Oil and tech will keep Kuwait’s economy on the rise

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2022 has not been the year some expected, with a degree of global economic uncertainty not seen in the last decade. However, this has so far failed to penetrate Kuwait’s economy.

Kuwait, along with the wider GCC region, has benefited from the high price of oil in the past 12 months, and it seems that this revenue flow will continue to strengthen its economy through the entirety of 2023.

This liquidity in the market sets the stage for a boom in trade. With the pandemic now in the rear view mirror consumer confidence is growing quickly, leading to an increase in spending that further contributes to economic activity.

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One area where this will be felt positively is Kuwait’s second-hand goods market, which is likely to go from strength to strength in 2023.

The wave of digitisation that Kuwait is set to witness next year will also lead to increased economic activity in the country. From December 6 all banks across the country began supporting Apple Pay.

This development is sure to boost demand and transaction volume for digital products and services as it provides consumers with an unparalleled degree of convenience. You’ve forgotten your wallet? No problem, just tap.

When considering the wider Mena region, the outlook is less bright. Nobody doubts that its technology sector is in for a rude awakening, which is already unfolding before our eyes. Sentiment has shifted, and startups will now face a new level of scrutiny.

Investor activity in the region is maturing and adapting to the smart money playbook of recessionary consolidation. Investors are no longer willing to commit funds to businesses without strict due diligence and attached conditions.

Therefore, founders whose businesses do not stand up to scrutiny will find it significantly harder to get their hands on funding, and as a result we will, unfortunately, see some companies go bust.

2023 will be an important year for Mena’s startup ecosystem. Enterprises that survive the coming difficult months, which could stretch to the better part of a year depending on macroeconomic circumstances, will have the opportunity to learn from their mistakes and reprogramme their culture.

The winning mindset for a tech company in 2023 must be to grow a healthy customer base, conserve cash, prioritise profitable operations, embrace governance best practices, and commit to targets that are sane rather than vain.

One class of technology business set to take off over the coming year is the super app.

A genuine innovation of the Far East’s burgeoning tech economy rising to prominence in recent years, super apps are the logical next step for Mena’s maturing digital service economy.

The classifieds market, in particular, has been continuously moving towards the super app business model, and the question on everyone’s lips is: “how do you become an everything company?”.

The answer is that you focus in on the transaction. Ambitious classifieds businesses want to help you search, buy, finance, maintain, inspect and insure products and services – and everything in between.

Another area to be followed is vertical expansion. The more product categories you can cater to, the more people will see you as the default choice when looking for any particular item.

At the same time, entering new verticals is challenging as requirements for a satisfying user experience differ widely between product categories.

The mindset to close in on the transaction and grow vertically will be adopted by classifieds businesses around the globe. The times of just being the outer window display for products are over.

Given these trends, 2023 presents us with a mixed bag of challenges and opportunities. Kuwait’s entrepreneurs should continue to make use of oil revenue and double down on diversifying and digitising its economy in a sustainable way.

Saudi Arabia has been a role model for this route over the last few years, leading to its world-leading growth numbers in 2022.

Mena’s tech sector must not forget the lessons of this year, especially with respect to embracing the functional and clearly calling out the dysfunctional founding culture.

All the ingredients for growth and innovation are present and government encouragement to build businesses is at an all-time high.

This could be the year for the wider region to emerge from turbulent times stronger and more dynamic than before.

Tarek Sakr is CEO of 4Sale