Being based out of Dubai and so close to all the action, I was so anxious to start digging in and talking to tech vendors to get their reactions on what's happening in the region. In my latest report I decided to answer a question that's been on everybody's mind: "What’s happening to the IT market in the Middle East and North Africa (MENA) in the midst of the recent political unrest, the Arab Spring?" While it's not easy to answer the question as demonstrations are still happening and elections are still pending the report presents a snapshot of the current state of the IT market in MENA.
Following the Arab Spring, Forrester revised downward its IT spending forecasts by more than 2% for the MENA region in 2011. Many distributors were stuck with large PC inventories or had delivered inventory to their clients and have yet to receive payments. A lot of public sector projects were also put on hold as national governments were shaken by the recent political events. As a result, vendors in the region have reallocated some their resources currently located in heavily affected countries, e.g., Egypt, Libya, and Syria, to countries that need more attention, such as Saudi Arabia and the UAE. Many vendors are also taking a more regional approach and are expanding their presence from their base countries into the rest of MENA.
Looking forward, I believe that the MENA IT market holds many growth opportunities. IT spending in the region is projected to grow at a CAGR of 8.7% through 2015. Most opportunities will come from the Gulf countries, such as Saudi Arabia and the UAE. Largest in terms of IT spending, these oil economies are also some of the most politically sound and economically stable countries. Placing in third is Egypt, which is currently going through a slump; but things should be looking up with the upcoming elections. These countries are investing heavily in eGovernment, smart cities, and increased infrastructure.
So what does all this mean to vendors?
- If you want to start somewhere in MENA, start with the big spenders: Saudi Arabia, UAE, and Egypt. Then smaller markets with big potential that you should consider investing in next include Qatar (fastest growing economy in the world), Kuwait, and Bahrain.
- Don’t do it alone. If you’re an MNC, partner with a local vendor and vice versa. Everyone has something to bring to the table. An MNC has years of experience and a global outlook, while a local vendor has the expertise in culture, the local market, and existing clients.
- I'm sure you already take into account political risk in your planning, but you should add more weight to this criterion when planning for MENA.
- Finally, treat MENA as a region, not as a country. Each country in MENA has its own unique characteristics, so beware and don't try to apply the same strategy to all the countries.