GCC sharing economy reaches $10 billion mark, but challenges remain

08 January 2018 Consultancy-me.com

The GCC sharing-economy has cracked the $10 billion mark in consumer spending, but will need tailored national measures to overcome key challenges and unlock its full potential according to a report from Strategy&. 

As the sharing economy of the member states of the Gulf Cooperation Council (GCC) reaches its $10 billion milestone, generating an estimated $1.7 billion in revenues for its platform providers, the management consulting firm Strategy& (formerly Booz & Company and now a part of the PwC network) has conducted a survey study on the nascent sector’s current state and future potential in the region, and recommended several key areas that industry and government will need to address for consumers and suppliers to reap the full socioeconomic benefits of its potential.

While still in its infancy, Strategy& considers the sharing economy of the GCC (which includes Saudi Arabia, the UAE, Kuwait, Bahrain, Oman and current pariah Qatar) as primed for growth, with the consulting firm outlining several specific regional factors. These include high levels of urbanisation and technology adoption – which generates the necessary data to drive the sharing economy; the growing accessibility to local investment capital through corporate and government funds; national transformation plans such as the UAE’s Smart Dubai initiative, and; a ready pool of workers, especially in areas of greater underemployment, and in particular regard to the youth and female demographics.

Advantages of sharing economy

With respect to the latter point, the future social and economic rewards and flow-on effects of increased workforce participation are obvious. Yet, there are further peripheral benefits to the sharing economy already being felt, such as improved access to and utilisation of online and mobile-based assets, employment flexibility, heightened transport capacity during times of demand, and both broader tourism possibilities and the ability to cater to larger tourist influxes for major festivals and events.

As to the benefits for adopters of sharing-technology, survey respondents across the region cited ‘price reduction’ and ‘mutual benefits to consumers and producers’ as the greatest advantages of the platforms (with residents of Saudi Arabia, Oman and Qatar also digging the modern trendiness of the sharing scene), trumping categories such as ‘convenience’ and ‘increased independence and self-reliance.’

Sharing economy of GCC

However, around one third of the GCC survey respondents said they were still unfamiliar with the sharing economy concept, or otherwise didn’t use it, suggesting a latent and sizeable scope for growth remains present within the local market. In response to the data, the report identifies five specific sectors with the greatest potential for growth in the region: accommodation, financial services, business services, household services, and transportation – with transportation currently generating the highest awareness and number of users.

While spending across the sectors was fairly evenly spread (transport being the greatest contributor and accommodation the current lowest), there were however other notable differences in the distribution of usage, as would be expected between age and gender, but also among the countries of the GCC, with the UAE and Saudi Arabia overwhelmingly out in front in sharing activity to command a combined 89% of total market expenditure. 

Sharing economy sector spending - in US Dollars billions

Encouragingly, a large number of those surveyed said they expect to increase their spending on sharing services in the future, with accommodation set for the greatest boost in attracting 42% of the respondents, followed by business services and transport at 40% and 38% of interest. Yet, the local sector still faces certain challenges and barriers, and such discrepancies in the current country-by-country usage highlight the need for focused national solutions.

Samer Bohsali, partner with Strategy& and its leader of Digital Business and Technology in the Middle East, outlines the message; “To exploit the sharing economy’s full potential while avoiding its potentially negative effects, GCC governments should adopt a differentiated approach that serves their specific socioeconomic needs and development goals. This will depend on the potential for job creation or risk of job loss, the need to grow the digital economy, cultural acceptance of the concept, quality standards, et cetera.” 

The consulting firm contends that the general areas which will need to addressed are;  inadequate or unclear regulatory frameworks – with current uncertainty as to operating, licensing and tax obligations creating legal grey areas and increased operational risks; limited trust in the platforms, such as concerns for data protection and quality assurance; incumbents with large investments, particularly in the transport and hospitality sectors, and especially as the latter market softens; strict or undefined labour policies – with especial respect to visa limitations for expatriates, and, perhaps most pertinent; the lack of sharing culture and need. 

Barriers to sharing economy

With wide and easy to access to cheap labor for many nationals of the GCC, including maids, chauffeurs and handymen, encouraging further uptake of sharing economy services will be a particularly difficult challenge. The authors of the report however believe that a slowing income growth-rate in the region and the mainstreaming of the sharing sector is beginning to shift opinion, and propose ‘platform localisation’ as one of their key recommendations to overcome current market roadblocks and stimulate further growth.

“The GCC has a distinct culture. Governments should therefore incentivise and promote the emergence of local platforms that can tailor their products and services to the needs of the region. These platforms need to bring local solutions to local problems. For instance, GCC governments can benefit from an accommodation platform that provides short-term stays for visitors of the Hajj, the annual Muslim religious pilgrimage that brings in two million or more pilgrims to Saudi Arabia.”

The Middle East is in certain respects currently undergoing a programme of social and digital modernisation, providing a barometer perhaps for sharing-technology potential in the region. The consultancy arm of KPMG in Kuwait recently accepted its first payment in bitcoin, while The Boston Consulting Group have been brought in by the Saudi government to help with the landmark establishment of cinemas across the country

EY launches advanced tool to assess trustworthiness of AI technology

12 April 2019 Consultancy-me.com

Global professional services firm Ernst & Young has announced the release of an advanced analytical tool to assess the trustworthiness of artificial intelligence.

Enabled by Microsoft Azure, the EY Trusted AI platform released by the global professional services firm Ernst & Young produces a technical score of an artificial intelligence system by leveraging advanced analytics to evaluate its technical design, measuring risk drivers including its “objective, underlying technologies, technical operating environment and level of autonomy compared with human oversight.”

Aimed at helping to resolve the issue of trust in technology, which the firm contends is the biggest barrier to wider AI adoption, the new tool’s risk scoring model is based on the ‘EY Trusted AI conceptual framework’ launched last year, which speaks to embedding trust mechanisms in an AI system at the earliest stages around the core pillars of ethics, social responsibility, accountability and explainability, and reliability.

“Trust must be a front-line consideration, rather than a box to check after an AI system goes live,” said Keith Strier, EY’s Global Advisory Leader for Artificial Intelligence. “Unlike traditional software, which can be fixed, tested and patched, if a neural network is trained on biased data, it may be impossible to fix, and the entire investment could be lost.”AI system overviewUsers of the new solution such as AI developers, executive sponsors, and risk professionals will be able to garner deeper insights into a given AI system to better identify and mitigate risks unique to artificial intelligence technology, with the platform score produced by the tool subject to a complex multiplier based on the impact on users – taking into account potential unintended consequences such as social and ethical implications.

According to the firm, it’s the first solution designed to help enterprises evaluate, monitor and quantify the impact and trustworthiness of AI, while an evaluation of governance and control maturity further serves to reduce residual risks and allow greater planning – helping to safeguard “products, brands, relationships and reputations” in the contemporary risk environment.

“If AI is to reach its full potential, we need a more granular view – the ability to predict conditions that amplify risks and then target mitigation strategies for risks that may undermine trust, while still considering traditional system risks such as reliability, performance and security,” said EY Global Trusted Artificial Intelligence Advisory Leader Cathy Cobey.

Offered as a standalone or managed service – which will be regularly updated with new AI risk metrics, measurement techniques and monitoring tools – the new solution will be available to clients globally this year, with further features including a guided interactive, web-based interface and a function to drill down for additional detail, as well as the ability to perform dynamic risk forecasting on when an AI component changes – such as an agent’s functional capabilities or level of autonomy.