April 22, 2024 - This Thirty-Year AI Expert Challenges the Notion That AI Can Think

How AI Investments Could Change the Middle East

Saudi Arabia’s reported $40 billion artificial intelligence (AI) investment fund represents a leap to redefine the Middle East’s role in the global technology landscape. 

The fund is part of a trend of Middle Eastern countries scrambling to position themselves as leaders in the global AI race. The vast investments underscore AI’s potential to reshape industries and fuel economic expansion. A PwC study estimates that by 2030, the Middle East could capture 2% of AI’s total global benefits, amounting to approximately $320 billion.

“Successful AI development efforts could not only lead to a wave of local creativity and innovation such as new startups, and attracting generation of students to the field, but could spread the resulting prosperity across the region, countering local disbalances and democratizing the knowledge economy to attract the brightest minds,” geopolitical analyst Irina Tsukerman told PYMNTS in an interview. 

Regional Ambitions

Saudi Arabia’s Public Investment Fund, boasting over $900 billion in assets, is in discussions with premier venture capital entity Andreessen Horowitz, among others in Silicon Valley, to examine potential joint efforts for the initiative, The New York Times reported recently. The initiative is part of a broader strategy to diversify the kingdom’s oil-dependent economy and establish itself as a global AI leader, Bas Kooijman, CEO and asset manager at DHF Capital, told PYMNTS in an interview.  

“The fund could spur innovation, attract global tech partnerships, and accelerate AI adoption across various industries within the region, contributing significantly to Saudi Arabia’s GDP,” he added. 

Saudi Arabia’s investment in AI could act as a catalyst for transformative change within the Middle East’s tech ecosystem, Steve Brotman, the founder and managing partner of Alpha Partners, told PYMNTS in an interview.

“Firstly, a $40 billion injection into AI signifies an unprecedented level of commitment to technological advancement in the region,” he said. “This could lead to the establishment of a robust AI research and development infrastructure, attract world-class talent, foster innovation, and facilitate the creation of cutting-edge startups and AI solutions.

“It could also encourage other countries within the Middle East to increase their investments in technology and lead to a regional tech boom. This could stimulate economic diversification, reduce oil dependency, and position the Middle East as a global contender in the AI domain.”

While the United Arab Emirates (UAE) spearheaded AI initiatives with the world’s first Ministry of Artificial Intelligence in 2017, Saudi Arabia’s massive investment dwarfs other regional efforts, Michael Ashley Schulman, partner and chief investment officer at a Southern California-based Running Point Capital, a multifamily wealth management firm, said in an interview with PYMNTS.

“Saudi Arabia is very forward-looking, and not only does not want to be left behind in AI advancements but wants to take a regional and global lead in AI,” he said.

“To do so, they know they have to overcommit as a signal to other investors and tech leaders of how vested they are. AI is expensive; a mere half-billion or a billion dollars would indicate interest but wouldn’t move the geographic needle.”

The potential impacts of AI funding in the Middle East are far-reaching. “AI adoption is accelerating in enterprise sectors, from risk modeling in banking to image recognition in utilities,” Pawel Satalecki, managing director at Avenga MENA, told PYMNTS.

“These use cases, along with promising B2C [business-to-consumer] applications, point to major disruptions across industries, ultimately contributing to economic diversification, new job creation, and potentially significant GDP growth.”

The Middle East is emerging as a player in AI. The UAE stands at the forefront, with its National Artificial Intelligence Strategy 2031 aiming to position the country as a global AI leader. The government’s focus on AI research, development and deployment across sectors like healthcare, education and transportation is already yielding results. For example, Dubai has deployed AI-powered traffic management systems to optimize flow and reduce congestion. Meanwhile, the UAE recently announced a $500 million AI investment

Other countries in the region are also making strides. With its vibrant tech ecosystem, Israel is a hotbed for AI innovation, particularly in cybersecurity and autonomous systems. Egypt focuses on AI for agriculture and smart city development, while countries like Bahrain and Oman leverage AI to boost financial services and government efficiency.

Overcoming Challenges

Analysts said that while the potential for AI in the Middle East is immense, success is still being determined. A key hurdle is the region’s need for more skilled AI professionals.  

“To become a true AI hub, the Middle East needs significant investments in AI education at all levels, building a sustainable talent pipeline, and fostering an ecosystem of local startups,” Kooijman said.

Even with all the funding, Tsukerman said that Saudi efforts to generate AI chips will likely need to catch up to those of other countries. She noted that the U.S., which is more technically advanced than the Middle East, needs help attracting qualified professionals to the new chip-development initiatives.

Satalecki highlighted the potential for governments to lead innovation: “It’s notable that some of the biggest strides in AI adoption are coming from government agencies in the Middle East. This top-down approach, a common driver in the region, could accelerate the pace of change compared to purely private-sector-led initiatives.”

To accelerate progress, international collaboration will be necessary. “The Middle East needs to actively import external knowledge and resources at this stage,” Satalecki suggested. “Partnerships with experienced AI service providers, tech companies and academic institutions can help bridge the gap while building local capabilities for sustained growth.”

AI in the Middle East

Here’s a look at some of the big players in the region:

UAE: Besides the Mohamed bin Zayed University of Artificial Intelligence and the Dubai Future Foundation, the UAE has launched several other projects. The UAE’s National Program for Artificial Intelligence includes initiatives such as the AI Lab, which focuses on developing AI solutions for government services, and the AI Ventures program, which provides funding and support for AI startups. The country has also established the Centre for the Fourth Industrial Revolution UAE, in partnership with the World Economic Forum, to explore the impact of AI and other emerging technologies on society and business.

Saudi Arabia: The Saudi Data and Artificial Intelligence Authority (SDAIA) has launched several initiatives, including the National Center for AI (NCAI), which conducts research and development in natural language processing, computer vision, and robotics. The country has also established the Saudi Company for Artificial Intelligence (SCAI), a government-owned company that aims to accelerate AI technology commercialization. In addition, Saudi Arabia has partnered with companies like Huawei to develop AI applications in healthcare, transportation and energy.

Qatar: Qatar has invested in AI, focusing on education and research. The Qatar Computing Research Institute (QCRI), part of Hamad Bin Khalifa University, conducts research in Arabic language technologies, data analytics and cybersecurity. Qatar has also established the AI National Strategy, which outlines the country’s vision for AI development and includes initiatives such as establishing an AI Park to support startups and creating an AI Consortium to foster collaboration between industry, academia and government.

Bahrain: Bahrain has launched the Bahrain FinTech Bay, a financial technology and AI innovation hub. The hub provides a platform for startups, financial institutions and technology companies to collaborate and develop AI-powered solutions for the financial sector. Bahrain has also established the Bahrain AI Society, which aims to promote AI awareness and adoption across various sectors, including healthcare, education, and transportation.

Oman: Oman has launched the Oman ICT Group, which includes a dedicated AI unit that develops AI applications for government services and industries such as oil and gas, tourism and logistics. Oman has also partnered with companies like Microsoft to establish an AI Center of Excellence, which provides training and support for AI professionals and startups.