Bahrain, an archipelago consisting of an island and 32 other constituencies, is the third smallest country in Asia. It provides a gateway to the Gulf Cooperation Council and its prime location offers direct access to Saudi Arabia and other huge markets. Bahrain’s ICT (Information and Communications Technology) Sector is of core importance to its Government, as part of their Vision 2030 plan, as they aim to promote digitization and innovation through its Digital Government Strategy. Global IT companies have started to choose Bahrain as their hub due to the ease and feasibility of its ideal location and availability of talent, cost competitiveness, and ownership structure. The country has recently been leveraging ICT to enable a start-up friendly culture, enhance their IT infrastructure, establish a digitized economy, and focus towards Smart Cities, Artificial Intelligence (AI) and Internet of Things (IoT).
ICT Infrastructure and Digitization
Bahrain has made significant investments to create a strong ICT infrastructure, which includes fiber-optic networking and high-speed internet access. This infrastructure supports the digital ecosystem and makes it possible for organizations and people to successfully access and use digital technology. Bahrain has also made great strides in the digitization of government services. The e-Government authority has put in place a number of online platforms and portals that give individuals and companies easy access to government services, which has improved user experience overall, increased efficiency, and reduced administrative procedures. Various initiatives have been taken by the government and several organizations to improve digital literacy and provide training courses in cutting-edge technology. Bahrain's universities and educational institutions place a strong emphasis on offering ICT-related courses and degrees.
Ranked first in MENA for ICT by the World Economic Forum, Bahrain offers the most competitive, affordable, and user-friendly environment for technological and innovative businesses throughout the region. The growth of Cloud Traffic in Bahrain has been unprecedented. Bahrain is the MENA region’s first country to adopt a “Cloud first” policy. The location of the country offers a plethora of opportunities in areas such as cyber security, digital entertainment, e-commerce and business outsourcing. How is cloud computing enabling businesses to achieve success? Bahrain has adopted an innovative and a forward-thinking approach to data and cloud computing services across both Public and Private Sectors. The cloud-first policy is built on four key cloud computing tenets: adoption of public clouds, preference for cloud IAAS & SAAS throughout government IT, training opportunities for Bahrainis looking to learn cloud skills, and grant credit support for companies making the switch to the cloud. Bahrain has also made significant investments in a variety of critical educational and training projects to provide graduates with the specialized skills required by businesses in a cloud-first economy, with the cloud playing an essential strategic role in the growth of our digital ecosystem.
The MENA region is a prime target for cyber-criminals, with an average financial loss of $2.5mn due to security incidents in 2015. The number of security firms in Bahrain is growing to provide essential protection in response to these threats. Services for cyber security are required on a worldwide scale by enterprises, the government, and other organizations. Market trust is rising as cybersecurity businesses fight to safeguard assets, information, and data from attackers. In turn, this increases Bahrain's appeal to investors and the security industry. Despite its modest size, Bahrain's market is dominated by SMEs, which account for around 28% of the country's GDP. Bahrain is therefore a great place for cyber security companies to test new products and solutions before successfully scaling them up to fit larger cyber security markets.
Artificial Intelligence (AI)
Bahrain has taken major initiatives towards the research and implementation of AI in several domains because it recognises the value of AI in simplifying operations and guiding critical business decisions across all industries. AI has significantly altered many aspects of our life, and Bahrainis view it as a key factor in attaining sustainable growth in the country.
Through the digital transformation of courts and the application of AI, Bahrain seeks to increase the effectiveness of courtrooms and the judicial system. In order to assist research into the potential uses of AI in courtrooms, the Supreme Judicial Council has organized the first international conference on artificial intelligence in the judiciary to be held in the nations of the Gulf Cooperation Council.
By measuring the quantity of output from each palm tree, Bahrain uses artificial intelligence techniques to automatically monitor all palm trees that are present on its territory. This allows prominent academic professors and investors to conduct research on the topic of food security.
To enhance the innovation and technology process, "HackFest" was organized to educate college and high school students about advancements in artificial intelligence. Bahrain Polytechnic is the organizer of the H.H. SH. Khalid Bin Hamad Competition for Innovation in Artificial Intelligence, which has the backing of various private sector businesses. The contest evaluates contestants' aptitude for developing original products that make use of AI characteristics.
With the active involvement of the government, residents, and enterprises, Bahrain has pioneered the trend towards "smart cities," which aims to make Bahrain's metropolitan areas more effective, habitable, and sustainable over the long and short terms. Intelligent traffic lights (also known as smart traffic lights) are utilized to guide automobile and pedestrian traffic using a combination of conventional traffic signals, a number of sensors, and artificial intelligence. Furthermore, new bank accounts can be opened effortlessly, without going to a bank, online using mobile apps. Personal identification may be virtually recorded, and information can be smoothly validated in compliance with the financial laws and policies of the kingdom. All personal data is legally secured.
eCommerce and FinTech
Bahrain, including the MENA region, is seeing a significant growth in e-commerce. High levels of computer literacy exist, and companies are aware of the internet's business potential. Bahrain has greater online purchasing rates than other GCC member nations due to its big youth population and high internet penetration rate (over 99%). Social media platforms like WhatsApp, YouTube, Facebook, and Instagram are now widely used as venues for advertising retail, delivery, and other commercial services due to the prevalence of smartphone and tablet use.
The ICT landscape has significantly grown in recent years, and cutting-edge technologies, including FinTech, have been gaining prominence. The most popular online product category has historically been groceries and other handmade food items, but consumers are starting to buy more physical goods, including clothing, cosmetics, electronics, computers, and home appliances. Online food delivery services have also been gaining major traction, contributing to a huge chunk of revenue for the food industry.
Nevertheless, there are barriers to the development of online enterprises in Bahrain, including the low adoption rates of online retail by local firms, the dominance of cash on delivery payments, and the poor consumer acceptability of online purchasing, compared to worldwide benchmarks. Customers in Bahrain frequently buy things online from other GCC member states or other markets since local merchants have generally kept their products off of internet marketplaces. Cross-border online shopping is prevalent, and the most popular items bought there include electronics, apparel, cosmetics, jewelry, and watches. Among the most popular online shopping locations in Bahrain and the GCC are foreign websites like Souq.com, Amazon, and eBay.
Gaming & Digital Media
Bahrain, with a population of 1.4 million, is joining the MENA gaming trend. The Bahrain Economic Development Board was established in 2000 to support Bahrain's startup economy and advance industries including gaming, app development, and fintech. Both the female-founded game and Web3 company The Stories Studio and the award-winning game developer Regnum Studios are situated in Bahrain. 6000 kilometers of fiber optic cable are being deployed nationwide as part of the 5G deployment. Additionally, the country's main telecom operator, stc Bahrain, has gotten a head start on building the first 5.5G mobile network in the area.
Local gamers in Bahrain are expected to generate US$21.33 million in revenue by 2027. In the mobile games market, the average revenue per user (ARPU) reached up to US$43.18 in 2022. The popularity of E-sports is growing in Bahrain. Local businesses have joined together with the UAE-based marketing company Power League Gaming to sponsor E-sports competitions.
Major Trends and Statistics
- In 2022, the country's GDP hit an all-time high, where GDP rose by 4.9% and non-oil real GDP increased by 6.2%.
- In 2022, the cost of living in Bahrain was 23% lower compared to GCC countries.
- Bahrain enjoys an annual direct cost advantage in the ICT sector of up to 28% when compared to the GCC region.
- According to the IMF, Bahrain's GDP is expected to grow by US$53.14 billion by 2027.
- In November 2022, Bahrain ranked 84th (Ookla Speedtest Global Index) with a median fixed broadband download speed of 48.32 Mbps and upload speed of 9.37 Mbps.
- Internet users’ stood around 1.46 million, and internet penetration stood at 99% (by January 2023).
- A total of 2.10 million cellular mobile connections were active in Bahrain, with this figure equivalent to 142.1% of the total population (by January 2023).
- 99.7% of Bahrain’s total internet user base (regardless of age) used at least one social media platform (by January 2023).
- 25.7% of Facebook’s ad audience in Bahrain was female, while 74.3% was male (by January 2023).
- YouTube had 1.46 million users in Bahrain (by January 2023).
- YouTube’s ad reach was equivalent to 98.7% of Bahrain’s total population (by March 2023).
- YouTube ads reached 99.7% of Bahrain’s total internet user base (by January 2023).
- Instagram had 879.8 thousand users (by January 2023).
- Instagram’s ad reach was equivalent to 59.5% of the total population (by January 2023).
- LinkedIn’s audience in Bahrain was equivalent to 33.1% of the total population (by January 2023).
- LinkedIn’s ad reach in Bahrain was equivalent to 33.5% of the local internet user base (by January 2023).
- Snapchat’s ad reach in Bahrain was equivalent to 65.9% of the total population (by January 2023).
- Snapchat’s ad reach in Bahrain was equivalent to 66.6% of the local internet user base (by March 2023).
- Twitter had 622.9 thousand users in Bahrain (in January 2023).
- Twitter’s ad reach in Bahrain was equivalent to 42.1% of the total population (in April 2023).
- there were 2.10 million cellular mobile connections in Bahrain (by January 2023).
- The number of mobile connections in Bahrain increased by 236 thousand (+12.7%) between 2022 and 2023.
- Spending on Enterprise IT is expected to reach $0.44bn and consumer spending is expected to reach $0.41bn in 2023.
- Bahrain has attracted more than $130 million of investments in the IT Sector, which aims to create more than 900 new jobs in the next year.
- Telecommunications services spending in Bahrain is expected to increase, with IT spending set to grow from $0.87bn in 2023 to $1bn in 2026.
- Digital revenue is expected to grow steadily to reach 46% of revenues by 2024.
- Bahrain's ICT Market is expected to grow at a compound annual growth rate of 6.7% from 2023-2028 in the next five years.
- The cumulative revenue generation opportunities for the ICT market in Bahrain are estimated at US$27.15bn between 2022 to 2026.
- ICT spending in Bahrain is expected to reach US$2.23bn by 2026.
- Bahrain's internet penetration is expected to grow by 99.5% by 2026.
- A 35% growth is expected in the national employment sector in the IT and technology industry by 2027.
- Revenue in the eCommerce market is projected to reach US$1,152.00mn by the end of 2023.
- Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 8.27%, resulting in a projected market volume of US$1,583.00mn by 2027.
- In the eCommerce market, the number of users is expected to amount to 1.19mn users by 2027.
- User penetration will be 70.8% in 2023 and is expected to hit 77.3% by 2027.
- Revenue in the Video Games market is projected to reach US$32.22mn by the end of 2023.
- Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 8.89%, resulting in a projected market volume of US$45.30mn by 2027.
- In the Video Games market, the number of users is expected to amount to 736.50 thousand users by 2027.
- User penetration will be 34.9% in 2023 and is expected to hit 38.2% by 2027.
- The largest market is Mobile Games with a market volume of US$11.87mn in 2023.
- Local gamers in Bahrain are expected to generate US$21.33mn in revenue by 2027.
Overall, ICT drives innovation, boosts productivity, and promotes digital inclusiveness, all of which are critical to Bahrain's economy. Bahrain's status as a regional center for ICT and digital innovation is a result of the government's dedication to this transformation, people support to implement and embrace this transition, and the collaborative efforts of many stakeholders, including foreign and national IT and telecommunication companies.