By Ian Kerr, CEO, Bolero International.
Anyone spending time in the Middle East and North Africa (MENA) realises that digitisation is very high on the agenda for significant organisations in trade, finance and government.
Optimists quote double-digit predictions for the rate at which the region’s market for digital transformation will expand, as the Gulf states in particular try to use their oil-wealth to reorient their economies towards a more broad-based future.
Large parts of the region enjoy near 100 per cent rates of smartphone-use, and the consequences of this enthusiasm for digital devices translates into business and trade, where younger executives and government leaders understand the opportunities that arise when trade infrastructures are integrated into the wider digital world.
Digital strategies are already in place
With ever-growing emphasis on the importance of reducing dependency on oil export revenues, the Gulf states in particular have responded by compiling digital strategies, setting themselves ambitious targets. Saudi Arabia and Qatar, for example, have Vision 2030 masterplans, while the UAE has Vision 2021. Egypt and Jordan too have their digital strategies.
Dubai and the UAE are generally thought to beat the forefront of digitisation,showing considerable interest in smart city technologies, artificial intelligence and semiconductors. The aim in Dubai is for all government transactions, where possible, to be digital by 2020. Saudi Arabia’s vision includes the National Transformation Program, which places digital transformation as one of the Kingdom’s four main objectives.
It may be true that these countries’ digital economies remain proportionately very small when set against the G7 nations, but the Gulf states are not hampered by inadequate broadband connectivity or lack of ICT talent. They also have some forward-looking regulators in the trade and finance sector, who not only understand the challenges, but are backed up by a robust legal system and a willingness to enforce rules.
The MENA could be poised to leap forward into trade digitisation
It makes the MENA region ideally placed to take advantage of the benefits of digitising trade transactions and documentation, removing all the very costly disadvantages of using slow and insecure paper-based processes. They have the opportunity to leapfrog ahead of many other regions where natural conservatism and lack of consensus often mean processing of trade documents takes days or weeks instead of the few hours now possible. Not only do paper processes open up all kinds of problems in relation to fraud and accuracy, they are easily lost and very expensive to administer.
The enthusiasm for digitisation is evident at major events
The enthusiasm for trade digitization is evident at big gatherings such as GTR MENA Trade & Export Finance Week in Dubai,which is a major event attended by 600 delegates from 30 countries, including many key people from corporates and banks. The energy flowing around the whole digitisation question is unmistakeable when significant market players get together.
Hardly surprising when growing wealth has generated such a surge of import activity that covers everything from materials for massive infrastructure projects to every kind of manufactured product, including luxury goods and vehicles.
That is not to say this a headlong rush. The move to digitisation is being taken step by step with full evaluation of each use case.
Organisations are digitising on a case-by-case basis
Many of the MENA region’s decision-makers in international trade have started to adopt digital platforms to benefit from huge gains in speed, security and efficiency. SABB (Saudi British Bank), for example is now bringing electronic trade document solutions to corporate clients, slashing transaction times and delivering major efficiency gains to all parties.
SABB’s move to a digital platform last year was a first for trade digitisation in the Kingdom and remains a significant cornerstone of what will be a much larger structure, since the bank is pre-eminent in the country’s trade finance.In fact, all the banks in the MENA area are increasingly adopting an open-minded approach to the digitisation of trade finance.
Electronic bills of lading are already widely used
Given the changes in attitude sweeping across the region, it was no accident that so many of the conversations at GTR MENA were about electronic bills of lading and digital presentations. Electronic document presentation, including bills of lading, has already been adopted as far afield as South America, India and Asia, with readily-recognised organisations such as BHP and Rio Tinto using the technology to accelerate secure and trusted execution of transactions in the Far East.
Change could be about to occur on a major scale, making the trading operations of banks and corporates in the MENA countries part of a “network of networks”. This will bring them all the huge benefits of integration with the ‘Internet of Things’ and similarly far-reaching technological developments that are shaping trade.
Wider digitisation requires a push from MENA governments but trade could be a trigger
The pace of change, will however, depend very largely on what governments across the Middle East actually do to stimulate digitisation. As global management consultants McKinsey pointed out, continued organic growth in this region will not be enough to transform it into one of the world’s major digital economies. They went on to say: “Unlocking the full potential of digitisation will require comprehensive, concrete, collaborative action – and it must begin immediately.” That was in 2016, so the time is ripe for all trade transactions to be conducted in the MENA region at the touch of a screen, rather than by couriering old-fashioned paper documents around the world for weeks at a time, where they may be lost, stolen or forged.
Moving to a tried and tested digital trade platform could be a major trigger in the wider digital transformation of the entire region.
Global Banking & Finance Review
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