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Kuwait: Speeding up information technology

Kuwait is moving to bring its information technology (IT) infrastructure in line with its neighbours by improving services, the network and the regulatory environment that governs the sector.

In its latest annual Global Information Technology Report, the World Economic Forum (WEF) ranked Kuwait 62nd out of 142 countries on its IT networked readiness index, which grades economies on their IT usage, acceptance and efficiency. Most of Kuwait's neighbours fared better in the rankings, with Bahrain, Qatar, the UAE, Saudi Arabia and Oman all featuring in the top 40.

By contrast, though ranked below its neighbours, Kuwait was the only significant mover in the WEF's latest survey, climbing 13 places. In its 2011 report, the WEF singled out Kuwait as being the only high-income economy that did not feature in the top half of the global rankings.

Though Kuwait's ascension through the ranks still leaves it in the middle of the pack, its IT position is moving in the right direction, and its jump was one of the most significant among any of the countries assessed.

The WEF attributed this marked improvement to a number of factors, including an improved political and regulatory environment and higher levels of individual and business usage. However, the report also highlighted the necessity for Kuwait to further bolster legislation relating to IT and to expand broadband reach.

The report also stated that Kuwait, along with other GCC states, needed to do more to improve IT penetration. While acknowledging that regional governments had adopted ambitious digital strategies, the WEF said local economies would benefit from expanding their overall skills base, as well as further liberalising the IT markets.

This message was recently reinforced by Qosi Al Shatti, the deputy director-general of the Central Agency for Information Technology (CAIT), the state agency established in 2006 to develop IT policies and to supervise the implementation of future plans and the nation's e-government programme.

Kuwait needs to develop the competitiveness of its IT industry if it is to broaden and diversify its economy, Al Shatti said during a seminar in May.

"The competitiveness of countries in the IT sector plays an important role in economic and social development," he said. "The more IT competitive the countries are, the more they can attract investments, create jobs, diversify sources of income and raise living standards."

Interestingly, Kuwait's WEF ranking is in contrast to its spending on IT goods and services. The country is the third-largest computer market in the Gulf, and investments in this segment are forecast to increase further in the second half of 2012. According to a report issued in early June, IT service sales are expected to increase by 9% year-on-year in 2012 to reach $291m over the $267m recorded in 2011. The study, prepared by the analysis firm Research and Markets, said the boost in spending would be driven in part by the government pushing for greater adoption of new technology by the country's industrial sector.

The report also projected that hardware sales would hit $394m in 2012, a 9% increase, with software sales climbing by a similar rate to $254m, up from the $233m posted last year. Private, state and corporate sales should see a solid increase, the report said, as the Kuwaiti economy regained momentum following the global economic downturn.

That momentum should see Kuwait's economy expand by 6.6% this year, according to estimates by the IMF. While lower than last year's 8.3% rise in GDP, that result was fuelled by increased state spending and steep wage hikes, whereas the 2012 projections are based on higher oil sales and real-term growth.

Some of this growth should flow into the IT sector, as firms seek to upgrade existing platforms and citizens take advantage of increased earnings to buy new electronics. As the sector seeks to improve the regulatory environment and moves to address some of the issues raised by the WEF, Kuwait could soon be in a better position to compete with its neighbours.

© Oxford Business Group 2012

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