How generative AI is gaining momentum in Mena

Imago/Reuters

• Annual impact of Mena’s gen AI could reach $23.5bn by 2030
• Region building on ChatGPT with its own tech offerings
• Hurdles to overcome, but ‘substantial promise’

Generative AI has dominated headlines for almost a year since the launch of US artificial intelligence-powered chatbot Chat GPT in November 2022. 

The coverage of ChatGPT has been mixed – the technology had many in awe at first, but a data breach affecting a reported 100,000 accounts soon sparked security concerns.

The story is still evolving for other generative AI players – especially in the Middle East and North Africa (Mena). 

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Many of the region’s governments have initiated AI-based strategies to foster innovation and economic growth across a range of industries. 

Within this, generative AI has gained traction, with growing interest in AI and machine learning technologies, and startups and research institutions actively participating. 

Sundeep Gantori, CIO equity strategist at Swiss bank UBS, says the Middle East is in the very early innings of AI adoption. The revenue opportunities in the region equated to “a few hundred million dollars” in 2022, he says, versus $28 billion globally, citing UBS research.

The same research has projected the global AI market will grow at a compound annual growth rate of 61 percent between 2023 and 2027, and, given its nascent stage, Mena’s generative AI market is set to exceed the global average, Gantori adds. 

Gantori says we will see generative AI investments happening in two stages. “Over the next 12 to 18 months, we expect to see significant investments in [regional] AI infrastructure and believe Middle Eastern companies will build AI data centres and train data sets.

“By mid-2024 and 2025, we will see the start of second stage investments in AI applications – with clear monetisation opportunities – in software, internet and other platforms.”

Reuters/Lucy Nicholson

Fledgling, but promising

The region certainly wants to build on the success of ChatGPT. The platform said it surpassed 100 million monthly users within two months of its public launch and continues to demonstrate public appetite for such technology. In June alone, the site averaged 55 million users per day, the company said.

Mena is responding with similar tech offerings. Just last month Technology Innovation Institute – the UAE government-backed research hub – launched Falcon 180B, an advanced iteration of its flagship large language model (LLM) using generative AI. 

The release strengthens the UAE’s place in the global AI market, offering Falcon 180B as an open access model for research and commercial purposes – and it is just one of the fledgling AI businesses coming out of Mena. 

Meanwhile, UAE technology company AstraTech is integrating an Arabic language ChatGPT function into its Botim app.

The app is a messaging and voice-over-internet protocol solution for the Mena region. App users can use generative AI to support payments and international money transfers.

According to research published in July by Strategy&, the consulting arm of PwC, the economic impact of generative AI in the Middle East could reach nearly $23.5 billion per year by 2030.

The report claims that generative AI-supported improvements in tech efficiency and efficacy will have the biggest impact in Saudi Arabia and the UAE – annual economic boosts of $12.2 billion and $5.3 billion respectively.

Aaron McClendon, head of AI at analytics consultancy Aimpoint Digital, says that generative AI holds substantial promise for Mena. 

He points out the range of generative AI's potential uses and benefits, from translation tools and chatbots, through to healthcare diagnostics and investment analysis. 

“To maximise these opportunities, it is crucial to address ethical considerations, promote AI education and encourage collaboration among governments, businesses and educational institutions,” McClendon says.

“We see low-hanging opportunities in the Middle East’s technology, media and telecommunications and healthcare industries, given their digital focus,” says Gantori. 

“Eventually, generative AI should also create a significant impact in other industries like government, oil and gas, industrials and manufacturing.” 

Hurdles to overcome

Gantori adds that the Middle East has a particular advantage over some other markets when it comes to becoming an “AI-first” economy, thanks to its freedom from legacy tech assets. 

This is similar to how China and India benefited from a “mobile first” strategy, he says.

However, there are still distinct regulatory challenges for the sector to overcome in Mena, including regulatory ambiguity, data privacy and ethics.

“Regulatory ambiguity arises from the absence of clear and harmonised guidelines, potentially deterring AI investments,” explains McClendon.

“Data privacy is a critical concern due to the vast amounts of personal data processed, demanding compliance with international standards.

"Ethical considerations, such as bias mitigation and transparency, are essential for AI systems, especially in diverse linguistic contexts,” he adds.

Other concerns include limited data availability, intellectual property issues, the need for international collaboration, economic constraints and ensuring AI system security. 

There is also a potential talent shortage and skills gap in the short term.

“Gen AI is an emerging industry, so Mena needs to invest in the right talent to promote its growth,” Gantori says. 

That being said, after some time the AI industry in the region is likely to grow at a rate at which the technology could be deployed to develop its own systems and applications – without so much human involvement, he adds. 

An estimated 15 percent of apps created in the next four years will be developed by gen AI, according to UBS research.

With opportunity comes risk

However, an August report by McKinsey & Company notes that gen AI has been known to produce content that is biased, factually wrong and illegally taken from a copyrighted source. So companies need to be aware of the reputational and legal risks when adopting the technology.

The report recommends companies employ people to monitor compliance and copyright issues. 

Despite this, forecasts for the industry in Mena point to a boom in the coming years, driven by rapid growth in generative AI tools, the increasing role the region is playing in global tech and AI conversations, and strong support from government. 

Events such as the UAE government’s Dubai Assembly on Generative AI, which took place this month, are an important piece of the puzzle.

Says Gandori: “We believe the AI applications and data models are a bigger opportunity in Mena as its 'AI first' approach means many of the applications and new tech business models can be AI-native platforms right from day one.”