Transformative Trends: MENA's Digital Economy Set to Soar to $400 Billion by 2030, Fueled by Edtech and Healthtech Surge

New research suggests that the digital economy in the Middle East and North Africa (MENA) region is anticipated to reach a significant milestone of $400 billion by 2030, a substantial increase from the estimated $91 billion in 2021.

The progression toward this $400 billion mark is expected to bring about significant structural transformations in the digital economy of the region. Notably, edtech and healthtech are poised to emerge as leading sectors, while online travel, food, and bill payment sectors are projected to experience a decline in their growth rates.

The study conducted by RedSeer Strategic Consultants, a global digital services consultancy, highlights a shift in the geographical dynamics of the region's digital economy. While the United Arab Emirates (UAE) and Saudi Arabia have been dominant contributors, the research foresees a more balanced growth scenario, with the rest of MENA countries, particularly led by Egypt, contributing nearly 50% to the overall digital economy, alongside the remaining 50% from the current leaders.

The research also anticipates a surge in economic activity from the region's Generation Z in the coming decade, with their contribution expected to triple, constituting 30% of the overall online retail spend, up from the current 10%. RedSeer emphasizes that the growth in MENA's digital economy will now be concentrated in specific sectors, in contrast to the historically broad-based growth.

Ankit Sarwahi, a venture capitalist and managing director of Middle East Venture Partners (MEVP), notes the transformative impact of technology on developing economies in MENA, particularly in countries like Egypt, where micro-entrepreneurs are revitalizing the economic landscape. Traditional sectors are anticipated to undergo rapid tech transformation, with first-time founders driving fundamental changes in financial access, education, and healthcare.

The study projects online retail to remain the largest segment in the digital push, with an annual growth rate exceeding 20% over the next decade. However, within online retail, sectors such as grocery and fashion are expected to experience even faster growth. Emerging sectors like edtech and healthtech are forecasted to undergo significant expansion, with a projected tenfold increase in their combined market size to $20 billion by 2030 from the current $2 billion.

Despite overall growth, the study points out that segments such as online electronics sales, once star performers, may experience a decline. While all online segments are anticipated to grow at over 10% annually, sectors like electronics, travel, and food tech are expected to grow at a slower pace than the overall digital economy.

Sandeep Ganediwalla, the managing partner of RedSeer Strategic Consultants, underscores the expected annual growth rate of over 15% in the digital economy from 2022 to 2030. He notes that certain sectors, including electronics, travel, and food tech, might experience slower growth, particularly as offline restaurants recover.

The study predicts that the growth in edtech services will be driven by skills enhancement among working professionals and educational institutions adapting to new technologies. However, the supplementary K12 segment in edtech may experience a slower ramp-up with the reopening of offline schools and colleges.

In terms of digital adoption, the study notes improvements in the rest of MENA, with daily time spent on digital channels comparable to that of the UAE and Saudi Arabia, exceeding 8 hours per day.