Introducing the Digital Cooperation Organization: Towards a Common Digital Market in the Middle East?

Introducing the Digital Cooperation Organization: Towards a Common Digital Market in the Middle East?

In November 2020, senior government officials from Saudi Arabia, Jordan, Bahrain, Kuwait and Pakistan announced the launch of the Digital Cooperation Organization (DCO), which seeks to unify efforts to advance digital transformation and grow the combined size of its members’ digital economy to USD 1 000 000 000 000 (one trillion) in the next 3-5 years, according to H.E. Abdullah Al-Swaha, Saudi Arabia’s Minister of Communications and Information Technology and the DCO’s mastermind.

The cornerstone of the DCO’s vision is a strategy designed to:

  • optimize policy and regulatory frameworks to expand cross-border data flows and digital trade;
  • develop a thriving DCO common market;
  • accelerate digital transformation, human capital development and digital infrastructure deployment;
  • promote trust in emerging technologies (AI, DLT) and align digital privacy standards; and
  • strengthen the bargaining power of DCO members by streamlining engagement with the private sector, representation at international organisations and national-level legislation and policies.

Realising the Vision

The DCO’s vision and strategy are commendable, albeit herculean. For one, expanding cross-border data flows will require: (i) a complete overhaul of existing data classification policies to ensure harmonisation and to lower compliance costs for new market entrants; and (ii) the removal of local residency requirements which currently characterise national legislation, including Saudi Arabia’s Interim National Data Governance Regulation and Pakistan’s Personal Data Protection Bill 2020.

Regulatory harmonisation (on data protection, digital taxes, online harms etc.) is the foundation of any common digital market. The DCO’s success will be closely tied to its ability to broker an agreement on a regionally flavoured regulatory framework that balances traditional “security concerns” with the DCO’s ambition to compete, and triumph, in the global technology race.

Building on Existing Strengths

To accelerate digital transformation, the DCO should build on existing strategies such as  Jordan’s Digital Transformation Strategy 2020, which includes a commitment to make all government services “digital by default”, and Bahrain’s Cloud-First Policy, which has driven cloud migration and attracted an AWS data centre. The same applies for human capital development, where capitalising on a young, tech-savvy population and high Internet penetration rates promises high returns on investments.

Bridging the Divide

The decision of the United Arab Emirates, the GCC’s digital powerhouse with a share of more than 25% of the e-commerce market in the gulf,[1] and the Sultanate of Oman, a rising digital star under new leadership, to refrain from joining the DCO raises an important question: can the DCO achieve its vision without regional unity?

The DCO’s success will depend on its ability to partner with these governments through a mechanism (e.g. MOUs, joint investments or digital trade missions) which promotes mutual benefit on common areas of interest (trust in emerging technologies, including AI and DLT) and builds on existing efforts, such as the UAE’s 1 Million Arab Coders Initiative.

What Comes Next?

The world will tune in for the DCO’s 1st Executive Council Ministerial Meeting (Q2-Q3 2021), which will agree on the DCO’s governance structure, operating model and vision implementation roadmap. This will be the DCO’s first test, and soon afterwards we will be able to develop a true picture of the prospects of a Middle East-driven common digital market.

Ahead of the Ministerial Meetings, the DCO has an opportunity to reflect on international examples, including the European Commission’s Digital Single Market Strategy, which guarantees that individuals and business can seamlessly access and engage in online activities under conditions of fair competition and a high level of consumer and personal data protection, irrespective of their nationality or place of residence. The DCO should also note that the commitment of Member States alone is not enough and that the organization will have to be creative in establishing a clear mechanism for implementation.

In the meantime, here in the Middle East, private sector companies who proactively engage the DCO’s leadership, including Secretary General Deemah Al Yahya, will reap the benefits, which include building political capital across all five Member States and accessing the opportunity to become the DCO’s vendor of choice.

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If you are interested in learning more about the Digital Cooperation Organization (DCO), contact Hussein Abul-Enein, Senior Policy Manager, Middle East Lead or Nada Ihab, Policy Manager, Middle East.

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[1] Bain and Company.  “E-commerce in Mena: Opportunity Beyond the Hype.”

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