E-Commerce Penetration in the Middle East Region Remains Amongst Lowest in the World

Saudi Arabia poised for a technology boom

The Arab Federation of e-Commerce has released a 5-year strategy claiming that it will help grow the MENA (GULF) (GAF) region’s e-commerce sector from $20 billion in 2017 to $200 billion beyond 2020. Companies such as Amazon (AMZN) and Noon, are currently poised to take advantage of the low e-commerce penetration in the region. Presently, e-commerce accounts for a meager 0.71% of the MENA region’s total GDP as compared to 3% for the rest of the world; 5% in the US.

  • About $1 billion has been invested by Saudi Arabia’s (KSA) Public Investment Fund and Dubai (UAE) real estate tycoon Mohamed Alabbar towards the establishment of their ambitious new e-commerce venture, Noon.com. Alabbar is the the billionaire chairman of Emaar Properties which owns The Dubai Mall and the Burj Khalifa, among other hallmark projects in Dubai.
  • UAE (UAE) based Gulf Capital has announced that it would invest about $135 million in e-commerce and technology across the GCC (GULF) (GAF). Current investments made by the company include Sporter.com and Emirates Auction. According to Dr. Karim El Solh, CEO of Gulf Capital, “The GCC region is set to witness an explosion in e-commerce activities. This trend will undoubtedly generate attractive investment opportunities for regional and global investors.”
  • Solh also mentioned Amazon’s (AMZN) recent $650 million acquisition of Souq.com (Amazon of the Arab world) as a demonstration of “the huge potential global players see in this market.”
  • Japan’s Softbank (SFTBY) is on course to put 25% of its stake in the British chip designer ARM Holdings (ARMH), valued at roughly $8 billion, into a technology investment fund it has created together with Saudi Arabia’s sovereign wealth fund.

Within the GCC, countries such as the UAE (UAE), Saudi Arabia (KSA), Egypt, Jordan, and Lebanon are expected to attract much of the early stage and private equity investments.

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