The Mobile Economy: Middle East & North Africa

The Mobile Economy: Middle East & North Africa

Policy decisions are fundamental to accelerating MENA’s digital future

Since the emergence of Covid-19, mobile networks have been instrumental in providing the reliable connectivity needed to sustain social and economic activities. As countries bring the pandemic under control, a priority for governments in the Middle East & North Africa (MENA) and elsewhere is to drive economic recovery and promote sustainable development. Digital services and technologies will be crucial to realising this objective, by stimulating economic growth, mobilizing the workforce, and enabling industrial efficiencies.

The number of mobile internet users in MENA exceeded 300 million in 2021, with penetration due to reach 50% of the population by the end of 2022. The GCC Arab states are home to the highest concentration of mobile internet users, but low take-up rates elsewhere reflect the work that remains to connect offline populations.

Smartphone adoption is growing well and is set to increase most strongly in MENA’s less advanced mobile markets over the period to 2025, underpinned by continued network investment from operators. Increasing user engagement with bandwidth-hungry applications such as video will lead to a surge in data consumption across the region, growing by 430% between 2021 and 2027.

4G is MENA’s leading mobile technology, with almost 270 million connections at the end of 2021. Take-up has more than doubled over the past five years, driven by network expansion (particularly in frontier markets) and efforts by mobile operators to transition users from legacy networks. However, 4G adoption is projected to peak in 2023 as consumers increasingly migrate to 5G plans. At the regional level, 5G remains at a nascent stage.

The current adoption rate of just 1% is expected to grow to 17% by 2025. However, operators in the GCC Arab states are among the global leaders in 5G, with competition and government support triggering launches of some of the world’s first and fastest next-generation mobile networks. 5G connections in this part of MENA are set to reach 41 million by 2025 (49% of total connections). While the consumer market has been the focus of early 5G deployments, B2B is the largest incremental opportunity in the 5G era, with a raft of digital transformation projects underway across industries. To fully exploit these opportunities, 5G leaders in MENA are investing in new capabilities, with edge computing a priority. This ties in with operators’ efforts to grow revenues beyond core telecom services.

In MENA, sustainability and security are the main priorities of operators’ network transformation strategies. This is unsurprising given the backdrop of rising security threats and demand for a greater focus on energy efficiency from shareholders and customers. The use of cloud and IT technologies is also high on the agenda; operators have been working closely with leaders in cloud networks to deploy new capabilities and accelerate progress. The use of open networking technologies is also starting to gain momentum, with Turkey emerging as a pioneer market for open RAN tests and pilots.

For operators in the region’s low ARPU markets, open RAN brings the promise of reduced costs for deploying and operating networks. Meanwhile, operators in advanced markets are assessing the technology as part of their plans to diversify network equipment supply chains, strengthen their bargaining power with suppliers and boost flexibility to innovate and quickly deploy key network capabilities.

Mobile technologies and services continue to make a significant contribution to MENA’s economy, generating 5.4% of GDP in the region in 2021 – around $255 billion of economic value added. The mobile ecosystem also supported approximately 890,000 jobs (directly and indirectly) in 2021 and made a substantial contribution to the funding of the public sector, with around $20 billion raised through taxation. Mobile operators play a key role in efforts to achieve the UN Sustainable Development Goals (SDGs).

They continue to deliver the connectivity that enables the growth of small businesses and digital transformation of enterprises and provide access to life-enhancing services and tools for citizens. Mobile money is one example, with adoption scaling rapidly as operators support the region’s shift to digital payments. Meanwhile, mobile operators are increasingly taking steps to fulfill SDG 13: Climate Action through cooperation to protect the environment and reduce carbon footprints, and the deployment of base stations powered by renewable energy such as solar.

The mobile industry continues to deliver benefits to the economy and wider society The Mobile Economy Middle East & North Africa 2022 Executive summary 4 In a post-pandemic world, digital connectivity is expected to become even more vital to citizens, firms, and institutions alike. Regulatory frameworks that are conducive to investment will be crucial to incentivizing the deployment of telecoms infrastructure. Such infrastructure will be key to economic recovery and future crisis resilience.

Seizing the mobile opportunity will require a forward-looking spectrum policy, with well-designed assignment spectrum roadmaps, fair prices, and technology-neutral licenses needed to support the growth of 5G over the course of this decade and beyond. It is also more important than ever before to address the barriers to mobile internet adoption and usage in MENA, while data protection regimes must ensure privacy, safety, and security for those engaging in the digital economy.

Policy decisions are fundamental to accelerating MENA’s digital future.

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