Market Monitor ICT United Arab Emirates 2017

As in 2016 the ICT market remains characterised by high competition, single-digit margins, low entry barriers and stagnating growth in some segments.

The ICT value chain in the UAE encompasses vendors, distributors, power retailers, resellers and other small retailers, while manufacturing is not present. Most of the vendors and distributors are present in Dubai’s free trade zones, and redistribute to the wider Middle East.
Since the end of 2015 low oil prices have put downward pressure on the economy and discretionary spending, including the ICT segment. The value of the ICT market is estimated at USD 4.5 billion in 2017 and has been flat since 2015.
As in 2016, the UAE’s ICT market remains characterised by high competition, single-digit margins, low entry barriers and stagnating growth in subsegments like PCs and desktops. The imposition of a customs duty on certain consumer durables and IT products in India has negatively impacted the overall demand of ICT products.
Payment delays and protracted defaults have sharply increased since 2015, as have run-away cases due to cash problems in this industry. One of the main reasons for the increased default rate remains the lack of support from banks in the form of reduced or cautious lending. The payment delays and insolvency outlook remains subdued in 2017.
Our underwriting stance continues to be very selective and we are especially cautious when it comes to distributors and resellers exporting to high political risk countries in the Middle East and Africa.

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