As oil flags, Middle Eastern capital flowing to IoT, smart cities

Research firm Gartner says Middle Eastern governments are spending more on Internet of Things (IoT) and smart city investments, as the region tries to diversify away from oil.

As reported by ZDNet, recent research by Gartner anticipated $11.5 billion in IT spending by governments across the Middle East and North Africa (MENA) region this year. The 2016 projection translates into a 2% increase from 2015.

“Overall spend is on the increase,” said Moutusi Dey Sau, a Gartner analyst. “Most of the investment is focused on industries beyond the oil industry.”

This comes as governments all over the world are increasing their IoT and smart city infrastructure investments.

The move to concentrate more government spending beyond petroleum-related IT investment is seen as an attempt by MENA countries to diversify away from oil. The fall in global oil prices has hit traditional petroleum-dependant economies hard, particularly Saudi Arabia.

“High dependence on the oil industry is one of the biggest challenges for this region,” said Sau. “These regions are in a very early stage of technology adoption,”

She says the attempt to diversify by MENA governments is seeing increased IT spend in such areas as IoT and smart city initiatives. As well, regional governments are investing in such areas as software, data center systems, devices, telecoms and wider IT services.

Gartner anticipates $3.1 billion in MENA government spending on mobile network services this year. Sau says the bulk of this spending will come from Saudi Arabia, which is the region’s largest IT investor.

“Saudi Arabia is a fast-growing market and is projected to be a $1billion [mobile] market by 2020,” she says.

Desite oil prices, impressive spending in the region

However, Sau says Gartner is seeing is seeing impressive mobile spending growth in areas beyond the Persian Gulf states which are the MENA region’s traditional IT powerhouses.

“The regions in North Africa are mainly driving the spend in telecoms in mobile phones, close to $3 billion in 2016”, says Sau. “Changing consumer behavior, fast adoption of technology, spread of digital transformation are all reasons for North Africa leading the IT spending in this region.”

Meanwhile, Turkey is the MENA region’s lowest government IT spender, largely due to the country’s ongoing political and economic turmoil.

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