Sustainable Development in Kuwait

Kuwait is witnessing a paradigm shift across several economic sectors from banking to energy, with sustainability being the common denominator.

The status quo in a large number of sectors has been challenged by the introduction of several key technologies in just under a decade. Green energies have become a viable alternative to fossil fuels, leading to the reshaping of the energy sector. The transport sector, meanwhile, is undergoing a paradigm shift with the introduction of electric vehicles by many automakers. Most importantly, the finance sector has seen the rise of fintech, cryptocurrencies, and smart banking powered by AI.

Kuwait is no exception. In fact, thanks to its prosperous economy, Kuwait has been an early adopter of many game-changing technologies. The country’s private sector is leading the way, creating a wave of drastic reforms across several industries. This is in keeping with the Kuwait’s Vision 2035, which identifies digital transformation as one of its pillars.

In November 2022, the Kuwait Digital Transformation Conference was inaugurated in Kuwait City to “showcase the latest technologies & solutions for digital transformation,” according to Zawya. Held by the Central Agency for Information Technology (CAIT), the conference gathered together over 500 professionals and executive managers to discuss the country’s prospects in the face of an economic ecosystem in the middle of transformation.

Almost all presenters and panelists were unanimous that the region is caught in the middle of a rapid digital transformation and business practices need to be rethought accordingly.

This may seem like a challenge in a society such as Kuwait, where routines, traditions, and the old way of doing things matter; however, the country’s leadership has been open in adopting new practices as long as they accelerate Kuwait’s path toward achieving its economic goals.

The event’s keynote speaker, Ammar Husseini, deputy director-general of the Central Agency for Information Technology (CAIT), summed up this attitude by explaining that “our aim is to enhance the efficiency of cloud-based applications and enhance the performance of key entities and industries in Kuwait in line with the Kuwait Vision 2035,” according to Zawya.

Sustainability is the common denominator of all these changes. While revolutionary changes are taking place across the finance and automotive sectors, the energy which powers these sectors is also increasingly coming from sustainable sources. The inevitable metamorphosis of the energy sector may be the greatest change that Kuwait’s economy is facing.

Despite its status as a traditional exporter of hydrocarbons, Kuwait has taken some steps toward embracing sustainable energies. The country’s goal is to raise the share of renewables to 15% in its energy portfolio by 2030. The Shagaya Renewable Energy Park is the focal point of Kuwait’s developments in sustainable energies. Located in the middle of a desert 100km to the west of Kuwait City, the energy park has huge potential for photovoltaic (PV) expansion. “Phase 2 of Shagaya will include a 1,500-MW PV solar plant, which will be the second-largest PV plant in the world,” according to the National Center for Atmospheric Research (NCAR).

Whether it is shifting to renewables or to accelerate digital transformation, many believe that Kuwait is agile enough to not only adjust its economy to the changing realities of the outer world, but also to make profits. “I think Kuwait can benefit tremendously from these developments and plans. Because it is a relatively small country in size with one of the highest GDP per capita figures in the world, there’s room for the government and private sector to implement changes swiftly and effectively,” said Palladium’s Abdullah AlNabhan to TBY recently.

Almost every observer is unanimous that Kuwait should not miss this opportunity to go through an economic transformation now, because thanks to reasonably high oil prices most GCC economies, including Kuwait, will continue to grow at least until 2023. This will provide the government with enough funds to safely implement an overhaul across its economy.

The S&P Global Ratings has forecasted that “Kuwait’s economy will grow by 8% in 2022, followed by 5.5% in 2023, mostly on account of rising oil production as OPEC+ cuts are discontinued.”

All this has created a series of new opportunities for the tech-savvy youth of Kuwait. The nation’s entrepreneurs are trying to capitalize on the imminent changes in the way of doing business, especially in areas such as digital finance, green energy, and electric vehicles. “Youth, in particular, consider entrepreneurship as means to achieve their personal and professionals’ aspirations and contribute to socioeconomic development,” observed the Kuwait Foundation for the Advancement of Sciences (KFAS) in a 2021 report. The same report found that “there is a favorable perception, locally, regarding entrepreneurship,” with up to 60% of Kuwaitis believing that the time is ripe for new enterprises in the start-up scene.

The country’s inevitable transformation is also presenting the nation’s savvy entrepreneurs with an opportunity: the Kuwaiti economy can capitalize on its notable accumulated wealth to support new enterprises in emerging fields discussed here. Although some projects will fail, those that succeed will be able to drive Kuwait’s economic transformation. This will be possible only by raising the state’s investment in R&D—which in 2020 stood at 0.2% of the GDP—and then by offering financial helplines to entrepreneurial initiatives in emerging and sustainable sectors.

The trend has already begun. “The focus on start-ups relates to Kuwait, which is now home to a thriving start-up scene. In just the past year, start-ups Justclean, Floward and Raha have raised USD6 million, USD27.5 million, and USD6.7 million in funding, respectively,” reported Arab Times in 2022. And hopefully we will see more activities in the start-up ecosystem in 2023.