Aroop Zutshi, Global President & Managing Partner, Frost & Sullivan speaks about how a high smartphone penetration rate is spurring the growth of a mobile economy in the region.
What is the potential of mobile economy in the MENA region and how fast is it outpacing the internet economy?
With the rapid growth of smartphone adoption, we are increasingly seeing internet usage shifting towards mobile. Mobile penetration in the MENA region is about 63% with the GCC at 76%, North Africa at 68% while in the Arab states, penetration is still fairly low at 45%. The mobile industry’s contribution to GDP is poised to grow from 4.2% of GDP to 4.3% of GDP which is approximately $195 billion.
What are some of the factors that have helped the growth of mobile economy in the region?
Smartphone/mobile usage is growing exponentially as its application spans almost every aspect of life - communication, entertainment, commerce, lifestyle and others. In addition to consumer demand rising, the mobile economy is receiving a good impetus from the government. Smartphone penetration in the region is already healthy and poised for further growth. As a result, the mobile economy too is likely to see exponential growth.
Does the region have the infrastructure ready for a mobile economy to flourish over the long term?
From an infrastructure perspective, some countries within the region are advanced while some have much ground to make up. The GCC will be one of the first to launch 5G networks with commercial deployment planned for 2019 in the UAE and 2020 for Qatar; while countries such as Algeria, Iraq and Sudan have very low 4G coverage at 24%, 25% and 10% respectively contributing to a regional average of just 37%.
Are companies realizing the benefits that a mobile economy could bring them?
Yes indeed. In an age where the Internet of Things is considered a requisite to success, enterprises are becoming more aware of a mobile economy and have started adopting Enterprise Mobility. Companies that have already implemented it have started reaping benefits of optimization and higher efficiencies
What are some of the trends that would impact the growth of mobile economy regionally and globally?
Some of the trends impacting the growth and adoption of mobile economy include-
A shift in consumer engagement to mobile and the rise of the platform economy
Increasing usage and consumption of mobile data
Mobile content growth
4G - driving surge in mobile broadband adoption
Increasing mobile applications
Government policies enabling a mobile economy
Mobile penetration rates vary across various markets across the MENA region with GCC having high levels of mobile phone penetration while certain other markets in North Africa has lower rates. Will that impact the growth of the mobile economy?
Mobile penetration and mobile economy have a direct correlation. For markets such as North Africa, with low rate of penetration currently, it is an imperative to increase the tele-density of the country first and eventually increase mobile penetration for overall economic growth. The impact of North Africa’s adoption rates on the growth of the mobile economy in the region is marginal however, as we are anticipating exponential growth in the GCC that will help sustain the average growth rate in the region.
As the mobile economy is set for growth, how will this impact the smartphone manufacturers? What is the outlook for smartphone sales in the region?
Smartphone sales have a direct correlation to the growth of mobile economy. Smartphone penetration has already reached about 75% in GCC countries and this market looks promising in Middle East & North Africa region.
What are some of the challenges that the countries in the MENA region might face in further developing a mobile economy?
Some of the challenges faced in the MENA region are -
With wide income distribution, affordability is a critical issue in some of the countries (particularly in Iraq and Sudan, for those at the bottom of the pyramid) for whom mobile ownership can account for a prohibitive proportion of their average income
Availability of local content is also an issue
Lack of Infrastructure is a challenge in some regions
Infrastructure cost in proportion to the potential revenue is high (particularly for areas with low density of population)