3 ways SMEs can harness the power of Web3.0
Dubai ranks first in the Middle East and 18th globally in the Economist's 2022 Digital Cities Index, placing in the top 10 for digital finance. The Dubai Metaverse Strategy aims to turn it into one of the world’s top 10 metaverse economies. By 2030, the Strategy is expected to have created and nurtured 40,000 virtual jobs and added US$4 billion to Dubai's gross domestic product (GDP). A five-fold increase in the number of blockchain firms would help to boost Dubai's economy and support the UAE government's vision.
Implementing a similar strategy for every country in the MENA region can ensure the industry and economy are primed for the same success.
With the global Web3 market expected to reach USD 81.5 Billion in 2030, it's my core belief that SMEs are the drivers. They represent about 90 percent of businesses and more than 50 percent of employment worldwide. With enough access to emerging Web3 technology, SMEs have a unique opportunity to set the standard of successful large-scale adoption. The key is knowing how to do so while effectively broaching the challenges commonly faced by SMEs.
These are the 3 steps SMEs can take to start utilizing Web3 now and keep ahead of the curve.
Step 1 - Carry out a Feasibility Study
Before we foster innovation, we must make sure our respective businesses are equipped to handle the internal changes involved. Feasibility studies can address regulatory, economic, legal, operational and technical and financial aspects of Web3 integration to help avoid potential pitfalls when traversing uncommon ground.
One of the key concerns for SMEs is access to costs. In fact, close to half of formal SMEs in Latin America and the Caribbean and the Middle East and North Africa regions don’t have access to formal credit.
According to Deloitte , SMEs are important contributors to the economy. But SME lending in the Gulf Cooperation Council (GCC) is 3 percent with an estimated credit gap of USD 250 billion. Their 2022 paper also motions to harnessing fintech, data analytics, cloud computing, artificial intelligence and machine learning as part of potential solutions for commercial banks when it comes to SME lending.
Step 2 - Transition into Web3 using a human-centric approach
Once the analysis has been completed, in theory SMEs become poised to start integrating their businesses with Web3. However, this is a feat not all staff may be prepared for straight away, which is why introducing certain methodologies as part of training is a vital step in the long run.
Along with setting Web3-specific KPIs, SMEs will benefit from training staff in design thinking methodology. This is a tried and tested iterative process that allows entire teams of staff to understand and address the rapid changes taking place both their business and end users.
The Interactive Design Foundation highlights the 5 stages of this process. By adopting this human-centric approach, businesses know how best to implement Web3 as a means to problem-solve their customer pain points and map environmental and behavioral changes in their respective industries.
Step 3 - Begin to implement Web3 technologies
The potential of Web3 is unquestionable. With investments totaling $4.3 billion between the first half of 2021 and the first half of 2022, venture capital in the MENA region is already flourishing, with crypto investment services, digital payments, and buy now, pay later (BNPL) options playing a key role.
Two of the most effective and accessible Web3 technologies SMEs can implement are cryptocurrency transactions and making use of NFTs and the metaverse.
Integrating an option to pay in cryptocurrencies is becoming increasingly popular due to its many benefits. Chainalysis reports that cryptocurrency transaction volume reached $15.8 trillion in 2021, up 567 percent from 2020. In fact, one third of UAE residents own crypto.
As payments operate on blockchain technology, crypto transactions can be easily validated and processed. Verifying customers' identities in this way - also known as Know Your Customer (KYC) - allows financial exchanges to help prevent criminal activity like money laundering and the financing of terrorism.
Web3 protocols allow SMEs to issue tokens, generate funds, and offer entertainment, goods, and equity through NFT virtual goods. NFTs enable blockchain registries that bind a user’s identity to the things they own, contributing to new standards in cyber security and identity management.
Between 2021 and 2026, Technavio expects the global NFT market to grow by $147.24 billion at a CAGR of 35.27 percent. The NFT industry in Africa & Middle East is expected to grow by 48.3 percent on an annual basis to reach US$3420.4 million in 2022, according to TechInsight360's Q2 2022 NT Survey.
Because Web3 is present and functional, NFTs and crypto can undergo peaks and troughs. In this way, new commercial applications can be developed, scaled, and tested in extreme market conditions with enough users. It is possible to support the next growth curve by drawing lessons from design and implementation.
About the author
Farbod Sadeghian is founder of artèQ, a leading international Technology and Art start-up with a mission to pioneer the NFT revolution. He has also partnered in a real estate technology company called Qlindo. He has worked as a partner and mentor in many great startups globally with over 22 years professional experience in the technology and startup scene.