Dubai: In three years, the UAE has grown the size of its investment in technology from $35 million (Dh128.5 million) in 2013 to $799 million in 2016, according to a new report released by Dubai SME on Wednesday.
The State of Digital Investments in Mena report highlights how the UAE remains the preferred destination for investors and entrepreneurs for the fourth year in a row.
“The directives of His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, to develop an investor-friendly economy and provide data to ensure successful investments whether locally or from around the world, have led to tangible and documented achievements as the UAE maintained its position an investment destination of choice in the region,” said Shaikh Hamdan Bin Mohammad Al Maktoum, Crown Prince of Dubai.
He added that “the UAE has clear legislative and regulatory frameworks that not only protect the rights and interests of investors but also enable emerging investors and entrepreneurs to achieve the highest degree of success.”
In 2016, 90 per cent of all dollars invested in the Middle East and North Africa (Mena) went in to the UAE. This trend is set to continue, driven by the fact that growth stage companies are increasingly Dubai-based.
“Souq and Careem contributed enormously to this increase, both in the UAE and across the Mena region,” Omar Christidis, Founder and CEO of Arabnet, said.
The two companies, which raised $275 million and $350 million respectively in 2016, accounted for 78 per cent of all dollars invested in the region last year, disproportionately skewing the numbers.
UAE share of deals
Despite that, “over the past four years the UAE has consistently outranked all other countries in the region, holding the highest proportion of deals among the top five countries, and its share has been rising steadily,” according to Christidis.
The UAE has grown its share of deals from 28 per cent in 2013 to 41 per cent in 2016.
For entrepreneur Craig Moore, who moved to Dubai from the UK to found his business Beehive, the stability and momentum of the UAE represented an attractive location from which to expand into the rest of the region.
“The UAE is increasingly becoming an easy entry point to explore the rest of the region, whilst the stability and infrastructure of the country is very advantageous,” Moore said in an interview at the ArabNet event in Dubai.
“It’s easier to talk to institutions, be they corporate or financial, if you’re regulated,” he added.
Moore described the continual improvement of the UAE’s enabling environment for start-ups, describing how the leadership was introducing new initiatives to drive innovation, including attracting talent, streamlining the setting up of businesses, and reducing costs for young companies.
“All of this will mushroom in to an ecosystem, and that leads to more entrepreneurs, more investors, more events, and you start to have a buzz. There’s a lot happening right now, and more is going to happen,” he said.
The next thing, he added, was the creation of innovation domestically, instead of the importing it.
The vast majority of Mena region’s investments were made in the transactional, or eCommerce, sector, according to the report.
Cumulatively, between 2013 and 2016, the value of investments in transactional businesses was $1.4 billion, compared to $93 million in media, $98 million in Software as a Service (SaaS), and $129 million in technology businesses.
Again, these numbers are simply indicative, as they are driven by a few large deals.