The digital transformation of an island nation: how Bahrain rose to lead cloud adoption in the GCC Region

BrandPost By Bahrain EDB and AWS
Sep 11, 20236 mins
Digital Transformation

Bahrain EDB

Bahrain EDB

As cloud adoption grows, its impact on economies and businesses is starting to show that digital transformation can make good on the utopian promises of innovation and improved public services.

Those who demand to see hard facts that prove the power of cloud should examine Bahrain. A new IDC study details the Kingdom’s sustained effort to build a future-ready technology ecosystem, which analysts describe as a “remarkable” achievement.

The economy of Bahrain, an archipelago of islands in the Arabian Gulf, has always been open and diversified, with particular strengths in financial services, manufacturing and logistics. The country’s strategic pivot to digital transformation, being the first in the region to adopt a Cloud-First policy, attracted AWS to setup in-country data centers, further accelerating the adoption of cloud services, which is expected to contribute $1.2 billion revenue to Bahrain’s GDP by 2026, according to IDC’s Economic Impact study.

So why did AWS select Bahrain?

Bahrain’s leading position in the digitization of its economy, owing to its Cloud-First policy and forward-thinking on data regulation and stance on sustainability made it a natural choice.  

Supported by the nation’s Labor Fund Tamkeen, it also benefits from a workforce that is young, highly skilled, bi-lingual and tech savvy alongside a diverse expat talent pool offering a global perspective.

Bahrain was also quick to foster the resulting potential for foreign direct investment (FDI). Compared with regional peers, Bahrain has always punched above its weight in this respect. AWS launched its first Region in the Middle East with three availability zones in 2019, enabling Middle East organizations to meet business continuity and disaster recovery requirements and build available, fault-tolerant, and scalable applications from Bahrain.

In turn, Bahrain’s investment in digital transformation, and continued focus on attracting key projects like AWS while developing key sectors as part of its overall growth and diversification plans, acted as an economic force multiplier.

By 2022, on the basis of the economy’s superior skills base, Citi chose Bahrain as the location for its Global Technology Hub, also a first in the region, which aims to employ 1,000 native programmers over the next decade.

This year, Singapore-based Whampoa Group also selected Bahrain as the HQ location for its new digital bank. More recently, the effort to continue to maintain an attractive investment environment in Bahrain has continued with the government’s launch of the Golden License, which offers large-scale investors privileges and benefits including prioritized allocation of land for the investment project, and streamlined access to the provision of infrastructure and utilities.

Bahrain also became the first country in the region to implement a multi-cloud and hybrid cloud system in the government sector to bolster business continuity, availability of government systems, as well as reduce operational costs.

The story of success

From the start, the Bahraini government’s digital transformation plan was comprehensive and bold. The long-term plan kicked off in 2007 with a strategy to digitise government.

This resulted in 85% of government digital infrastructure being moved to the cloud. The effect of subsequent plans rippled further and further into the wider economy. The latest iteration – a five-year Economic Recovery Plan that kicked off in 2022 – mandated regulatory reform, additional public sector digital transformation and investment in world-class digital and telecoms infrastructure, cybersecurity and IT skills.

These digital initiatives were only one part of the wide-ranging plan that aims at achieving economic growth, fiscal balance and the managed expansion of a selection of key vertical sectors.

The roots of efforts like these spread deep and wide. Between 2018 and 2022, according to IDC, 2,500 IT professionals in the public sector were retrained to support digital transformation efforts and cloud adoption.

IDC also notes how Tamkeen undertook a substantial retraining program for IT professionals in the wider economy, with the aim of increasing employment in IT and telecoms by 35% by 2023. Tamkeen also supported the launch of AWS Cloud Innovation Centers at Bahrain Polytechnic and University of Bahrain, making Bahrain the only country with two Cloud Innovation Centers outside the US.

In addition, an educational partnership with Apple, the expansion of professional cybersecurity training at the SANS Institute and Reboot01, powered by the French educational platform 01 Edu, offers a two-year program where graduates emerge as full stack developers. Ultimately, the Recovery Plan aims to provide 20,000 citizens with government cybersecurity training by 2026.

IDC calculates that public cloud expenditure in the Gulf region is growing at less than 30% annually. In Bahrain, the figure is over 40%. The analyst firm describes the arrival of AWS as “a game-changer in many respects” and suggests that “by deploying the right resources towards this specific goal, Bahrain accelerated implementation of its strategy”.

Bahrain now qualifies as a digital overachiever , with impressive internet penetration rates, world-class network infrastructure and levels of support for digital literacy that exceed anywhere else in the world.

So far, so good. But has Bahrain’s sustained investment had a positive effect contributing to the growth and diversification of the national economy?

In IDC’s study, one key statistic stands out: in 2021, every dollar spent on cloud services was already generating 6.8 additional dollars in the wider economy.

And there’s more to come. As IDC suggests, the full impact of Bahrain’s long-term digital strategy is likely to become apparent in 2023.

Policymakers take note: Bahrain’s digital transformation is a powerful endorsement of the economic multiplier effects generated by sustained strategic investment in the public cloud.

Learn more here.