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Bahrain plans to create a world-leading tech ecosystem

Bahrain is building a technology ecosystem that will help the country further reduce its economic reliance on the oil and gas industry

Alicia Buller
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Published: 21 Jan 2019 10:00

The tiny Gulf kingdom of Bahrain has big plans to grow its national technology ecosystem.

As one of the most diversified economies in the Middle East, the island nation is pushing its tech sector to create jobs for nationals and decrease its reliance on oil and gas.

One of the key drivers of Bahrain’s growth is its favourable business environment. It offers a tried-and-tested legal and regulatory environment and has minimal restrictions on foreign ownership.

Bahrain is also proud home to a respected financial services sector with more than four decades of experience.

According to government figures, the number of Bahraini tech startups has grown to 75 companies, which highlights the growing importance of entrepreneurship to the kingdom’s economic growth.

Khalid al Rumaihi, CEO of the Bahrain Economic Development Board (BEDB), is the man charged with devising a healthy economic strategy for the country and attracting companies and investors to come to Bahrain. He aims to double the number of local tech startups to “around 200” within the next two years.

Al Rumaihi said Bahrain’s government has chosen to prime its tech ecosystem to stand out from its Gulf competitors. He told Computer Weekly: “We are not going to compete with Saudi Arabia, for example, in industry or oil ­– they have more land and access to best practices. So we decided to focus on financial services, middle office and tech.”

The government recently implemented a “cloud first” policy to encourage government entities and businesses to use cloud services for technology solutions. US tech giant Amazon has chosen Bahrain to launch its first ever Amazon Web Services (AWS) infrastructure in the Middle East, which will go live this year.

“We are eager to see the results of bringing the most advanced cloud technologies closer to startups, enterprises and governments,” Zubin Chagpar, head of public sector, Middle East and Africa at AWS, wrote in a recent blog.

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AWS has predicted that 10,000 data solutions architects will be needed across the region within the next five years. Al Rumaihi said about 2,500 Bahraini nationals have already signed up for AWS training programmes.

As Bahrain forges its future, the government is focused on providing tech education and talent development opportunities, said Al Rumaihi. “We need programmers, coders and developers,” he said. “In the longer term, we are focused on providing Stem [science, technology, engineering and maths] education in schools, but in the shorter term we are providing online coding training. Platforms like AWS allow people to get certificates within six months.”

Al Rumaihi said there is a pressing need to create jobs for young people in Bahrain. The International Monetary Fund has estimated that the Middle East needs to create about 100 million jobs for young people over the next five years to maintain a sustainable economy.

“Empowering Bahrain’s ambitious young population is vital,” he said. “You cannot create enough jobs to satisfy all these college graduates. Some of them are going to have to become tech entrepreneurs because that person who becomes an entrepreneur creates 20 jobs. The way to solve our job creation issue is to create job creators.

“We want Bahrain to be a hub for entrepreneurs across the region. We want to see our tech startups mixing with other tech startups, but first of all we need regulation to make it easy for startups to set up.”

The Bahrain government has reduced capital startup requirements from $50,000 to $100 for some businesses, and the country has introduced a “sandbox” for startups in the financial technology (fintech) space, which is exempt from regulation.

Al Rumaihi said the country has also introduced new regulations for crowd funding and a critical bankruptcy law that will allow companies to fail, restructure and continue operations.

Growing the ecosystem

The one thing startups always need more of is capital – which is why Bahrain has just launched the $100m Al Waha Venture Capital Fund of Funds, which aims to invest in promising regional tech startups.

Al Rumaihi said the main criterion for fund eligibility is that venture capitalists should have some kind of presence in Bahrain. “The big corporates need to be engaged,” he said. “Startups need to work with big institutions. Local and global corporates need to be engaged because they create entire industries around them.”

Al Rumaihi described the building of a datacentre in Bahrain as a “game changer”, adding: “You only have to look at other countries that Google et al have entered. The big tech companies come in, they liven up the economy and they hire people who then leave and become entrepreneurs. They have a ripple effect – they create a transformative effect that you can’t even imagine.” 

Areije Al Shakar, senior vice-president and head of the development services division at Bahrain Development, said there is a vast untapped opportunity to create technology solutions in Bahrain and the wider region. “The region is becoming more e-commerce and technologically savvy, so the opportunity to innovate on an e-commerce platform is quite vast,” she said.

Al Shakar, whose government department supports entrepreneurs with requesting and raising loans, said there is an opportunity for companies to build “regional tech leaders” that can ultimately be taken over by global players as they push into the Middle East.

“There is a big opportunity for tech players to create more Arabic media content, as well as capitalise on the large use market that we have,” she added. “We are all going to be coming online, so there are a lot of solutions that can cater to that.”

Al Shakar sees particular promise in Bahrain’s fintech space. “In terms of providing an optimal regulatory framework space and the type of technical expertise and history of banking here, Bahrain will definitely be able to help support the growth of that sector,” she said.

“We already see that with the innovative regulations that we have. Ultimately, we definitely have that push forward and it’s just a matter of time before we succeed.”

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