s economy in 2030, the second highest in the region after Saudi Arabia. Additionally, the UAE economy will experience the largest impact from AI in the region, with a contribution of up to 13.6 percent of GDP.
  • The UAE is the region’s leading recipient of IT FDI, and is currently ranked 10th in the world in terms of IT sector inward FDI by capex, and by number of foreign companies investing in the sector (2011-2020).
  • A majority of the UAE’s inward FDI in the IT sector has been directed towards Dubai (USD 4.4 billion), followed by Abu Dhabi (USD 922 million) and Sharjah (USD 149 million), and USD 432 million to other emirates.
  • According to the UN E-Government Development Index, the UAE was ranked seventh in Telecommunications Infrastructure, and Dubai was ranked sixth in Local Online Services.
  • In 2020, UAE-based start-ups collectively raised over USD 577 million in venture funding.
  • The UAE is the fastest growing and most advanced e-commerce market in the MENA region, according to a study conducted by Visa and Dubai Economy. The value of the retail e-Commerce market in the UAE was USD 3.9 billion in 2020, and is projected to reach USD 8 billion by 2025.
  • The UAE Strategy for Artificial Intelligence sets out the mechanisms for formulating and issuing government laws on the safe use of AI. This initiative is currently being developed and implemented.
  • Regulatory ‘sandboxes’ have been developed to allow companies to test their products and businesses, and to allow regulators the opportunity to assess their legal framework through testing in a controlled environment with relatively relaxed rules for a specific period of time. There are three major fintech sandboxes in the UAE:
    • Financial Services Regulatory Authority (FSRA)’s RegLab;
    • Dhabi Global Market (ADGM)’s Digital Sandbox; and
    • Dubai Financial Services Authority (DFSA)’s Innovating Testing License.
  • The UAE and emirate-level authorities have technology-based visions which provide investment opportunities for strategic partnerships with large tech companies, and also potentially smaller companies that can provide innovative solutions for tech integration into government services.
  • For tech companies looking to set-up in the UAE, many start-up incubators offer funding, guidance and mentorship, access to industry experts, residence visas, office space, as well as platforms to advertise to potential clients and investors. Notable examples include:
    • Futurism Program, Dubai: Six-week long accelerator program targeting venture capitalists in the start-up and tourism ecosystem, spearheaded by the Dubai Department of Tourism and Commerce Marketing. If selected, applicants are mentored by, and collaborate with, industry stakeholders, and present their ideas at Gitex Technology Week, with a chance to win AED 100,000, licensing, visas, and office space for the top start-up.
    • AIM Startup, Dubai: An annual innovation showcase and pitch competition led by the Ministry for Economy, giving start-ups the opportunity to meet with investors, companies, industry experts, and government representatives.
    • StartAD, Abu Dhabi: Anchored at NYU Abu Dhabi, a global accelerator steering seed-stage technology start-ups to launch, develop and scale their ventures.
  • UAE Council for Artificial Intelligence
  • Smart Dubai
  • Dubai Smart Government
  • UAE Centre for the Fourth Industrial Revolution (4IR)
  • Ajman Digital Government
  • Emirate-level Departments of Economic Development

The UAE is taking bold steps to bring its digital dream to life by creating the world’s first Ministry of State for AI. This is an excellent model for responsible planning across private and public sectors. It will lay the foundation for a robust digital economy for generations to come.

Bill McDermott, Former SAP CEO

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