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Mobile powering the digital economy in the Middle East

February 14, 2022

Group of islamic girls using smart phone

Jonathan Kriegel

CEO

The Middle East continues to see high uptake of digital technologies by its consumers, though progress varies considerably from one country to another. With some of the fastest mobile connection speeds globally, it’s no surprise that smartphones play an increasingly important role in people’s lives, especially when it comes to shopping, entertainment, banking, and paying for goods and services.

Qatar has a population of less than three million, for example, 99% of whom are Internet users. But the country has an average median mobile network speed of 178Mbit/s as measured by Ookla speed tests conducted in January 2021. Mobile speeds in the United Arab Emirates (UAE) are almost as high at around 136Mbit/s while dropping to 91Mbit/s in Saudi Arabia and 84Mbit/s in Kuwait. Yet while Palestine (7.5Mbit/s) and Iraq (14.4Mbit/s) have some of the slowest mobile connectivity speeds in the world, other small states like Oman (47Mbit/s) and Lebanon(40Mbit/s) again have relatively mature mobile network infrastructure.

High mobile network speeds drive smartphone usage

99% of the adult population in Bahrain, Kuwait, and the UAE accesses the web. In comparison, 97% in Saudi Arabia, 95% in Oman, and 90% in Israel do. Yet Internet users as a percentage of the total population are considerably lower in Jordan (67%), Iran (70%), Iraq (75%), and Lebanon (78%).

Those high mobile download speeds drive more people to surf the web using their smartphones. Figures compiled by Statcounter indicate browsing on mobile phones accounts for 81% of all web traffic in Syria, 76% in Iraq, 72% in Saudi Arabia, and 68% in Iran. However, this drops to 58% in the UAE and 55% in Israel.

And in Yemen, 75% of web traffic is served to mobile phones despite the country’s Internet users accounting for just 27% (8m) of the country’s 30m population. Statcounter also calculates that in Lebanon, the percentage of web traffic originating on mobile phones increased 63% between December 2020 and December 2019, overtaking laptops and PCs for the first time.

Not all of that web traffic derives from smartphones either, with some of the less affluent states in the Middle East exhibiting comparatively low smartphone ownership rates. The UAE has the third-highest penetration of smartphones per head of population in the world (169%), pipping Qatar (161%) and a long way ahead of Saudi Arabia (115%) and Oman (111%). But others fall short of the global average (105%), including Palestine (84%) and Lebanon (67%).

Entertainment and shopping are favorite pastimes

Consumers in the Middle East indeed occupy significant amounts of time accessing the web via the mobile phones they do have in their possession. Internet users aged between 16 and 64 in the UAE spend an average of four hours and 35m minutes a day using the Internet on mobile phones, according to GWI statistics compiled in the third quarter of 2021. This is the highest in the region, whereas adults in other Middle East countries all fall below the global average of three hours and 43 minutes.

Statistics show that a considerable chunk of that time is spent accessing multiple forms of digital content. GWI estimates that 68% of adults in the UAE pay for some form of digital content at least once a month, followed by 61% of their counterparts in Saudi Arabia and 45% of Israelis. The percentage of Internet users aged between 16 and 64 accessing Netflix and other over the top (OTT) video streaming platforms tends to be lower in the Middle East than elsewhere. This may be because of stricter laws around content and censorship in the region.

Even so, almost 96% of adult Saudis and Israelis watch TV content from these sources each month, ahead of 94% in the UAE. Indeed, watching videos, TV shows, and movies was the third most popular reason for using the Internet in the UAE and Saudi Arabia, according to GWI figures compiled in the third quarter of 2021, cited by 56% and 59% of adults aged between 16 and 64 respectively.

Many people in the Middle East are also enthusiastic online shoppers. Around 58% of UAE citizens between the ages of 16 and 64 buy something online at least once a week, according to GWI, with Statista’s Digital Market Outlook estimating that they spend on average US$1,561 in the process. That’s followed by half of Israelis (average spend US$1,605) and 49% of Saudis (US$475). Again the smartphone plays a central role in many purchases, with mobile phones used to buy something online at least once a week by 32% of UAE citizens and 26% of Saudis and Israelis.

Growing popularity of mobile payments

GWI also provides interesting statistics on how consumers in the Middle East fund their eCommerce purchases. Just over a quarter (26%) of Saudis use mobile payment services offered by smartphone manufacturers such as Apple Pay, Google Pay, or Samsung Pay, for example, compared to 23% of their counterparts in the UAE and 13% in Israel.

Many people in the region don’t have bank accounts, though. In Yemen, only 6.4% of the country’s 30m population have an account with a financial institution, and only 0.4% a credit card, according to World Bank financial inclusion data. A quarter of adults in Palestine aged over 15 have bank accounts, but just 3% credit cards, while the numbers rise to 45% and 15% respectively in Lebanon.

Lebanon and Yemen record less than 1% over-fifteens have mobile money account that store funds in an app linked directly to a mobile phone account like M-Pesa. However, the adoption rate for this type of payment mechanism is considerably higher in other Middle Eastern countries. In Iran, for example, the World Bank calculates that 94% of people have accounts with a financial institution (94%) and 9.1% credit cards, but over a quarter (26%) also have mobile money accounts.

Credit and debit card ownership is much higher in the UAE (45% and 83%, respectively), but it too sees over a fifth of its population using mobile money accounts as of January 2022. And from a total population of over 40m people, 23% of adults in Iraq have a bank account, and only 1.8% have credit cards, while 4.2% have a mobile money account.

A report from Juniper Research –Mobile Money in Emerging Markets: Segment Analysis, Vendor Strategies, and Market Forecasts 2021-2026 – estimates that the total value of mobile money in emerging markets across the world will expand from US$555bn in 2021 to US$870bn by 2026, representing 60% growth. But Juniper also predicts that two regions – the Middle East and Africa will account for over half (56%) of that total by the end of the forecast period. Multiple companies offer mobile payment and money transfer services in the Middle East, including M-Pesa and Orange Money.

Elsewhere reports from McKinsey suggest that digital wallets will become the most preferred mode of payment in the Middle East over the next five years.[i] As mobile networks continue to expand and reach more of the region’s consumers while simultaneously getting faster and more reliable, the smartphone will inevitably become the go-to digital device for an even more significant segment of its population over time.


[i] The future of payments in the Middle East, McKinsey & Company, 23rd August 2021

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