Smart cities to the hyperloop: This region is investing in a tech-led transport revolution

The Middle East is seeing a flurry of startup activity that, when combined with large-scale government investment, could deliver transformative economic, environmental and human benefits.

The Middle East has already been the birthplace of a number of tech-led transport unicorns. Waze, a traffic and navigation app co-created in Israel, was acquired by Google in 2013 for over $1.1 billion. More recently, Uber purchased Careem, a regional ride-hailing app, for $3.1 billion.

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But alongside these high-profile efforts, a quieter transport revolution is taking shape.

Analysis from MAGNiTT found that $121m was invested across 45 investment deals in the Middle East and North Africa (MENA) delivery and transport sector in 2019. Startups can be seen across a spectrum of activities, including rideshare services using scooters and buses, car purchasing and parking apps, freight and trucking services, and last-mile delivery logistics.

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These efforts are being accompanied by large-scale, government-funded projects that are creating new roads, metro systems and airports, as well as less eye-catching – but equally important – investments in areas like smart lighting and traffic management.

This investment and innovation matters. According to the Organisation for Economic Co-operation and Development (OECD), the MENA region still faces significant infrastructure shortcomings, including in transport, ICT and energy. Data from the World Bank suggests that the region will require at least $100 billion annually over the next five to 10 years to build new infrastructure, as well as maintain aging systems.

Building smarter cities and public transport networks

One potential outlet for these efforts are the smart city ambitions blossoming across the Middle East. These high-tech hubs are designed to be powerhouses for economic growth, and the transition to knowledge-based economies. However, pollution, congestion and limited public transportation options all threaten to dampen these aspirations.

In some cases, like the construction of Egypt's new capital city, cities are being built from the ground-up with smart technology and Internet of Things (IoT) systems integrated into the urban bedrock: smart monitoring of traffic congestion and accidents; smart utilities to reduce consumption and cost; even smart buildings and energy management – all of this is part of Egypt's futuristic vision.

Older cities will need to adapt and accommodate these efforts. However, cities, old and new alike, require effective transportation systems at their heart. Public transport, governments and analysts believe, is integral to achieving this. 

Encouraging citizens out of private vehicles and onto public transport will be a tough sell, and will require "inverting the pyramid", according to global consulting firm Strategy&.

Research by Strategy& found that public transport accounts for just 17.5% of daily trips in Dubai, approximately half this figure in Riyadh, 4.9% in Abu Dhabi and an even smaller proportion in other major Gulf Cooperation Council (GGC) cities. This is compared to 59% in New York, 33% in Tokyo, and 37% in London.

Changing consumer behaviors, and encouraging greater take-up of public transport such as the new Metro systems in Riyadh and Doha could prove particularly difficult, especially given the low cost of petrol, COVID-era social distancing requirements, and the region's sweltering climate.

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Transport behaviors in the GCC will need to be flipped on their head if ambitions for smarter, greener cities are to be realized

Source: Strategy&

Qatar's Public Works Authority, Ashghal, knows this, taking upon itself to install 2,700 air-conditioned bus stops on all of the country's major roads. The move is part of a wider upgrade to transport infrastructure, which will support the FIFA World Cup Qatar 2022 and its legacy. This will be great comfort for thousands of bus users in many areas," Ashghal rightly notes.

Going green

As well as trying to change citizens' attitudes towards public transport, new, greener technologies are also being introduced to meet MENA nations' emissions targets.

This includes the roll-out of electric vehicles, from buses to private cars, as well as efforts to establish large, solar-powered electric charging stations.

Nations are also embracing cleaner forms of energy and exploring opportunities for automation. Autonomous vehicles are being piloted across the region, with Dubai arguably leading the way with plans for 25% of all traffic to be autonomous by 2030.

The emirate has also launched the region's 'first industrial scale' green hydrogen plant, as well as having announced plans for public transport to be emissions-free by 2050 and partnering with autonomous vehicle firm Cruise to be the first non-US city to use the company's self-driving taxis and ride-hailing services.

Meanwhile, Morocco has set a target to take 50% of its energy from renewable sources by the end of the decade, up from 35% in 2019. The UAE and Saudi Arabia have one-upped this, with plans for zero-carbon cities.

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Use of alternative fuels across public transport in Middle East and North Africa.

Source: The MENA Centre for Transport Excellence (CTE) and the International Association of Public Transport (UITP)

The Line, a 170-kilometer-long city in Saudi Arabia, is one of them. It plans to be car and road-free, with transport running entirely underground. As reported by ZDNet's Daphne Leprince-Ringuet, the city promises to "be fitted with every high-tech element of a science-fiction movie, from air taxis to humanoid concierges."

Championing future tech

The MENA region is also actively scoping out the use of Hyperloop technology. One company pioneering this new form of transportation, Virgin Hyperloop, is understandably enthusiastic about its potential.

Chaired by the Emirati businessman, Sultan Ahmed Bin Sulayem, the company opened its first overseas office in Dubai in 2017. Over in Saudi Arabia, Virgin Hyperloop is exploring the creation of a Hyperloop 'Center of Excellence', which it estimates will generate $4 billion in GDP and create 124,000 high-tech jobs.

Jay Walder, chief executive officer at Virgin Hyperloop One, has proposed that Hyperloop technology will be 50% more energy-efficient than high-speed rail, and up to 10 times more than flying. "As a result, all Gulf cities could be less than an hour away from each other, powered by a zero-emission network that is energy neutral and could be completely unplugged from the grid in the Middle East," he said.

Moving Forward

According to World Bank, an estimated 5.5% of GDP in MENA is lost annually due to poor roads and accidents. Propelling high-tech transportation throughout the region has the potential to address a myriad of goals, including improving road safety, accommodating the transport needs of growing populations, achieving sustainability targets and meeting the wider accessibility needs of the Middle East.

Strategy& estimates that sustainable mobility could unlock about $400 billion in economic value over the next 20 years in the GCC alone. As public and private investors look to accelerate economic growth and digital transformation across the MENA region, it is little wonder we are seeing transportation technology getting the green light.