Bahrain Information Technology (IT) Sector

Market Overview

With an Information Technology (IT) market Compound Annual Growth Rate (CAGR) of around 6% over the forecast period, the Kingdom of Bahrain will continue to be a lucrative market for technology products and services, benefiting from trade liberalization, strong demand from the financial sector, and government IT and broadband initiatives. Among some of the factors making Bahrain one of the region’s more advanced markets is a robust and developing capital market underpinning financial hub status, and e-government leader status.
Bahrain government Central Informatics Organization (CIO) established e-government solutions centre. This reinforced our view that the general environment should be conducive to the development of the IT sector. Bahrain privatization and liberalization programs support spending, as well as low interest rates.

The prospects for IT remain good with the total size of the IT market expected to increase from 231 Million USD in 2005 to around 315 Million USD in 2010, and software and services displaying the fastest growth over the forecast period. We are taking a positive view of market performance over the 2006-2011 forecast period, in line with our upwardly revised GDP and oil price projections. Among reasons for our confidence, Bahrain’s non-oil sector, already relatively significant by regional standards, will continue to expand, creating a virtuous multiplier effect by generating more revenues for government to spend. With oil revenues stable, the better economic growth scenario should impact directly on sales of computer equipment to home users, as well as encouraging spending by government and administrative bodies. The government has stated its intention to invest oil and gas budget surpluses in economic diversification programs.

The oil and gas industry and the banking sector account for a significant and growing portion of IT investments. Currently, there are major projects being implemented by the Central Bank of Bahrain.

Bahrain is less dependent on oil and gas than some of the other GCC countries. Bahrain government economic diversification programs are bearing fruit, and manufacturing accounting for around 10% of GDP. The financial services industry is continuing to expand and develop in Bahrain, spurred by the popularity of Islamic banking, as reflected by projects in 2006 involving Saudi Arabia, Kuwait, and UAE Banks.

Bahrain telecommunications sector is opening to competition. Recent legal changes allowing nationals from other GCC countries to own property in Bahrain, have also spurred on the booming real estate market in the country, creating opportunities for vendors to provide services. There are initiatives to create a GCC free trade which will benefit many other sectors.
The computer hardware market is expected to grow at a CAGR of 6% over the forecast period to a value of around 127 Million USD. This is creating new opportunities for vendors. Highlighting the trend that government remains major spenders on computer equipment and services, driven by various e-government programs.

Industry Developments

Bahrain is becoming a regional financial centre. The Central Bank of Bahrain (CBB) is deploying a new national payment network that will allow real time online inter-bank payment and settlement. In addition to the real-time gross settlement system (RTGS), which allows the online inter-bank payment, the Bank will also deploy a Securities Settlement System (SSS). With its robust and developing capital market.

Bahrain’s Ministry of Social Development base its entire infrastructure on open source. This deployment, which is in line with a series of Government strategic open source initiatives, is being managed by IBM local partner Gulf Business Machines (GBM).

Outsourcing

The financial sector It activities encourages the development of outsourcing. Emphasizing the potential of Bahrain’s finance sector, Financial Services and Euro-net Worldwide have created a joint venture company, Euro-net Middle East (EME), which will offer outsourcing capabilities to financial institutions across MENA. EME is based in Bahrain and will provide debit card management, ATM and POS outsourcing services, chip card issuing, and gateway services to credit Card and national switches.

e-Government

Bahrain is ranked first for e-government implementation in the MENA. Bahrain stands second only to Israel in West Asia, and is ahead of Cyprus and Turkey. Bahrain is the first government in the Middle East to adopt open standards for its e-government initiatives.
Vendors have been keen to support, and benefit from, these developments. Four years ago, the government signed an agreement with Microsoft to further the development of an ‘intelligent kingdom’.

With the resulting increase in the number of citizens using e-government services to interact with government departments, Bahrain's Central Informatics Organization is currently implementing a training program to improve the e-literacy of civil servants in the country.