According to ISPI, the Institute for International Political Studies, projects to digitize services continue to multiply in cities in the MENA region (Middle East and North Africa), driven by the growth of mobile telephony and data traffic on the cloud. We are talking about new urban realities known as Smart Cities whose value is estimated to reach 2,57 trillion dollars in 2025 (Grand View Research report). In this scenario, focusing on improving connectivity has become a priority in the transformation process of those urban realities that aim to become increasingly autonomous from the point of view of services. This responds to the need to cope with the sustained demographic growth in the region: according to the growth prospects estimated by the United Nations for 2050, a growth of the local population of 50% is expected, with urbanization rates around 70%.
Currently the cities of the MENA area collect 28% of the total population, 32% of the workforce and about 50% of the wealth produced, with the urban GDP significantly higher than that of the rural areas. In particular, the economies based on oil have favored the immigration of millions of workers, multiplying the number of residents in various towns and cities (leading Qatar and the Emirates), increasing the pressure on cities with consequences on transport, road traffic, energy consumption and management of water resources. With a view to ensuring the sustainability of urban services, reducing costs and inefficiencies and improving the quality of life, it seems that becoming "smart", rather than an option, is today an obligatory choice for the major cities of the region. So this is the direction that many local governments are choosing, multiplying the financial resources destined for the development of "intelligent" technologies: theInternational Data Corporation (IDC) estimates that in 2018, total spending on these types of technologies will reach $1,26 billion. Here then is that in this scenario the Gulf monarchies represent the most advanced markets. In addition to the significant increase in population, major international events such as the 2020 Dubai Expo and the 2022 World Cup in Doha have been an important driving force for the digitization of services in recent years. The McKinsey Global Institute study published last June assigns the primacy of smart cities to the UAE, with Abu Dhabi and Dubai in the top two positions of the region's ranking.
This is also thanks to the fact that the UAE is an international leader in the penetration of fiber optics in homes, equal to 93,7%. In this regard, see the 2018thinknow 2 report, the innovation data agency that annually publishes the ranking of the most innovative cities, assigning Dubai the primacy of the most innovative city in the Middle East. In the last three years, it is no coincidence that the emirate has invested heavily in what could be defined as an all-round smart strategy: initiatives to strengthen and make the transport system more effective thanks to the introduction of new technologies, among including the Dubai Smart Self-Driving Vision launched in 2016 with the aim of automating 25% of the city's daily transport. Also, the Dubai Future Foundation developed an Autonomous Transportation Strategy that is expected to generate more than $6 billion in revenue annually by reducing transportation costs and carbon emissions as well as increasing worker productivity by slashing commute times. Among the results expected from the implementation of this strategy there is also a 44% cut in transport costs and a 12% reduction in polluting emissions, while the number of private investors is progressively growing alongside government funding.
At the same time, Saudi Arabia has also launched a program to accelerate the digitization of the country - from education to health, from transport to energy - starting right from the cities, in line with the National Transformation Program and the Saudi Vision 2030. Furthermore, the economic reforms approved in Jordan, Morocco and Tunisia should not be underestimated. In fact, throughout the MENA region, the number of "new cities" is growing, i.e. cities designed on the drawing board with dirigiste and yet very ambitious methods, from environmental sustainability to the creation of jobs with recourse to technology. This is the case of Neom, a fully digitized and automated mega-smart city on the Red Sea, for the construction of which Saudi Arabia has announced 500 billion dollar plans, of Lusail in Qatar or of the new administrative capital of Egypt which will include 20 residential areas housing a population of 6,5 million people. Added to these is the Jordanian government project announced at the end of 2017, namely the construction of a new urban area with the aim of decongesting Amman and Zarqa but also of stimulating the Jordanian economy and attracting long-term investments. The construction of the city, which will rise on an important axis of connection with Iraq and Saudi Arabia, will be carried out in five phases and its completion is expected between 2030 and 2050. Last but not least, Chinese investment in the development can be counted of the coastal city of Duqm, Oman.
Hence the attraction of private investments, including foreign ones, remains a key issue in the development of smart cities in the region. The new investment law in the UAE is expected to come into force in the fourth quarter of this year. According to government statements, this measure will authorize the creation of companies with wholly foreign capital in the country. To date, this is possible only in the numerous Special Economic Zones present in the country; in the rest of the territory, foreigners can participate in companies registered in the UAE with no more than 49% of the capital. The decision is part of a package of economic reforms aimed at achieving the objectives set in the National Vision 2021: this program aims to diversify the economy, favoring the private sector and encouraging foreign investment, a direction all the more encouraged and necessary in view of Expo Dubai 2020. At the same time, according to analysts, this measure could also prove useful for increasing the Local Employment: Authorization to set up these companies could be conditional on each new business hiring a minimum number of UAE nationals. In order to attract international excellence that can contribute positively to the development of the local economy, the new investment law will also provide for the issuance of 10-year visas for entrepreneurs and professionals of various categories, such as in the hi-tech sector and in medical-scientific field. Visas with a duration of 5 or 10 years, based on academic performance, will instead be intended for international students.
As pointed out byISPI analysis, in evaluating the possibility of investing in the technological development of cities in the MENA area it is important to take into consideration several factors. First of all, the level of technological development and digital penetration of the area in question, and its future potential. The local social, environmental and political context, with particular attention to the possibility that social inequalities could fuel hotbeds of protest. The geopolitical stability of the country, both in the regional geopolitical context and in the implementation of economic policy. Finally, the presence of international events already planned or in progress, to be considered as investment opportunities, with the unforeseen consequences that they may bring.
