Linking up: Mobile web access, social networking and e-commerce all look set to boost growth

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Driven by a large youth demographic, Kuwait’s uptake of mobile internet and new technological innovations has been substantial. While broadband internet prices remain comparatively high, mobile operators have managed to make Blackberries and iPhones ubiquitous. Social media, meanwhile, appears well ensconced locally. Still, the lack of Arabic content is an obstacle to growth. According to a 2010 report on the GCC information and communications technology sector from Kuwait Financial Centre (Markaz), only 1% of internet content is in Arabic, whereas Arabic speakers account for approximately 5% of the world’s population. A new era has dawned where, to be competitive, businesses must create an online presence and stay in touch with customers. Online businesses achieving international popularity, such as group-buying sites, are starting to spread in the region as well. With internet penetration at just 39%, the coming years should see many opportunities for entrepreneurs to deliver specialised online content to Kuwaitis.

BUNDLING: Across the world, but especially in the Middle East, people are increasingly using their phones for more than just voice, pointing to a promising new horizon for operators. Mobile firms are now bundling voice, data, internet and entertainment services in order to attract customers. Software giant Oracle’s 2010 report “Opportunity Calling: The Future of Mobile Communications” indicated that “less than a third of mobile phone users currently bundle their mobile phone bill with other communications services, but nearly all of those who do not would be interested in the option.” In the Middle East, 39% of respondents used their phone as a mini-computer, compared to a global average of 25%. Some 70% used their phone to read or send e-mail, compared to a global average of 44%, and 33% to update their status on a social media site. The Middle East leads the world when it comes to multiple uses for handsets, due mainly to region’s high youth concentration. In this respect, Kuwait is no exception. According to mid-2010 population statistics from KAMCO Research, 34.6% of Kuwaitis (1.23m) were under the age of 25. Moreover, 14.8% of the population (530,000) is under the age of 10, pointing to a large pool of future mobile subscribers. Average revenue per user (ARPU) has been on the decline since the entry of a third telecoms operator, Viva, in 2008, but by offering mobile internet and other value-added services, operators should be able to recover some of their lost revenues. However, given the government’s intervention to lower internet prices, Ali Alostath, CEO of Hayat Communications, which builds telecoms infrastructure regionally, said this advantage will soon be lost. “You may have more young people getting lines, but that’s fixed and revenue will be shared among three operators,” he told OBG. “In the long run, ARPU will be lower for voice but data would compensate and good operators would try to keep the same mixed ARPU.”

SOCIAL MEDIA: The GCC leads the Arab world in Twitter activity, with half of the region’s “tweets” coming from UAE, Kuwait, Qatar and Saudi Arabia in the first three months of 2011, according to the Dubai School of Government’s “2011 Arab Social Media Report”. Kuwait accounted for 16% of the Arab world’s tweets, the highest percentage. The country has around 113,000 Twitter users, or 3.6% of the population, compared to the UAE, which leads with around 201,000, or 4.2%. Twitter usage in the region spiked dramatically in early 2011 as a means for broadcasting information about political events. The site, however, lacks an Arabic interface, though web clients are available for Arabic-speaking users. Facebook, available in Arabic since 2009, has achieved greater popularity in the region. In the first three months of 2011, 5% of Kuwaitis joined Facebook. Around 26% of the population uses the social networking site, compared to 50% in the UAE and 37% in Bahrain.

In addition to helping friends stay connected, social media has become a powerful marketing tool. “Whether it is a political affair or business promotion, more and more companies, government and private, are realising the potential of mass-market reach that social media offers,” Waqar Qureshi, senior manager for products and business development at local internet service provider Qualitynet, told OBG. “Telecoms are using social media to create product/service awareness, promote packages, gain feedback and keep in touch with their customers. Some of this social media is also giving room to enhanced customer service – consumers feel more comfortable leaving a message on Facebook rather than calling the helpdesk.” Marketing via social media is gaining traction as well. A 2011 report by Regus Media of corporate social media use found 62% of Gulf firms surveyed are using sites like Facebook to connect with customers, compared to a global average of 52%. In March 2011 the Gulf University for Science and Technology hosted Kuwait’s first Social Networking Forum, designed to help firms and individuals “utilise social media networking to further develop their projects and themselves.”

E-COMMERCE: Making business transactions on the internet is also becoming mainstream, with Business Monitor International estimating $100bn was spent on e-commerce in the Gulf in 2010. The Arab Advisors Group’s last regional survey from 2008 indicated 10.7% of the Kuwaiti population uses e-commerce. The UAE’s penetration rate was the highest in the Arab world, at 25.1%, while Lebanon’s was the lowest, at 1.6%. Recent years have seen the rise of a number of commerce websites catering to Middle Eastern customers., an online shopping platform operating in the UAE, Saudi Arabia, Jordan and Egypt, launched a Kuwaiti version in June 2011, enabling users to buy and sell merchandise. Online group-buying is also starting to catch on. GoNabit is the Arab region’s first “deal a day” site, with 140,000 registered users in Kuwait, the UAE, Jordan and Lebanon. In 2011 it was bought by US-based, one of the world’s largest group-buying sites. For the ArabNet 2011 forum, which explores digital trends, GoNabit and YouGovSiraj, a regional consultancy, released a survey on e-commerce habits in the region. Out of 2196 respondents from the UAE, Lebanon, Jordan, Kuwait and Egypt, around two-thirds said they would buy online if the product were cheaper, and 56% if it were more convenient.

CREDIT CARDS & THE ECONOMY: One challenge to e-commerce’s spread in the Middle East has been requirements by sites such as GoNabit that customers make purchases through PayPal, which necessitates a credit card. Kuwait, however, has high credit card usage compared to other countries in the region. In its 2011 report “The Impact of Electronic Payments on Economic Growth”, ratings agency Moody’s rated Kuwait’s card penetration contribution to consumption as 1.79%, which is higher than the global average of 0.79% and on a par with Western nations such as Denmark (1.61%). The Moody’s study concluded that “increases in private consumption that are attributable to card usage drive corresponding increases in GDP”. Therefore, further expansion of e-commerce in Kuwait seems likely ahead.

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The Report: Kuwait 2012

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