Thanks to the success of the vaccine rollout, we were able to send field staff back to Saudi Arabia in August after a pandemic-induced period of absence. Apart from the natural sense of excitement at finally being able to hold face-to-face meetings with partners old and new, our new team has reported a sense of wonder at how rapidly things appear to be changing in the Kingdom.
When Oxford Business Group was founded in the mid-1990s, our primary markets were all in the Middle East. Back then, Saudi Arabia’s economy was almost entirely dependent on oil. The government was still grappling with the internal ramifications of the 1st Gulf War, and international commentators speculated on whether a huge population boom threatened to undermine the Kingdom’s social contract and create a generation of underemployed and disaffected youths. Nevertheless, it was our foundational belief that the significant challenges the region faced were outweighed by the tremendous opportunities presented by its demographic advantages and inherent entrepreneurial spirit.
The region has changed profoundly over the past three decades, as has Oxford Business Group – which has become a global business intelligence firm present in over 30 emerging markets across four continents. But the process of transformation has accelerated in Saudi Arabia faster than anywhere else in recent years. All six countries in the Gulf Cooperation Council (GCC) have faced pressures to diversify their economies away from hydrocarbons, reduce wasteful public subsidies and generate new high-value growth engines that can provide well-paying jobs for their youthful citizens. However, the pressures have been felt most acutely in Saudi Arabia, given its population of over 35m[P1] – more than the five other GCC countries combined – of which two-thirds [P2] are aged 34 and below. While the Kingdom may be home to the world’s second-largest [P3] proven oil reserves and offers the world’s lowest production costs [P4] – only a small minority of Saudi citizens [P5] actually work in the petroleum sector and related downstream industries. And although global demand for Saudi oil – particularly from Asia – is likely to continue for the foreseeable future, the global momentum in favour of decarbonisation underlines the need for the Kingdom to nurture new sources of sustainable economic growth and job creation.
Enter Saudi Vision 2030, the Kingdom’s overarching strategy for economic diversification and national rejuvenation that was unveiled by the then Deputy Crown Prince, Mohammed bin Salman, in 2016. Look past the consultancy jargon and buzzwords and what you find is a reasoned and ambitious vision for economic and societal transformation. While the pandemic-related economic downturn and volatility in oil markets may have slowed momentum, Vision 2030 remains the beacon that guides all new economic, business and social policies in Saudi Arabia, with public and private sector stakeholders incentivised to pursue strategies that align with national medium- and long-term objectives. As a result, the Kingdom today is unrecognisable in many ways from what it was a decade ago. There is a tangible sense of excitement in the air that extends beyond the gleaming skyscrapers and glitzy new leisure and entertainment venues. Many educated and ambitious young Saudis – both men and women – feel increasingly confident that their homeland can meet their career and lifestyle aspirations while upholding their traditions.
Underpinning the wide-ranging changes taking place across the economy and society are rapid advancements in digital technology. Like their cohorts around the world, young Saudis spend much of their time online. In fact, Saudi Arabia has a higher rate of social media penetration than Britain, with 79.3% [P6] of the population in the Kingdom registered as social media users compared to 77.9% [P7] here at home. The average rate of social media penetration in the Middle East is just 60%. Perhaps it should not be much of a surprise to see social media usage so high in Saudi Arabia when the country is ranked by some estimates [P8] as having the world’s third-highest smartphone penetration rate. Of all the mobile phone devices in circulation in the Kingdom this year, almost 99% [P9] are smartphones. This high level of connectivity is helping to boost productivity and opening up profitable opportunities in everything from e-commerce and education to entertainment and financial services – thus helping to accelerate economic diversification.
Saudi consumers can be confident that the high-tech devices in their pockets will provide them with high-speed internet access. In fact, the latest Ookla Speedtest Global Index [P10] ranks the Kingdom as having the sixth-fastest mobile download speeds in the world, with the average megabits per second (Mbps) download rate being almost double that of Britain. Many of us in the UK who have been forced to endure frustratingly patchy connections during the endless series of Zoom meetings over the past 18 months would be very grateful for such speeds.
Saudi Arabia is also ahead of Britain in the 5G rollout. Among capital cities, Riyadh is ranked as having the sixth-fastest 5G download speeds [P11] in the world, with speeds more than twice as fast as those recorded in London and Washington DC. The Kingdom’s largest telecoms provider, stc, launched the region’s first commercial 5G network in 2019 and had achieved 5G coverage in 47 cities across the country by the end of 2020. Despite the fears of the conspiracy kooks, 5G technology provides significant economic multiplier effects. The ultra low latency and high throughput should help to fuel the development of new high-value tech industries, as well as boost productivity and fuel innovation in everything from government services to public transportation.
About The Author – Patrick Cooke
As OBG’s Managing Editor for the Middle East and Asia, Patrick oversees research and production of the group’s broad suite of business intelligence products across the dynamic and varied markets of the Gulf and Asia-Pacific. At the same time, he is instrumental in developing new content ideas and features that reflect the dynamism in high-potential markets across these regions and the growing appetite for actionable intelligence and advisory services on the opportunities within.
A graduate in Political Studies from the University of Leeds, Patrick was an award-winning national newsroom journalist before gravitating towards business writing and economic research on emerging markets. Having gained valuable experience across four continents, Patrick has conducted insightful interviews with an array of presidents, senior ministers, central bankers and top executives on the pertinent issues facing their markets, as well as being a regular speaker, moderator and panelist at international events and a contributor to regional newspapers.
The rest of this editorial will be published at a later date.