arab digital economy index 2020 covid 19 and the need for

COVID 19 AND THE NEED FOR TRANSFORMATION
TO THE DIGITAL ECONOMY
Copyright 2020 © The Arab Federation for Digital Economy and the Council of Arab Economic Unity, the League of Arab States.
All rights reserved. No part of this publication may be reproduced, transmit- ted or distributed in any form without prior written permission of the pub- lisher, except in the case of brief quotations for research, studies, reviews and non-commercial uses permitted by copyright laws.
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Title of publication: Arab Digital Economy Index 2020
ISBN: 978-9948-25-848-3
Printed in the United Arab Emirates (UAE) with the approval of the National Media Council (MC-03-01-7227199)
First Edition
Jordan
Acknowledgments Foreword Executive Summary Part One: Methodology and Main Pillars Introduction
10 11 14 19 20
1. The importance of the ADEI post-Covid 19 2. What is new in the ADEI 2020? 3. Structure and methodology:
Table of Contents
3.1 The Strategic dimensions of the digital economy in Arab countries 3.2 Foundations for building the ADEI 3.3 Distribution of ADEI pillars over strategic dimensions 3.4 Developing ADEI pillars 3.5 ADEI data methodology 3.6 Dealing with outliers 3.7 ADEI country score calculation
4. Determining benchmarks
Part Two: Findings of the ADEI 2020
5. Main findings of the ADEI 2020
5.1 Comparing score value of mean indicator of the Arab region to the benchmark scores 5.2 Score value according to strategic dimensions: 5.3 Ranking of Arab countries according to strategic dimensions 5.4 ADEI Arab country ranking 5.5 Comparative performance of Arab countries according to ADEI
Arab Digital Economy Index 20206 Arab Digital Economy Index 20207
22 25 26
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6. Analysis of Arab countries’ digital performance 57
Table 1: Pillars for building the ADEI Table 2: Structure of Pillar 1 – Institutions Table 3: Structure of Pillar 2 - Infrastructure Table 4: Structure of Pillar 3 - education and skills Table 5: Structure of Pillar 4 – E-government Table 6: Structure of Pillar 5 – Innovation Table 7: Structure of Pillar 6 – Knowledge and technology Table 8: Structure of Pillar 7 – Business environment and network readiness Table 9: Structure of Pillar 8 – Growth of financial market services Table 10: Structure of Pillar 9 – Sustainable development Table 11: Pillars and indicators with missing data Table 12: Ranking of Arab countries according to strategic dimensions
List of Tables
Figure 1: International reports and references used in the preparation of the ADEI 2020 Figure 2: Strategic dimensions of digital transformation in Arab countries Figure 3: Distribution of pillars over different strategic dimensions Figure 4: Calculating final score for each country Figure 5: Score value according to strategic dimensions Figure 6: Strategic dimensions Figure 7: ADEI map of Arab countries Figure 8: Ranking of Arab countries compared to average of the region and benchmark score
List of Figure
37 38 39 39
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Main findings References: High committee for report preparation and review
190 197 200
UAE Qatar Saudi Arabia Bahrain Oman Kuwait Jordan Morrocco Tunisia Egypt Lebanon Algeria Iraq Syria Mauritania Yemen Sudan Libya Djiboati Comoros Somalia Palestine
58 64 70 76 82 88 94 100 106 112 118 124 130 136 142 148 154 160 166 172 178 184
We extend our thanks and gratitude to the government of the United Arab Emirates led by his Highness General Sheikh Mohamed Ben Zayed Crown Prince of Abu Dhabi for his kind patronage and deep belief in the importance of an overall Arab renaissance particularly in development areas related to modern IT. We also sincerely thank Lieutenant General Sheikh Seif Ben Zayed Al Nahayan, Deputy Prime Minister, Minister of Interior and the Honorary President of the Federation of Arab Digital Economy for his constant motivation, follow up, and encouragement of the work team to present a report that matches developmental aspira- tions for the Arab region.
Our gratitude extends to members of the work team of the Arab Vision for Digital Economy for their diligent efforts to push the Arab digital wheel forward. This is the one of the Vision’s initiatives and most recent publication that seeks to enhance the role of the digital economy in the development of the Arab region.
Acknowledgments
It gives me great pleasure to present the second Arab Digital Economy Index (ADEI) report which contains the most recent data and conclu- sions drawn from solid and reputable international reports published in 2019-2020.
This report is issued as the world enters the fourth and last quarter of 2020, a year that has witnessed many critical events with far reaching economic implications. Most importantly among these is the Corona- virus - Covid 19 – a pandemic which has spread all over the world. No doubt Covid 19 will have long-lasting effects particularly as countries around the world have had to adopt strict preventive health measures in their fight against the pandemic. These measures have necessitated lockdowns and closures and resulted in halting production and economic growth. It is noteworthy to mention that this most recent economic downturn has cost the world a global bill of around US Dollars 12 trillion,1 which does not include the lost economic and developmental opportunities in production and consumption. As far as the Arab region is concerned, while the plan was to achieve a 4% economic growth rate, the total direct losses are now estimated to be US $ 180 billion. In fact, this may be an over-optimistic estimation for some international reports have estimated the losses and lost opportunities to reach a high of US $ one trillion.2
Foreword
2. Buller, A. (2020) Middle East to lose ‘trillion of collars’ in coronavirus crisis. Arabian Business. https://www.arabi- anbusinesss.com/politics-economics/451833-bill-gates-middle-east-to-lose-trillions-of-dollars-in-coronavirus-crisis
Notwithstanding the above, it is important that we do not surrender to obstacles and challenges. We must remember that we still have a long list of activities and tasks to accomplish that pre-dated the Covid 19 pandemic. This includes finalizing the Grain and Feed Trade Associ- ation (GAFTA) agreement and building and reconstruction of the Arab countries that have suffered wars and conflict in the last decade. Add to this the challenges related to the decline in prices of oil and decrease in consumption, the far-reaching trade wars between East and West, the global economic slow-down and now Covid 19. Within these economic pressures with substantial social and political repercussions that touch the life of every Arab citizen, we need to put the economic roadmap in front of our eyes and ask ourselves: How do we get out of these multiple and successive crises?
We may not have immediate or magic solutions but there is no doubt that knowledge and proper planning are the way out of the crisis. It is essential, however, to face the new situation with realism, accuracy and without embellishments. We need to read well and understand the sur- rounding global environment so we can envision and plan for the future. This is the pre-requisite for any sound planning and organization.
It is also in this context that we envisioned the important role that the ADEI report can play and the service it can offer to policy makers, com- petent authorities, experts and Arab readers, hoping that they would use it to understand the status of the Arab digital economy on the basis of most recent data. Each of the 22 Arab countries can now determine its capabilities and status along the nine pillars presented in this report including infrastructure, innovation, markets and business, institutional and governmental structures, education and skills, e-governments services, knowledge
and technology, financial markets and sustainable development. Each pillar has been articulated using a set of international indices which ex- plain in detail areas of strength and improvements as well as challenges facing each country.
We hope this document succeeds in presenting an analytical and developmental tool for decision makers, experts, researchers and Arab readers. We also hope it represents an initiative and an effort towards a better and brighter future for Arab citizens.
Dr. Ali Mohammed Al-Khouri Advisor to the Council for Arab Economic Unity Chairman of the Board of the Arab Federation for Digital Economy
In light of the feedback received from Arab, international and academic institutions on the first report of the Arab Digital Economy Index (ADEI) and the revisions introduced later on, the second ADEI report to be issued end of 2020 has been updated in substantial ways. The sub-indicators and calculation of weight have been revised and more weight as- signed to dimensions that reflect the main pillars of the digital economy particularly. This was a necessary step as a large number of Arab countries - around half - still suffer weaknesses especially in the dimension of institutions and infrastructure.
The main findings of the 2020 ADEI revealed that the United Arab Emir- ates continues to occupy the highest rank among the Arab countries, with a score value of 70.6 and a 7-point difference from the country in the following rank. In general, the Gulf countries are on top of the list of the digital landscape.
According to the report findings, the Arab countries were divided into three clusters as follows: The first cluster comprises the Digital Leaders. These are countries which attract international investments and can be contrasted to digitally advanced countries. They occupy the positions from 1 to 5 as follows: the UAE, Bahrain, Oman, Qatar and Saudi Arabia. The five countries are characterized by their ability to adapt quickly to changes as well as their vast flexibility in making the shift towards smart cities and modern IT applications, in addition to the ease by which they achieved financial and digital inclusion, automation and linking all government services.
The second cluster comprises the Digital Accelerators which are the countries that have gone a reasonably long way in the path towards -
Executive Summary digital transformation. They may be considered investment attracting albeit less than the first cluster. These countries occupy the positions from 6 to 12 and include: Kuwait, Egypt, Jordan, Lebanon, Morocco, Tunisia and Algeria.
The seven countries have sufficient knowledge bases and infrastructures that could enable them to advance and become Digital Leaders within the middle range of two to four years, if they are able to take decisive and daring steps towards completing their digital transformation plans. To do that, they need to resume their digital connectivity projects and deepen their digital IDs plans in government platforms so the latter can offer services accurately and efficiently to all citizens. These countries have not completed their digital inclusion plans and many of their economic activities are still taking place outside the official systems. Also, they are not fully financially or digitally inclusive.
The third cluster includes the Digital Activators. These are the countries that could benefit from more digital activation and investments to maximize their digital infrastructural capacities. They have the support of the Digital Leaders and international organizations and occupy the ranks from 13 to 22. They are: Iraq, Syria, Mauritania, Yemen, Sudan, Dji- bouti, Palestine, Comoros, Libya and Somalia. At different levels, these countries need to resume work on their communications infrastructure, and improve their internet services and cybersecurity. They also clearly need strategic plans for digital transformation and digital economy to catch up and make careful strides towards modernization. Some of these countries still suffer instability following the Arab uprisings in the second decade of the current century or as a result of events predating the Arab uprisings.
We have undertaken some benchmark comparisons in order to identify gaps in Arab digital economy performance, comparing Arab results with those of Singapore and Malaysia which represent two digitally rising and advanced countries. Using the mean performance of Singapore and Ma- laysia, the comparison with the Arab region showed a large difference, with the UAE position coming closest to the benchmarks with a 6-point difference.
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Joint Arab cooperation to face challenges and seize opportunities to set an agenda for digital transformation.
Sound and accurate planning to face risks of digital globalization, build human capabilities and create new work opportunities.
Establishment of investment funds to finance plans of digital transformation and innovation in the Arab region.
Design and implementation of digital projects to increase participation rates, digital inclusion, transparency, and accountability and enhance quality of life.
Positive impact on society and adherence to the SDGs
Update of laws and legislation to ensure trust-building, digital security and respect for individual privacy.
Part One Methodology and Main Pillars1
Arab Digital Economy Index 202019
The second report of the Arab Digital Economy Index (ADEI) 2020 is a special and vital publication because of the exceptional current global situation resulting from the spread of Covid19. On 11 March 2020 the World Health Organization (WHO) announced that the Coronavirus is indeed a global pandemic. Since then, the Covid 19 situation has escalat- ed and number of Corona cases risen resulting in heightened social and economic uncertainties and fear of an unprecedented and impending economic crisis. These developments were reflected in the tension faced by states to find a balance between safeguarding the lives of people on one hand, and sustaining economies and livelihoods on the other. Within this crisis, digital technology and solutions have proved to be important and necessary tools in helping governments continue to provide basic public services and face crises and emergencies.
It is in this context that the ADEI measures the extent to which Arab counties have coped with global changes in digital technologies and related issues. It comes within the framework of the activities of the Arab Federation of Digital Economy (AFDE) and the initiative of the Arab Vi- sion for the Digital Economy under the umbrella of the Council of Arab Economic Unity (CAEU) of the League of Arab States.
Countries around the globe responded to the Covid 19 not only through implementing quarantines and closing borders and public places, but also through the mobilization of resources to maintain infrastructural and digital facilities and find new and innovative digital solutions. This was reflected in governments’ initiatives to swiftly launch a number of services to provide vital industries and citizens with the needed resources. The crisis has clearly been affecting all vital sectors and systems starting from health care to security, education, training, judiciary, economy
Introduction
and stock and trade markets as well as energy, transport, culture and sports. Since early 2020, many countries sought to accelerate the shift towards digital economy and endorsement of digital solutions. The re- actions of governments and citizens after the pandemic demonstrated their readiness to adjust to new means of communications and organization of life.
The global economy suffered a major crisis. Some sectors were fully or partially paralyzed and employees and workers lost their jobs and were laid off. However, a large number of companies has been able to maintain full or partial efficiency without any major disruption through adapting digital technologies.
Working remotely has become the norm in most of the private and public sectors. Home learning through interactive digital platforms has helped maintain the interest of students in education. Many firms replaced the roles and tasks played by employees with digital tools, solutions and services. The wholesale and retail trade sectors as well as restaurants started relying on home deliveries through online orders.
The internet proved to be a window to the world. For most of the countries and their citizens, it became a prerequisite for resuming life without major disruption. The internet became a public service and access has been provided to all citizens. Thus, the digital economy played a historic and exceptional role in facing the global pandemic which humanity was not prepared for. Countries with more advanced digital capabilities have been more able to stand against the pandemic; less so for countries that are less advanced in this area.
Covid 19 and the ensuing shift to digitalization – beyond the planning of any state – has however, resulted in large disparities between countries and social groups within the same country. The more advanced countries
have demonstrated more flexibility in dealing with the repercussions of the health crisis. Within the same countries, some social and demo- graphic groups were more digitally capable and empowered, while other groups have been suffering digital illiteracy that is hard to overcome. Thus, one can say that digitalization affects equality in society and the digital gap deprives large swaths of the population of the ability to reap the fruits of new technologies. One fears that such groups might be left behind in the post Covid 19 time.
1. The importance of the ADEI post-Covid 19
The second ADEI report is crucial in identifying the digital gaps in the Arab countries and within the same country, in a world where digital transformation has become a life necessity and not a luxury as described only one year ago. At the present time, governments must ensure that all citizens have access to the same services and opportunities made available through digitalization.
The pandemic has demonstrated the positive potentials that a digitally- transformed world can offer as well as the benefits of control over new technological tools and the introduction of new work practices and models. However, it is important to remember that this shift requires new and swift measures to buttress the transformation particularly in Arab countries that lack the necessary infrastructure and tools for digital solutions. In such a context, governments must give priority to individuals who rely on informal income generating activities for survival.3
To what extent are countries ready to use digital technology in a productive way?
Do states have scientific, institutional and legal frameworks that fa- cilitate the endorsement and use of digitalization?
To what extent are states prepared in terms of innovation, research and development to respond to the pre-requisites of change?
What are the capabilities of adapting to the consequences of digital disruption?
What are the business sector’s technological capabilities and degree of readiness for digital transformation?
To what extent is the required knowledge to unravel, understand and build new technologies available?
To what extent is the technology available that assesses the general context and allows the development of more digital technologies?
To what extent are countries ready for the future of digital transfor- mations?
What is the effect of technology on the speed of achieving the SDGs?
The ADEI helps respond to a number of important questions in the Arab countries as they position themselves vis a vis best international practices. The questions that the Index seeks to answer are:
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Identifying areas of weakness and strength in digital transformation
Building local and international investment decisions which business people and policy makers use to understand and design future requirements for catching up with the swift technological changes.
Helping international organizations which have declared their full support to the post Covid 19 digital transformation plans particularly in countries which need assistance in accelerating the process. Among these international organizations are: the World Bank (WB), the International Monetary Fund (IMF), the International Finance Corporation (IFC), and the European Union (EU). These organizations will need to identify their priorities in extending assistance to the most needy countries, according to their rank and the weakest points along the nine pillars that reflect capabilities of transformation.
Answers to the above questions help determine many of the issues that motivated the building of the ADEI and are as follows:
2. What is new in the ADEI 2020?
In order to refine the report methodology by taking into account lessons learned from the first ADEI report along with the information provided by the member states and external recommendations and feedback, the technical team reviewed a number of international reports. It also paid special attention to the evaluation and ranking of countries based on several aspects and using results of technological surveys.
Based on this comprehensive review process, the team introduced some major modifications to the indicators used in the ADEI 2019 which relied on 2018 data. They merged some pillars and added new important indicators on trust, safety, inclusiveness and cyber security as well as work environment and readiness for digital transformation. In addition, pillars on knowledge and innovation were developed.
Despite the availability of new and important international reports, cov- erage of Arab countries is limited. For example, the Global Fintech Index which ranks countries according to the development of their financial technology described in the report as the electric power needed for digital transformation, included only three Arab countries.4 Similarly, the IMD World Digital Competitiveness Ranking 2019 report covered 63 countries and included only four Arab states.5 We could not therefore include these reports in building the ADEI but benefitted from the IMD structure in our own re-structuring the ADEI which now includes some of the main and sub-indicators used in the IMD.
The dearth of accurate statistical data on the financial technologies sector in the Arab region, prevented us from illuminating that vital economic activity. We therefore recommend building an Arab country-specific data base on financial services to be used in the third report.
Reference to the strategic dimensions of the Vision of the Arab Dig- ital Economy.
The reported indicators reflect current ICT issues
The impact of technology on the achievement of the SDGs
While the team introduced changes in the ADEI 2020, it made sure to preserve the following main principles:
In the next section we review the structure and methodology of the 2020 ADEI.
3. Structure and methodology:
The ADEI presents a comprehensive overview of the digital performance of 22 Arab countries. It enables us to assess the current status of each country independently from each other, while taking into account the availability and diversity of economic resources in each country. The overall aim is to identify the digital gap both on the level of the countries as well internationally.
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The Global Innovation Index (GII), Cornell University, INSEAD, and World Intellectual Property Organization (WIPO), 20199
The Sustainable Development Report, Bertelsmann Stiftung and Sustainable Development Solutions Network (SDSN), 202010
The Network Readiness Index (NRI), Portulans Institute and Sterile Technologies Limited (STL25), 201911
Figure 1: International reports and references used in the preparation of the ADEI 2020
THE EASE OF DOING BUSINESS 2020
THE GLOBAL COMPITATIVE REPORT 2019
GLOBAL INNOVATION INDEX 2019
E-GOVERNMENT SERVEY 2020
SDG REPORT 2020
3.1 The Strategic dimensions of the digital economy in Arab countries
The calculation of the ADEI is based on five strategic dimensions as indicated by the following figure:
Digital Foundations Digital
Figure 2: Strategic dimensions of digital transformation in Arab countries
Digital foundations: This strategic dimension seeks to achieve a level of infrastructure for knowledge and ICT in Arab countries, that qualifies them to catch up with accelerated global technological changes.
Digital innovation: This dimension seeks to enable all Arab countries to catch up with the globally accelerated technological future and provide education and skills systems that help promote innovation and modern technological trends.
Digital citizen: This dimension seeks to maximize individuals’ use of digital technology and provide a level of education and skills that qualifies them and enhances the quality of their lives.
Digital business: This strategic dimension seeks to empower firms to use ICT optimally, contribute effectively to the digital economy and provide a digital work environment that is conducive to technological changes.
Digital government: This strategic dimension seeks to provide a digital government that targets investments in ICT for the benefit and in the service of citizens, reduces costs of transaction, raises the quality of life of citizens and achieves transparency. Digital government requires the presence of effective governance mechanisms in the interest of the three related parties: individuals, firms and governments.
3.2 Foundations for building the ADEI
The Index consists of nine sub-pillars3 that allow us to cluster Arab countries according to their performance along 62 main and sub-indicators. The following table details the nine pillars of the ADEI.
Serial number Pillars Main Indicators Sub-indicators
1 Institutions 3 3
2 Infrastructure 2 4 3 Education and skills 5 0 4 E-Government 5 0 5 Innovation 5 0 6 Knowledge and technology 4 0
7 Business environment and network readiness
5 8
8 Growth of financial market 6 0 9 Sustainable development 2 0
Total 37 15
3.3 Distribution of ADEI pillars over strategic dimensions
The following figure explains the distribution of the pillars over the different strategic dimensions. It is important to remember, however, that the SDGs pillar and the achievement of its goals through technological development is a dimension that intersects with all other dimensions and pillars.
3. For more information, refer to the first ADEI report.
Strategic dimensions
Digital foundations
Digital innovation
Digital government
Digital business
Digital citizen
Figure 3: Distribution of pillars over different strategic dimensions
3.4 Developing ADEI pillars
In the ADEI 2020, pillars subject to evaluation are as follows:
Pillar 1: Institutions
Several studies indicated that technology has a positive impact on economic growth rates as well as the ability to speed up the achievement of the SDGs and contain crisis, which was proved during the Covid 19 crisis.
However, this positive impact cannot be sustained unless effective governance mechanisms are put in place for the integration of technology in partnership between the three main stakeholders: individuals, firms and governments. Furthermore, building digital trust is essential. Trust is a concept that denotes the level of stakeholders’ confidence in the ability of governments or institutions to maintain the safety and security of networks, infrastructures and systems particularly as they relate to con- fidential data and information.12 Given the importance of the concept, the pillar of institutions has been restructured in ADEI 2020 to add digital trust as a new main indicator, followed by four sub-indicators as follows:
Pillar 1 Institutions
1.1 Political environment
1.1.2 Government effectiveness
1.2 Regulatory environment
1.2.1 Regulatory quality
1.3.3 Cybersecurity
Table 2: Structure of Pillar 1 – Institutions
Pillar 2: Infrastructure of ICT
The pillar of infrastructure was redesigned in the ADEI 2020 to reflect the extent of availability of ICT services, and their accessibility and af- fordability. Electronic participation was added to the pillar of the e-government and became integral to the evaluation of its quality. In the ADEI 2020 report, Pillar 2 is as follows:
Pillar 2 Infrastructure
2.1.2 Percentage of individuals using the internet
2.1.3 Fixed (wired) broadband subscriptions per 100 inhabitants
2.1.4 Active mobile-broadband subscription per 100 inhabitants
2.2 Logistic performance
Pillar 3: Education and skills
This pillar was fully developed to include many indicators that reflect depth and quality of the educational process as well as acquired skills. Indicators included: average years of education, expected years of education, critical thinking, ratio of students to teachers in primary education, skills of current workforce, quality of vocational training, skills of graduates, digital skills among active population and the availability of skilled workforce. The following table reflects the structure of Pillar 3.
Pillar 3 Education and skills
3.1 Current workforce
3.3 Future workforce
3.5 Adult literacy rate, %
Pillar 4: E-government
This pillar has been restructured and a new indicator – e-participation – added. E-participation denotes the use of ICT to enable individuals to participate in decision making, administration and service provision and evaluation. Thus, e-participation is often considered part of the e-government. This definition underscores the vitality of the triangle: citizens, public administration and politicians as the main stakeholders in the e-participation initiatives along with government procurements and contracts for the purchase of advanced technological products, the extent of applying digitalization and quality of government services.
The following table shows the structure of Pillar 4 of the e-government.
Pillar 4 E-government
4.1 Online services
4.2 E -participation
4.4 Government procurement of advanced technology products
4.5 Future orientation of government
Table 5: Structure of Pillar 4 – E-government
Pillar 5: Innovation
Components of Pillar 5 have been developed to reflect innovation capabilities which are some of the most essential enablers for the shift to the digital economy. The following table shows the indicators of Pillar 5
Pillar 5 Innovation
5.1 Multi-stakeholder collaboration
5.2 Scientific publications
Table 6: Structure of Pillar 5 – Innovation
Pillar 6: Knowledge and technology
This pillar was renamed and its indicators were modified to reflect the level of knowledge and technology which are closely linked to the components of Pillar 5. The following table delineates the indicators of Pillar 6.
Pillar 6 Knowledge and technology
6.1 ISO 9001 Quality Certificates4 /bn PPP$ GDP
6.2 ICTs and organizational model creation
6.3 ICT services exports, % total trade
6.4 Mobile app creation/bn PPP$ GDP
Table 7: Structure of Pillar 6 – Knowledge and technology
Pillar 7: Business environment and network readiness
The components of Pillar 7 have been modified to provide new bases for the evaluation of the business environment. The latter includes the third party i.e. service providers – in any system that links individuals with governments and firms, and plays a pivotal role in leading the transformation process. This pillar comprises five main indicators and a number of sub-indicators that reflect the business environment and readiness for digital technological transformation.
Pillar 7 Business environment and network readiness
7.1 Ease of Doing Business:
7.1.1 Ease of starting a business
7.1.2 Ease of resolving insolvency
7.1.3 Ease of obtaining credit
7.1.4 Ease of protecting minority investors
7.2 Intensity of local competition
7.3 Entrepreneurial culture
7.3.2 Attitudes towards risks of establishing projects
7.3.3 Companies embracing digital ideas
7.3.4 Willingness to delegate authority
7.4 Internet shopping
7.5 R&D expenditure by businesses
Table 8: Structure of Pillar 7 – Business environment and network readiness
4. ISO 9001 Quality Certificates are some of the bases for the documentation of content, work methods and correc- tion of errors. They are one of the main methods of knowledge management.
Pillar 8: Growth of financial markets
Availability of and accessibility to finance as well as the efficiency of financial institutions is one of the most important concerns of the digital transformation process. Often finance is a main obstacle facing digital transformation and the adoption of new digital technologies. No major change has been introduced into this pillar. Only some sub-indicators have been eliminated to avoid any overlap with other pillars particularly Pillar 7 on the business environment.
The following table shows the current structure of Pillar 8
Pillar 8 Growth of financial market
8.1 Domestic Credit to Private Sector % GDP
8.2 Financing of SMEs
8.3 Venture capital availability
8.6 Non-performing loans % of gross total loans
Table 9: Structure of Pillar 8 – Growth of financial market services
Pillar 9: Sustainable development
Well-developed and disseminated digital technologies and applications are important tools with a potentially positive impact on the achievement of the SDGs. According to Digital with Purpose: Delivering a SMART- er2030 report issued by the Global e-Sustainability Initiative (GeSI) and Deloitte,13 technologies play a pivotal role in helping governments, companies and philanthropic organizations accelerate their efforts towards the achievement of the 17 SDGs. Through the analysis of a large set of-
including 20 special goals and 25 related indicators, the Digital with Pur- pose report indicated that the dissemination of current digital technologies will help – on average – in accelerating progress towards the SDGs by 22% and mitigating downward trends by 23%.14
Pillar 9 Sustainable Development Goals (SDGs on which ICT has the Highest Impact)
9.1 SDGs on which ICT has the Highest Impact
9.6 Quality of Life
3.5 ADEI data methodology
Many of the 22 Arab countries’ indicators were either missing or incom- plete. Upon the calculation of scores, missing values obstruct analysis and ranking of Arab countries. Thus, we had to apply the missing data methodology. The following table shows all the countries, and the missing data in pillars and indicators.
Table 11: Pillars and indicators with missing data
Missing data - IndicatorsMissing data - PillarsCountries
00Algeria
00Bahrain
317Comoros
317Djibouti
00Egypt
317Iraq
00Jordan
00Kuwait
00Lebanon
00Libya
317Mauritania
00Morocco
00Oman
429Palestine
00Qatar
317Somalia
317Sudan
317Syria
00Tunisia
00UAE
317Yemen
The above table shows the unavailability of data in ten of the Arab countries due to the adverse economic situation and the absence of institutions that could participate in this report. For example, Palestine lacked data for all the indicators. Also, nine other countries had data for only 11 out of the 57 original indicators.
It was well known before starting the report that some countries would be missing data as they were experiencing political and economic crises and their performance was expected to be quite modest in comparison
to other countries. It is noteworthy, however, that while ten countries lacked data, the remaining 12 countries had data for all 57 indicators. In order to draw a comparison between the countries, we applied the missing data methodology to calculate the value of indicators that lacked data.
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The mean value of observations: This is appropriate in situations where data is homogenous
A fixed value to be chosen on the basis of previous research
A value to be predicted using regression analysis based on relation with other variables
A random value based on current observations.15
Since data from Arab countries were not homogenous and had outliers, we ruled out the mean and the regression analysis alternatives and relied instead on the last option which is a random value. Since the missing data was for countries whose performance was very weak and below the minimum level for any of the used indicators, we opted for the following linear model methodology:
Missing value =Minimum score of indicator – (5%) * (Minimum score of indicator)
3.6 Dealing with outliers
An outlier is a data point that differs significantly from other observations. It can cause serious problems in statistical analyses so it is important to determine these values first and deal with them as they arise. Outliers may arise due to variability in the measurement or may indicate an experimental error. In the latter case, outliers are usually excluded from the data set.
In the ADEI, outliers were identified using a cut-off value calculated by adding two standard deviations to the mean of the normalized values. The outliers were excluded if the country under examination was able to justify the high performance.
3.7 ADEI country score calculation
The Index score ranges between 0-100 (100 being the best performance and 0 the worst).
The country’s overall score was calculated in two main steps:
• First step is to normalize the individual indicator – which scores do not fall on the 0-100 scale– into a normal number (0,100) using the maximum and minimum limits where (x’) indicates the unified score value. We obtain the minimum limit (x) and maximum limit (x) from the maximum and minimum limits indicators where (x) indicates the original value of the indicator.
The following equation describes how to normalize the indicator into a normal number:
–minimum limit ()
Figure 4: Calculating final score for each country
The final outcome for a country (value of indicator) is the average score of the nine pillars using different weights according to the relative importance of each pillar and its components. Given the importance of the infrastructure pillar for digital transformation in the Arab world, we have increased its weight to 60% while distributing the remaining 40% to other pillars.
To draw a comparison between Arab countries and an advanced benchmark, two countries – Malaysia and Singapore- were chosen for the following reasons:
4. Determining benchmarks
Successful digital transformation: Both Singapore and Malaysia are among the advanced countries in IT not only in Asia but also the world over. They have been classified - in the E-government pillar of the UN – among the countries with most distinguished performance (very high). In 2020 Singapore occupied the 11th rank internationally while Malaysia occupied the 47th . In the network readiness index (countries whose economies use technology to enhance their competitiveness) of the World Economic Forum, Sin- gapore occupied the second rank and Malaysia the 32nd.
Similarities: The GDP of Singapore and Malaysia amounted to US$ 358.4 billion and US$ 354 billion respectively in 2019 and they are both comparable to the Gulf countries in that respect. Malaysia is also an upper middle-income country according to the World Bank and is similar to some Arab countries in that regard.
1.
2.
Using data from Malaysia and Singapore, benchmark scores were calculated by calculating the simple mean of aggregate scores in the pillars and indicators of both Malaysia and Singapore.
Part Two Findings of the ADEI 20202
5. Main findings of the ADEI 2020

Figure 5: Score value according to strategic dimensions
The average score of the 22 Arab countries was 35.69 while the benchmark countries’ score was 76.07 leaving a negative gap of 40.38.
This vast disparity between the two scores point to the need for an accelerated adoption of digital technology and the shift to an advanced digital economy built on institutional and infrastructures as well as a modern ICT network capable of achieving a qualitative leap in that respect.
5.2 Score value according to strategic dimensions:
Digital Innovation
E -G
ov er
nm en
Figure 6: Strategic dimensions
The Arab citizen strategic dimension obtained the highest score of 48.9 but it is still lower than the mean and did not reflect on the dimensions of digital innovation or digital business. These indicators still point to the weak performance of the Arab countries and are followed by the e-government dimension.
The digital foundations dimension comprising infrastructure and governance environment revealed less than average performance despite the importance of the digital foundations for successful digital transformation. In general, the performance of the Arab countries is quite modest compared to the benchmark references. That said, there were variations in the performance of Arab countries with regard to the strategic dimensions as follows:
5.3 Ranking of Arab countries according to strategic dimensions
Table 12: Ranking of Arab countries according to strategic dimensions
Strategic Dimensions
41.05 36.36 46.83 43.84 48.90
Country ranking based on dimensions 1 UAE UAE UAE UAE UAE
2 Qatar Qatar Qatar Bahrain Qatar
3 Oman Saudi Arabia Bahrain Qatar Oman
4 Bahrain Bahrain Oman Kuwait Bahrain
5 Saudi Arabia Oman Saudi Arabia Saudi Arabia
Saudi Arabia
5.4 ADEI Arab country ranking
The following map shows ADEI findings for the 22 Arab countries (from 1 to 22).
Figure 7: ADEI map of Arab countries
Based on findings, countries were divided according to their ranking to three clusters as follows:
Cluster 1: Digital Leaders are countries that attract international investments and can be contrasted to digitally advanced countries. They rank from 1 to 5 and include: UAE, Bahrain, Oman, Qatar, and Saudi Arabia. These countries are characterized by their ability to adapt quickly and their flexibility in shifting towards modern applications as well as digital and financial inclusion, and automation and connectivity of government services.
Cluster 2: Digital Accelerators are the countries that have covered a reasonably long way on the path towards digital transformation. They attract investments albeit less than the countries in Cluster 1. They occupy the ranks from 6 to 12 and include Kuwait, Egypt, Jor- dan, Lebanon, Morocco, Tunisia and Algeria.
Their material and knowledge infrastructure is sufficient and enables them to move forward and can - within in the middle range of two to four years - become digital leaders. This cluster of countries must adopt courageous and decisive steps towards the completion of their digital transformation.
They also need to complete their digital connectivity steps, deepen the use of the digital IDs in government platforms so that services can be offered to citizens accurately and efficiently. These countries have not yet completed digital inclusion for all citizens. Many of their economic activities take place outside the formal/official systems and they are not financially or digitally inclusive.
•
•
•
ital infrastructural capabilities. They have the support of the Digital Leaders and international organizations and occupy the ranks from 13 to 22. Countries in this cluster are: Iraq, Syria, Mauritania, Yemen, Sudan, Djibouti, Palestine, Comoros, Libya and Somalia.
At different levels, these countries need to resume work on their ICT infrastructures and achieve accessibility of internet services and cybersecurity. They also clearly need strategic plans for transformation and achieving the digital economy to catch up and make prudent strides towards modernization. Some of these countries still suffer instability that followed the Arab uprisings in the second decade of the current century or predated them.
5.5 Comparative performance of Arab countries according to ADEI
The ADEI 2020 has been updated and some components, indicators, pillars and weighting revised. The main finding of the comparison is: the UAE continues to occupy the top position among the Arab countries with a score of 70.6 and around a 7-point difference between it and the country in the second rank. The Gulf countries combined still stand on top of the list and the Accelerators are still represented by Kuwait, Jor- dan, Morocco, Tunisia, Egypt, Lebanon and Algeria.
There has been no improvement in the performance of the Activators – countries with weak performance and still need support.
The results of the comparison with the benchmark countries, based on the mean performance of Singapore and Malaysia, demonstrated a large disparity between the mean performance of the Arab region and the two benchmark countries. The performance of the UAE was the closest to the benchmarks with a 6-point difference as indicated in the following figure.
ADEI score value from Benchmark score 76.07
Average of region 35.69
14.6 13.1
Qata r
U nit
ed A
Average of region 35.69
14.6 13.1
Qata r
U nit
ed A
n
Figure 8: Ranking of Arab countries compared to average of the region and benchmark score
Analysis of Arab Countries’ Digital
Performance
United Arab Emirates
Overview of country performance of strategic dimensions distributed over pillars
Dimension Pillar Score value Ranking
Digital foundations -Institutions -Infrastructure 81.04 1
Digital innovation Education and skills -Innovation -Knowledge and technology
52.36 1
Digital business -Business environment and digital readiness -Growth of financial market
68.71 1
Pillar 1 Institutions Score
1.1 Political Environment 80.625
1.1.2 Government Effectiveness 80.70
1.2 Regulatory Environment 68.30
1.2.1 Regulatory Quality 69.10
1.3.3 Cybersecurity 86.40
Overall Score 74.73
Weighted Score 14.94
100.00
100.00
100.00
94.06
100.00
Pillar 3 Education & Skills Score
3.1 Current Workforce 70.40
3.3 Future Workforce 70.90
3.5 Adult Literacy Rate, % 93.80
Overall Score 73.74
Weighted Score 4.87
0.00
100.00
73.80
5.5 Research Institutions Prom- inence 4.20
Overall Score 40.92
Weighted Score 2.70
6.1 ISO 9001 Quality Certificates /bn PPP$ GDP
6.00
6.3 ICT services exports, % total trade 1.80
6.4 Mobile app creation/bn PPP$ GDP 6.70
Overall Score 20.45
Weighted Score 1.35
7.1.1 Ease of starting a business 94.80
7.1.2 Ease of resolving insolvency 49.30
7.1.3 Ease of obtaining credit 70.00
80.00
71.00
66.90
70.40
70.80
61.60
18.73
84.80
8.4 Market Capitalization 60.40
8.6 Non-performing Loans % of Gross total Loans
88.00
Pillar 9
Sustainable Devel- opment (SDGs on which ICT has the Highest Impact)
Score
9.2 SDG Contribution 70.24
Qatar
Qatar – Rank (2)
Digital foundations -Institutions -Infrastructure
50.80 2
62.26 3
74.15 2
Arab Digital Economy Index 202065Arab Digital Economy Index 202064
Overall Score 66.59
100.00
30.50
100.00
70.95
Overall Score 77.23
Weighted Score 5.10
87.01
89.48
58.70
Overall Score 38.20
Weighted Score 2.52
2.30
Overall Score 16.83
Weighted Score 1.11
28.00
65.60
64.30
67.90
66.80
63.40
2.22
Pillar 8
80.00
97.60
Pillar 9
Score
Saudi Arabia
Income level
Population (million)
Unem- ployment
Saudi Arabia – Rank (3)
49.20 2
59.02 5
67.83 5
Arab Digital Economy Index 202071Arab Digital Economy Index 202070
Overall Score 55.18
100.00
64.37
92.43
60.51
Overall Score 77.07
Weighted Score 5.09
83.17
66.04
63.80
Overall Score 43.40
Weighted Score 2.86
1.30
Overall Score 15.83
Weighted Score 1.04
86.00
74.80
58.30
64.30
69.20
54.00
0.49
Pillar 8
59.00
97.80
Pillar 9
Score
Bahrain
Income level
Unem- ployment
Bahrain – Rank (4)
47.66 4
62.55 2
69.63 4
Overall Score 56.03
100.00
37.30
100.00
Overall Score 74.13
Weighted Score 4.89
78.34
59.95
56.40
Overall Score 27.38
Weighted Score 1.81
5.70
6.4 Mobile app creation/bn PPP$ GDP 0.±0
Overall Score 16.75
Weighted Score 1.11
66.00
70.10
60.50
65.10
57.40
50.90
0.52
Pillar 8
77.60
89.50
Pillar 9
Score
Oman
Oman – Rank (5)
47.45 5
58.39 6
69.82 2
Overall Score 62.84
100.00
27.66
70.40
Overall Score 75.97
Weighted Score 5.01
55.47
51.32
55.20
Overall Score 27.56
Weighted Score 1.82
3.50
Overall Score 14.08
Weighted Score 0.93
56.00
66.20
53.50
64.20
58.60
49.50
2.13
Pillar 8
74.40
96.20
Pillar 9
Score
Kuwait
Kuwait – Rank (6)
43.86 7
59.95 3
63.43 6
Overall Score 53.61
100.00
7.77
100.00
Overall Score 68.01
Weighted Score 4.49
0.00
36.41
42.90
Overall Score 28.00
Weighted Score 1.85
1.50
Overall Score 14.25
Weighted Score 0.94
66.00
56.00
54.10
52.20
52.90
47.10
0.49
57.07
Pillar 8
100.00
97.10
Pillar 9
Score
Jordan
Jordan – Rank (7)
43.26 8
55.42 7
55.42 8
Overall Score 53.87
59.96
12.56
72.48
Overall Score 70.29
Weighted Score 4.64
57.90
45.90
59.80
Overall Score 29.74
Weighted Score 1.96
4.20
Overall Score 18.13
Weighted Score 1.20
50.00
76.00
48.70
57.60
59.40
50.20
0.49
1. Institutions
2. Infrastructure
Pillar 8
76.50
92.50
Pillar 9
Score
Income level
Unem- ployment
Morocco – Rank (8)
37.87 12
51.60 9
49.13 11
Morocco
Overall Score 50.21
Weighted Score 9.64
100.00
13.52
48.24
Overall Score 51.71
Weighted Score 3.41
49.41
39.45
60.30
Overall Score 29.06
Weighted Score 1.92
2.90
Overall Score 14.50
Weighted Score 0.96
70.00
67.20
46.00
52.40
44.30
40.40
5.43
Pillar 8
66.90
85.90
Pillar 9
Score
Income level
Unem- ployment
Tunisia – Rank (9)
39.88 10
47.27 10
54.00 9
Tunisia
Overall Score 47.70
Weighted Score 9.21
100.00
27.76
62.68
Overall Score 61.64
Weighted Score 4.07
34.04
22.36
55.20
Overall Score 28.20
Weighted Score 1.86
7.60
Overall Score 13.00
Weighted Score 0.86
62.00
65.00
44.60
51.40
42.30
34.80
3.07
Pillar 8
86.70
69.90
Pillar 9
Score
Income level
Unem- ployment
Egypt – Rank (10)
38.55 11
46.70 11
49.09 12
Egypt
Overall Score 42.77
Weighted Score 8.14
69.44
21.11
43.84
Overall Score 54.59
Weighted Score 3.60
45.62
43.15
60.00
Overall Score 32.62
Weighted Score 2.15
1.80
Overall Score 14.75
Weighted Score 0.97
64.00
65.70
41.80
52.50
60.60
40.50
0.83
Pillar 8
31.20
91.10
Pillar 9
Score
Income level
Unem- ployment
Lebanon – Rank (11)
46.16 6
53.91 8
55.65 7
Lebanon
Overall Score 34.70
Weighted Score 6.78
31.36
0.20
36.48
Overall Score 71.15
Weighted Score 4.70
14.71
27.11
44.80
Overall Score 30.74
Weighted Score 2.03
6.10
Overall Score 20.53
Weighted Score 1.35
44.00
79.00
52.90
52.20
50.70
43.60
0.49
33.58
Pillar 8
100.00
89.60
Pillar 9
Score
Algeria
Algeria – Rank (12)
40.28 9
43.49 12
53.12 10
1.1.2 Government Effectiveness ----
Overall Score 31.31
Weighted Score 6.26
89.69
22.93
67.41
3.1 Current Workforce 53
Overall Score 59.66
Weighted Score 3.94
33.27
32.97
49
Overall Score 28.82
Weighted Score 1.9
0.7
6.4 Mobile app creation/bn PPP$ GDP 0
Overall Score 10.58
Weighted Score 0.7
7.1.1 Ease of starting a business 78
7.1.3 Ease of obtaining credit 10
20
55
43.5
43.7
46.6
40.4
0.9
Pillar 8
24.3
76.2
Pillar 9
Score
Iraq
Income level
Unem- ployment
Iraq -Rank (13)
25.57 20
29.02 19
37.38 13
1.1 Political Environment 0
Overall Score 5.11
Weighted Score 1.02
69.13
37.08
31.87
Overall Score 34.39
Weighted Score 2.27
0.00
20.57
23.85
Overall Score 16.07
Weighted Score 1.06
0.00
Overall Score 5.18
Weighted Score 0.34
46.00
47.88
22.14
27.27
29.64
28.03
0.49
1. Institutions
2. Infrastructure
Pillar 8
2.76
53.01
Pillar 9
Score
Syria
Syria – Rank (14)
27.38 15
29.90 16
37.07 14
Overall Score 5.11
Weighted Score 1.02
76.61
24.79
12.04
Overall Score 41.64
Weighted Score 2.75
0.00
20.57
23.85
0.00
5.5 Research Institutions Prom- inence
0.00
0.00
Overall Score 5.18
Weighted Score 0.34
54.00
47.88
22.14
27.27
29.64
28.03
0.49
22.93
Pillar 8
2.76
53.01
Pillar 9
Score
Mauritania
Mauritania – Rank (15)
27.28 16
30.33 15
35.71 16
Overall Score 5.11
Weighted Score 1.02
79.85
0.72
43.01
Overall Score 37.96
Weighted Score 2.51
0.00
20.57
27.30
0.20
0.00
0.00
Overall Score 5.18
Weighted Score 0.34
32.00
47.88
23.30
28.70
31.20
41.30
0.49
Pillar 8
2.90
55.80
Pillar 9
Score
Yemen
Yemen – Rank (16)
29.44 13
30.70 14
33.72 17
Overall Score 5.18
Weighted Score 1.04
17.98
4.10
3.11
Overall Score 43.32
Weighted Score 2.86
0.00
21.65
25.10
Overall Score 22.10
Weighted Score 1.46
0.00
Overall Score 5.68
Weighted Score 0.37
26.00
50.40
40.40
35.90
41.00
29.50
0.47
1. Institutions
2. Infrastructure
Pillar 8
2.76
53.01
Pillar 9
Score
Sudan
Income level
Unem- ployment
Sudan – Rank (17)
26.10 18
29.48 17
33.25 19
Overall Score 5.11
Weighted Score 1.02
40.65
0.01
25.58
Overall Score 36.50
Weighted Score 2.41
0.00
20.57
23.85
0.00
0.00
0.00
Overall Score 5.18
Weighted Score 0.34
30.00
47.88
22.14
27.27
29.64
28.03
0.49
8:
9:
16.60
Pillar 8
2.76
19.38
Pillar 9
Score
Libya
Income level
Unem- ployment
Libya – Rank (18)
27.61 14
28.49 20
36.64 15
Overall Score 5.11
Weighted Score 1.02
64.73
15.18
28.41
Overall Score 42.56
Weighted Score 2.81
0.00
20.57
23.85
0.00
0.00
0.00
Overall Score 5.18
Weighted Score 0.34
18.00
47.88
22.14
27.27
29.64
28.03
0.49
Pillar 8
2.76
53.01
Pillar 9
Score
Djibouti
Income level
Djibouti – Rank (19)
26.58 17
31.01 13
33.26 18
Overall Score 5.11
Weighted Score 1.02
2.55
8.25
15.53
Overall Score 38.42
Weighted Score 2.54
0.00
20.57
23.85
0.00
0.00
0.00
Overall Score 5.18
Weighted Score 0.34
52.00
47.88
22.14
27.27
29.64
28.03
0.49
1. Institutions
2. Infrastructure
Pillar 8
2.76
53.01
Pillar 9
Score
Income level
Unem- ployment
Comoros – Rank (20)
26.01 19
29.34 18
32.56 20
Comoros
Overall Score 5.11
Weighted Score 1.02
25.72
0.33
48.97
Overall Score 36.12
Weighted Score 2.38
0.00
20.57
23.85
0.00
0.00
0.00
Overall Score 5.18
Weighted Score 0.34
26.00
47.88
22.14
27.27
29.64
28.03
0.49
Pillar 8
2.76
53.01
Pillar 9
Score
Somalia
Somalia – Rank (21)
24.26 21
27.74 21
27.53 21
Overall Score 5.11
Weighted Score 1.02
14.65
1.90
0.10
Overall Score 29.16
Weighted Score 1.92
0.00
20.57
23.85
0.00
0.00
0.00
Overall Score 5.18
Weighted Score 0.34
0.00
47.88
22.14
27.27
29.64
28.03
0.49
Pillar 8
2.76
53.01
Pillar 9
Sustainable Devel- opment (SDGs on which ICT has the Hig

arab digital economy index 2020 covid 19 and the need for

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