Sunil Paul, COO and co-founder of Finesse, on how the fourth industrial revolution will transform regional businesses.
In January 2016, World Economic Forum Founder and Executive Chairman, Klaus Schwab, published a book titled ‘The Fourth Industrial Revolution.’ Since then, the term has been used to analyse the impact of emerging technologies on industrial, market and to an extent, societal transformation.
4IR, in the words of Klaus Schwab, is “characterised by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.” Technological breakthroughs in artificial intelligence, robotics, the Internet of Things and 3D printing are not only finding their way into business and production processes but also daily life.
For example, machine learning and artificial intelligence are closing the gap between humans and machines; 3D printing is collapsing the production value chain from concept to market; robots are no longer a factory phenomenon; they are now found in banks, restaurants and homes.
The benefits of 4IR are several and could be the subject of another article. Communities based in less developed regions can access services via digital networks, and leapfrog development cycles. Improvements in productivity through flexible production systems allow for goods and services to be delivered cheaper and faster; 4IR also promises to spur new services and new forms of employment via digital platforms and level the playing field for Small and Medium Enterprises (SMEs), bypassing expensive investments in infrastructure and marketing.
The big question is whether countries in the Middle East are ready to be disrupted by 4IR? Will companies and organizations be able to adapt to the rapid transformation? What will be the impact on jobs and on people? How to tackle security challenges triggered by digitisation?
McKinsey Global Institute, in a study in 2017, noted that almost half the activities people are paid almost $16 trillion in wages to do in the global economy have the potential to be automated. A growing youth population is putting pressure on regional economies to create jobs and on education systems to prepare future workers.
However, the governments are also dealing with a young and well-educated population, who in turn, can be equipped with the creativity and skills needed to for knowledge-based, sustainable economy. For the oil rich economies of the region, the new imperative of economic diversification to reducedependency on hydrocarbon exports dovetail nicely into the 4IR framework.
To get fit for the 4IR, the region’s first priority should be to strengthen the innovation capacity. R&D expenditure as a percentage of GDP is 0.9% in the UAE, 0.8% in Saudi Arabia and 0.7% in the Egypt. Missing the bus here would mean the region continues to remain a market for innovations developed elsewhere. For example, China is aiming to become the world’s number-one AI hub by 2030 with a one trillion renminbi AI core industry.
The pace of transformation driven by 4IR is so fast that future skilling is a must, and countries should update their educational policies and allocate resources for this. Repetitive tasks have a higher likelihood of being automated while new digital economy would create a demand for higher skills. Moreover, higher education systems must also be adaptable to life-long learning to allow people to re-skill quickly.
The private sector – industrialists, technologists and business people – must invest innovation and skill or risk their region getting excluded from the new value chains of goods and services.
Governments worldwide are stepping up policy efforts to address 4IR’s technological disruption. In May 2019, more than 40 came together to adopt the first-of-their-kind ever set of intergovernmental rules on the use of AI.
In the region, UAE has been at the forefront of 4IR adoption, launching a national strategy for AI in 2017, the first Arab country to do so. The strategy, among other things, is focused on making the country the first in the field of AI investments in sectors that include transport; health; space; renewable energy; water; technology; education; environment and traffic.
In April 2019, the UAE inaugurated the Centre for Fourth Industrial Revolution, the first in the region and fifth globally with one of its aims being to works towards developing mechanisms, applications and uses for 4IR in the UAE.
In March, Saudi Aramco had unveiled its 4IR centre aimed at uplifting the technical skills of its workforce and helping the company’s operational performance to enable greater efficiencies.
In Bahrain, state-backed business support services provider Tamkeen and the Bahrain Economic Development Board (EDB) has launched several 4IR pilot projects.
But the bulk of the region’s private and public sectors have a plenty of ground to cover before they get to the 4IR. In many cases, they are, as in other regions, pacing themselves through the second and third industrial revolutions while embracing 4IR technologies. The better the region prepares for the eventualities of 4IR, the better the position they will be in to reap its rewards.
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