After the 2020 outbreak of COVID-19 that caused a breakdown to the global economy, the beginning of year 2021 brought hope to people across the world with the launch of vaccination campaigns. The real challenge was to go back to “normal” and start the recovery process, which was not easy. Year 2021 was much better that 2020, economically speaking.
Majalla covered the most significant Saudi economic developments that took place last year from an analytical point of view. The recovery of oil prices has enabled the Kingdom to continue its public spending and launch mega projects in preparation for the post-oil era.
PIF: THE BIGGEST SAUDI INVESTOR
Saudi Arabia has worked hard to go ahead with its economic diversification plan according to the Kingdom Vision 2030. The Public Investment Fund, the investment arm of the Saudi government, invested USD 40 billion in the local Saudi market. The Kingdom launched several muti-billion dollar megaprojects including: The Line, a smart city being built in NEOM along 170 km without streets, cars or carbon emissions; Oxagon, an eight-sided floating industrial city northwest of the Kingdom; Jeddah Downtown, a USD 20 billion megadevelopment to create a modern downtown in Jeddah; and, The Rig, a new tourism project inspired by an offshore oil platform. There are other projects and developments with all being financed by PIF.
The PIF investments focused on value-adding, innovative projects that exist only in Saudi such as The Rig and Oxagon. The decision-makers are accelerating the process to make the Kingdom a hub for the green economy as well as investments, arts, tourism and innovation.
NON-OIL ECONOMY PROSPECTS
Saudi business angels and venture capitals were rising stars in financing fresh startups. Saudi Venture Capital Company (SVC), a publicly owned company established in 2018, is investing three-quarter billion USD to support the entrepreneurial financing lines.
The Kingdom continued working hard to turn itself into a global hub for the camel industry with more than 1.4 million camels that made the country rank 3rd globally in the number of camels after the Sudan and Somalia. It held camel festivals and encouraged more investments for camel meat and milk production.
New laws were issued to boost the local mining sector. The mineral wealth that lies underground is estimated at USD 1.3 trillion. More 690 mining companies, both local and global, were licensed in 2021, raising the total number of mining companies to around 2000. Majalla called it “Saudi Arabia’s Hidden Wealth for Post-Oil Era.”
Majalla highlighted countryside tourism and cash crops in the Kingdom. More Saudis are turning to local tourism as more farmers are opening their farms for visitors to enjoy the countryside life at reasonable prices, away from the noise of cities. Organic and cash crop farmers have received government subsidies to produce quality food locally.
The taxing system was enhanced with the launch of e-invoicing and digital linking to fight tax evasion and avoidance in order to enhance the collection and revenues.
To speed up privatization, the National Infrastructure Fund was launched with a total capital of USD 53 billion. The Fund is set to provide credit facilities and partnerships to attract more investments in the infrastructure sector.
BOOSTING BANKING SECTOR
The Saudi banking community welcomed more competitors including Standard Chartered Bank, a British banking and financial services company founded in 1969, and the National Bank of Iraq (NBA), an Iraqi bank established in 1995, raising the total number of foreign licensed banks to 19. This comes as part of Saudi endeavors to make the Kingdom a competitive banking hub.
The next big players in the Saudi banking scene are digital banks. Fahad Al Mubarak, Governor of the Saudi Central Bank, announced the Kingdom’s intention to license more digital banks. STC Bank and the Saudi Digital Bank (SDB) were licensed in 2021 and are expected to begin operations this year.
ZERO EMMISSIONS
The Kingdom is leading the effort to reduce global warming by self-imposing a commitment to reach net zero carbon emissions by 2060, increase the green cover, and adopt the circular economy. The Saudi Green Initiative was launched last October and the Kingdom pledged to plant 10 billion trees by 2030.
