The pandemic has acted as a catalyst for digital transformation. In few places is this more visible than in the Middle East, and particularly the GCC, a region that boasts some of the world’s highest internet and smartphone penetration rates, and yet which is notorious for its reliance on cash. The surge in the use of ecommerce, mobile payments and financial technologies more broadly has been vertiginous. The Kingdom of Bahrain, for example, saw a substantial growth in electronic payments, with the number of transactions increasing by 82% as of August 2020, reaching 8.4 million transactions. The value of electronic payments has grown by 33% to reach USD 1.1 billion, with electronic fund transfer systems such as Fawri and Fawri+ saw transactions increase by 935.7 per cent year-on-year in the month of May. The value of e-Commerce is also expected to increase by 28% in 2020 reaching BHD 366 million, from BHD 287 million in 2019.
Bahrain’s digital infrastructure
As the first GCC member to begin diversification efforts, Bahrain is indicative of the ongoing journey to digitisation currently being undertaken by countries across the region. As the latest UN e-Government survey report highlights, GCC governments have for some time now been seeking to grow tech and startup ecosystems from scratch, complete with world-class accelerators, 5G infrastructure, and even burgeoning VC communities. Ranking second in the region for e-Government readiness and capacity, Bahrain is now home to the region’s first AWS hyperscale data centre Region, is one of the first countries in the world to roll out nationwide commercial 5G and is shifting its entire government to the cloud. As of October, 62% of all government services have now fully migrated online. Indeed, as a result of a comprehensive economic reform programme, which saw the Kingdom named the fourth most-improved economy in the world by the World Bank, there are now few interactions with the state that require a physical presence.
Bahrain’s effective response to the pandemic
This strong digital connectivity stood the Kingdom in good stead when the pandemic started coming into full force. Bahrain was able to temporarily close its educational institutions – from kindergartens to universities – quicker than most countries in the world, but still minimise disruption to studies thanks to the Ministry of Education’s online education portal, with 5.7 million users, 6600 lessons and 372 e-books as of April 2020.
Global supply chains have also been decimated by the ongoing COVID-19 pandemic. However, Bahrain’s MVC Global in partnership with Cox Logistics Group introduced a first-of-its-kind “SmartHub” logistics warehouse for pharmaceuticals and food to be headquartered in Bahrain and serve the GCC market.
Trade with Saudi Arabia, the region’s largest market and one of Bahrain’s most important trading partners, was able to be maintained thanks to a streamlined and technologically advanced customs process from which paper has been almost entirely eliminated. Bahrain Customs installed high-tech scanners to automate data collection and allow shipment inspections to take place before reaching the border. Powered by AI, these machines have the capacity to screen 120 trucks per hour and store collected information online. This has greatly increased both the speed and capacity for processing as demonstrated by a 15 per cent growth in trade between Bahrain and Saudi Arabia in the first quarter of this year.
Bahrain was already making impressive progress on its digitisation process journey, but the road ahead is strewn with hurdles. As recent research from the Economist Intelligence Unit (EIU) makes clear, widespread diversification, a fast-evolving technology landscape and socioeconomic developments present “vast opportunities ahead” for companies in the GCC that successfully invest in digital technologies. However, major challenges including regional deficiencies in digital skills, customer experience, and economic integration risk curtailing hard-won momentum. Across the region, boosting STEM education; encouraging investment in technology, R&D and local innovation; and fostering a more integrated regional trade and regulatory environment where knowledge and training transfer can thrive – these are now all top priorities.
Looking ahead to the new normal
As for Bahrain, digitisation has a bigger role to play than just in quickly reacting to the early stages of the crisis. More important will be its role as we enter the so called new normal, which stretches ahead for the foreseeable future. For instance, Bahrain’s digital revamp of its judiciary system, which includes online fast-tracking of a number of processes, is already proving invaluable. This comes at a time when globally, COVID-related commercial disputes are likely to skyrocket and court systems are already under strain, thanks to social distancing measures. When Bahrain made it possible to register a business online, register property online and even secure a construction permit online, it was an improvement and a convenience. In the new normal, it may prove to be a necessity.