A vital commodity: How data became the new oil

Data has become the oil of the 21st century — a vast asset with a fundamental value that has yet to be fully realized, at least in the Middle East and North Africa region. The world is fast approaching “peak oil,” after which petroleum consumption will decline in consumption, and rock-bottom prices will dent once-lucrative oil revenues.

Any forward-thinking Middle East government would have seen the writing on the wall by now and prepared for the inevitable. One way to do so is by tapping into under-funded or under-resourced sectors that have experienced explosive growth and reshaped entire economies around the world. A decade ago, many would have laughed at the notion that an electric car manufactured by a tech company would spark a green car revolution and propel that company to a size that dwarfs traditional motor manufacturers. Yet this is what Tesla has achieved, much as how Airbnb upended the hospitality industry, Amazon decimated of brick-and-mortar retail, Uber disrupted personal transport and social media sounded the death knell for traditional news media and communication.

This is the power of data. Seven of the 10 largest companies in the world, with a combined value of more than $6.4 trillion, are in technology, data and internet services. It is almost four times the combined GDP of the GCC states and nearly twice that of the entire MENA region.

And there is still capacity for growth, because at least 40 percent of the world is not connected to the internet or exposed to the latest data-driven tech innovations. However, even with the advent of artificial intelligence, big data, analytics and high-speed 5G connectivity, it is unsettling to see slowing growth, and in some cases a decline, in the adoption of new data-driven technologies. Short-termism and cultural rigidity are often to blame for this intransigence, and worse, they permeate across sectors, dimensions and borders, resulting in warped projections that cater to near-term benefits at the expense of long-term gains.

The post-pandemic world is slowly taking shape, converging on a multipolar order in which competing regions vie for strategic balance in the service of common interests. Ongoing geopolitical proxy struggles are evidence that military victories alone are no longer sufficient, and nor is agile diplomacy, let alone economic dominance.

What will give nations or regions an edge is a pragmatism based on a convergence of interests, established commonalities, shared cultures and proximity. Thus, if the MENA countries wish to survive, let alone prosper, they must be prepared for an inevitable lurch towards technology and data-driven innovations, prioritizing tech investments as an economic imperative, even as a matter of national and regional security.

It is crucial for Arab countries to drive tech innovation across the region, and in the developing world. The region is well placed to take advantage of its junction between Europe, Asia, and Africa, which has already netted numerous benefits for air transport, tourism, hospitality, real estate, freight and logistics.

Additionally, even if the region faces economic headwinds until at least 2023, there is still significant manpower, tech resources and capital to prioritize investments in the start-ups at home, in the region and abroad. In cases where local sources are not viable, the region already has the infrastructure and experience to attract and retain the requisite talent and investment. Large migrant populations have also diversified the demographics in GCC populations, an incredible advantage when adapting tech-driven solutions to a specific target market's language or dialect, helping with ease of use and adoption.

It is imperative that the GCC governments, for example, find another gear and actively engage or fund initiatives, efforts and programs that will result in the region gaining a foothold in the global digital economy.

Most countries in the world already have some form of tech sector, with entrepreneurs seeking to launch digital solutions to replace analog systems. It will be easy to wade in, invest or partner in these efforts in order to gain a foothold in new markets or expand existing holdings. In fact, it could prove to be useful in the long run because the biggest concern for most developing world start-ups is that there is little partnership across markets, which can lead to projects dying before they reach sufficient scale.

In short, the region is sitting at an important junction with numerous advantages that make it easier to exploit the untapped potential in the region and across the developing world. By focusing on mining, extracting and processing huge amounts of data, which power solutions on the ground in some of the world’s under-served regions, there will be sufficient scale to effectively replace a petroleum sector at the precipice of decline.

In other words, if 60 percent of the world’s population going on the internet has netted at least $6 trillion in wealth, there is about $4 trillion still up for grabs and time is running out. Granted, recovering from the pandemic will take priority for most economies. However, smart planning would focus on both recovery and building resilience by looking to exploit untapped, under-served yet potentially lucrative sectors.

Even more, Africa, the Middle East and parts of Asia will continue to experience population growth in the foreseeable future, which translates to increased opportunities for investment, engagement and innovation. This way, Arab countries can claim a stake in the era of new oil sustained by growing markets with an insatiable hunger for technology and data-driven innovations. It can only be hoped the region will be those markets’ first port of call.

• Hafed Al-Ghwell is a non-resident senior fellow with the Foreign Policy Institute at the John Hopkins University School of Advanced International Studies. He is also senior adviser at the international economic consultancy Maxwell Stamp and at the geopolitical risk advisory firm Oxford Analytica, a member of the Strategic Advisory Solutions International Group in Washington DC and a former adviser to the board of the World Bank Group. Twitter: @HafedAlGhwell