GCC states ease Covid-19 lockdowns and accelerate digitalisation


Economic News

11 May 2020
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Several GCC states have begun to ease coronavirus lockdown restrictions as governments in the region look to get their economies moving again after weeks of strict stay-at-home measures.

Such moves came as a relief to many, beginning soon after the start of Ramadan – traditionally a time for gathering and celebration.

However, this is still a Ramadan like no other. With many social distancing measures and travel restrictions remaining in place, discussion has turned to what the 'new normal' will look like.

Easing up

Moves to begin easing restrictions were partly prompted by data that shows a slower spread of the virus in the region than in many other parts of the world, largely thanks to the swift enactment of containment and testing measures.

In particular, centralised data systems in the GCC have allowed for efficient contact tracing.

In the UAE, where 198 people had succumbed to the virus and where the total number of cases stood at 18198 as of May 10, a gradual re-opening of shopping centres and other businesses has been taking place since April 24.

Meanwhile, a strict 24-hour lockdown has been lifted in Dubai, allowing shopping centres and restaurants to operate at 30% capacity, with social distancing measures set to remain in place for the foreseeable future.

In neighbouring Saudi Arabia, where 246 people had died and 39048 tested positive for Covid-19 as of May 10, the government began to ease curfews in all regions on April 26 – although the 24-hour lockdown has remained in place in Makkah and neighbourhoods that had previously been isolated to prevent the spread of the virus.

In Qatar the authorities fully opened Doha's Industrial Area on May 6. This district was closed off in mid-March due to a spike in cases amongst its migrant population, but was reopened following widespread testing. Strict entry and exit regulations have been put in place, in part managed by the use of a mobile application by employees and employers entering or exiting the area.

As of May 10, the country had recorded 22520 cases and 14 deaths associated with the virus.

Finally, in Oman on April 28 the authorities began discussions about lifting restrictions on some areas of the economy. The decision was subsequently made to open some commercial businesses, including car servicing, repair, and rental agencies; currency exchanges; outlets selling electrical and electronic appliances; printing houses; and quarries.

Oman had recorded 3399 cases and 17 deaths attributed to the novel coronavirus as of May 10. 

A changing reality

The consistent question that decision-makers at all levels are facing – both in the Gulf region and globally – is how the current pandemic will shape the economic and social behaviours of businesses and consumers over the longer term.

One area where a shift has already become evident is digital engagement.

Digital transformation forms a central plank in the many diversification and development plans being executed by countries in the Gulf. Indeed, last December’s GCC meeting renewed calls for member states to speed up the rate of digitalisation across their economies.

The summit, which took place in Riyadh, outlined in its declaration a set of measures to achieve such a transformation, including the “employment of technology and artificial intelligence (AI) to modernise government services and improve the efficiency of those services”.

It also called on governments to put incentives in place to foster the emergence of youth-led private companies developing digital tools applicable to all sectors.

While significant strides have been made in recent years, the onset of the pandemic revealed the gap that still existed between those entities operating across the financial, retail and health care sectors that had invested in digitalisation strategies, and those that had not.

“For firms operating in the digital sphere, as a whole this period has been an opportunity, in terms of illustrating to clients their ability to cope in a crisis, while also underlining the importance of having digital strategies in place,” Khalil Al Harthy, CEO of Credit Oman, told OBG.

There has consequently been a scramble to close this gap. On the one hand, this has created a slew of new applications and digital tools to help citizens and authorities alike navigate the crisis. On the other, it has nudged those companies who had previously been reluctant to engage in the digital economy to explore the opportunities therein.

“The accelerated shift towards digitalisation across the economy has been one of the silver linings of the pandemic, as people recognise the need for good digital infrastructure in terms of speed, coverage and cloud services,” Salim Al Ozainah, chairman and CEO of the Communication and Information Technology Regulatory Authority in Kuwait, told OBG. “Awareness around the importance of cyber-security when using new applications is also increasing very fast among the general population.” 

Moving forward, the challenge for all Gulf countries will be to restart their economies while having to contend with the reality of a much lower oil price environment. Here, too, acceleration towards digitalisation is on the cards, as firms look to cut operational costs in the wake of the crisis.

“Oil and gas firms will be forced to cut down on costs and to do this they will have to build digital platforms and implement new technologies such as AI and robotics,” Maqbool Al Wahaibi, CEO of Oman Data Park, told OBG.

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