Is the UAE ready to become the next start-up nation?
The UAE has already seen the emergence of successful start-ups such as Souq, the best online retailer in the Arab world, bought by Amazon in 2017 for a sum 700 million dollars. Is this an isolated case? This example is part of a wider economic dynamic driven by most Gulf States. While its oil revenues are doomed in the long term, what is the UAE doing to reconvert its state into a start-up nation ?
Start-ups boosted by government assistance
Start-ups are born and grow in an eco-system that is conducive to their development. In the United Arab Emirates, public players are taking this advice to heart. With a zero tax rate and 5% VAT applied to companies with sales of less than 385,000 UAE dirhams ($37,500), young innovative companies are encouraged to make their home in this land of milk and honey. Metropolises are particularly involved in this promotion. In 2022, the Executive Council of Dubai created a new 100 million euro fund for start-ups. The Venture Debt Fund for Startups was designed to support the projects of young companies and ensure their growth. In Abu Dhabi, a $2 billion fund has been raised by the government via the HUB71 platform, in order to give more visibility for WEB3 start-ups on a regional scale.
Towards a new Silicon Valley
And it's no longer just big cities that are home to start-ups. Entrepreneurs are now able to create their own space for fulfilment, and to extend it beyond a mere professional framework. Such is the case of Mohammed Al Zarooni, Managing Director of the Dubai Silicon Oasis. The Silicon Valley of the Middle East has become the largest technology incubator. Its campus is home to around a hundred start-ups from over 70 countries. Recognized as a major research hub, the Dubai Silicon Oasis aims to foster innovation and to make it accessible to citizens through an even more unifying project. What is more, the Dubai Digital Park is scheduled to spread over 92 miles. That smart city should be able to combine industry, real estate and commercial complex. The transition to an engineering-based economy is thus taking shape in greater depth.
Fintech as a driver
Ranked among the top 20 fintech companies by Forbes, Emirati start-up Sarwa is part of the success story. Thanks to its innovative technology, combined with expert advice, Sarwa ease investing by developing and testing personalized strategies. Fintech is thus taking root in a country which already boasts a well-established financial services sector and attracts capital from all over the world.
High-tech diplomacy — from one startup nation another
The new diplomatic landscape has also made a major contribution to the technological and economic development of the United Arab Emirates. In turn on the path of innovation, this new start-up nation has been able to count on the support of its predecessor. In September, the meeting between the official Abu Dhabi delegation and Israel’s public companies led to new economic agreements. From now on, new business opportunities in the fields of cyber security, artificial intelligence, blockchain and data protection flourish. Trade between Israel and the UAE increased by 117% in the first half of 2022, according to Israel's ambassador to the United Arab Emirates, Amir Hayek. This reconciliation between the Israeli technology ecosystem and Emirati entrepreneurs continues to lift young Gulf start-ups to the top of the global innovation market. Dubai now ranks just behind Tel Aviv in terms of investment in the Middle East.
Gray matter: the relay to black gold
Recently, the Gulf State was designated by the World Bank as the most entrepreneurial in the Middle East. Nowadays, the UAE is on the way to becoming a global tech hub. While in 2017, cash flow in companies in this key sector quadrupled (compared to 2016), reaching $870 million, by 2023, the IMF's annual report lists 72,000 new companies, compared with 20,000 in 2018.
Ever more connected, more attractive, and competitive, the United Arab Emirates is preparing for a major economic and energy transition. If the oil economy will soon no longer be an option for the Persian Gulf federation, another wealth is being extracted from Emirati soil — grey matter will replace black gold.
Sources:
https://arab.org/fr/middle-easts-start-scene-explained-five-charts/?amp
https://www.ft.com/content/225ffd34-0f22-11e7-b030-768954394623
https://lepetitjournal.com/dubai/installation/impot-revenu-entreprises-emirats-2023-352164 https://www.cairn.info/les-startups%20en%20france--9782715406810-page-63.htm https://www.tresor.economie.gouv.fr/Pays/AE/situation-economique-et-financiere-des-emirats arabes-unis
https://www.youtube.com/watch?v=6WOQKKONciE
https://en.wikipedia.org/wiki/Souq_(company)
https://kawa-news.com/5-start-ups-arabes-a-suivre/
https://www.dsoa.ae/explore-dso/who-we-are/our-story
