How will Covid-19 shape Abu Dhabi’s start-up ecosystem and data protection landscape?

As the economic effects of the coronavirus pandemic continue to be felt globally, Abu Dhabi has sought to support small and medium-sized enterprises (SMEs) with stimulus measures, while cloud services offered by local data centres are making it easier for people to work and study from home.

To coincide with the start of Ramadan, the UAE government has begun to relax some Covid-19 restrictions, announcing on April 24 that the national curfew had been reduced by two hours, and would now be enforced from 10.00pm to 6.00am.

Meanwhile, on April 28 the local government in Abu Dhabi moved a step closer to opening malls and shopping centres across the emirate by releasing a set of health and safety requirements for businesses willing to reopen.

The guidelines state that, among other measures, malls must conduct daily disinfection programmes, implement thermal scanners at every entrance and restrict capacity at food and beverage outlets to 30%.

While statistics are not available for individual emirates, as of April 28 the UAE had 11,380 confirmed cases of the virus and 89 deaths.

SME stimulus

While the UAE government has released a nationwide stimulus package focused primarily on the banking system, the authorities in Abu Dhabi have prioritised support for start-ups and SMEs as part of its plan to offset the economic impacts of the virus shutdown.

On March 16 the Abu Dhabi Executive Council passed a comprehensive stimulus package that included a 16-point strategy for protecting vulnerable firms and households.

As part of the measures, SMEs can apply to a Dh3bn ($816.9m) credit guarantee scheme designed to stimulate financing by local banks to SMEs, while start-ups are eligible for electricity subsidies until the end of the year. In addition, a Dh1bn ($272.3m) market-maker fund was also created to boost liquidity in the stock market.

These measures align with the government’s Dh50bn ($13.6bn) economic development programme Ghadan 21, or Tomorrow 21, which was launched in September 2018. 

Ghadan 21 prioritises the nurturing of start-ups and SMEs as part of efforts to bolster the emirate’s non-oil economy.

The plan’s initiatives range from launching funding initiatives to providing assistance to start-ups and companies in early stages of growth.

Cloud services

Meanwhile, the shift towards remote working and learning as a result of Covid-19 containment measures has accelerated demand for cloud computing services.

Although data security concerns have hindered the uptake of cloud products in the past, a series of developments over the past year have helped to boost capacity in this area.

In June 2019 US software giant Microsoft launched its first data centres in the Middle East in both Abu Dhabi and Dubai, which marked the first time that public cloud services became widely available in the region.

This was followed in January by the entrance of fellow US firm IBM Service, which also launched one data centre each in Abu Dhabi and Dubai. Meanwhile, in mid-April San Francisco-based start-up InCountry announced that it had opened its Middle East headquarters at Abu Dhabi’s Hub71.

Launched in March last year as a flagship initiative of Ghadan 21, Hub71 is an ICT cluster that offers subsidised office space, housing and health care to seed stage and emergent start-ups that specialise in tech-based solutions.

With a list of 36 start-ups as of April 2020, the cluster is central to the emirate’s plans to strengthen its post-pandemic tech ecosystem.

Data protection

The rise in the uptake of cloud computing services has also come amid increased awareness of cyber threats and data protection solutions.

On an international level, this has been boosted by the 2018 implementation of the EU’s Data Protection Regulation (GDPR). Locally, in February 2019 the UAE introduced its first national-level legislation to directly govern data protection.

The Federal Law No. 2 of 2019, or Health Data Law, regulates the use of ICT within the health care segment, and contains data protection principles similar to those under the GDPR.

In addition, the UAE’s free zones are subject to their own data privacy governance. In 2018 Abu Dhabi introduced data protection amendments for companies operating within its Abu Dhabi Global Market financial free zone, once again bringing regulations closer in line with GDPR standards.

Cybersecurity

These legislative updates have also been complemented by efforts to strengthen the cybersecurity environment.

In June last year the Telecommunications Regulatory Authority launched the UAE National Cybersecurity Strategy 2020-25. As well as modernising cybersecurity laws, the 60 initiatives outlined in the roadmap include plans for SME-specific regulations and the provision of support for small businesses to adhere to these new standards.

Data protection is set to grow in importance as companies employ a broader range of digital services. In the UAE alone, cloud services are expected to generate 55,000 new jobs by 2022. It will be key for companies with a regional or international presence, in particular, to source local expertise and data storage centres as data protection regulations continue to evolve.

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