Saudi Arabia’s significant progress towards Vision 2030 is accelerating growth in the Kingdom, despite ongoing Omicron concerns, according to foreign direct investment advisory Sovereign.
Saudi Arabia became one of the most attractive markets for international companies looking to expand through mergers and acquisitions in 2021. The country’s accelerated growth, which reached 6.8% in the third quarter of 2021, can be attributed to rising global demand for crude oil, ambitious Vision 2030 targets and the government’s increased focus on improving the private sector, in addition to progress in combating the coronavirus pandemic. This has strategically positioned Saudi Arabia for continued mergers and acquisitions growth in 2022.
“Saudi Arabia is probably the Middle East’s most active M&A market. Although this acceleration in M&A activity is widespread, we have seen notable increases in healthcare, education, logistics, manufacturing, infrastructure, and entertainment. Additionally, we have seen significant investment in ESG and green energy, as well as technology, particularly in niche industries such as healthtech, edutech and fintech,” said Sovereign Saudi Arabia Managing Director Paul Arnold.
Saudi Arabia has also made significant strides in strategic tourism development as part of its effort to diversify its investment away from oil. The Kingdom intends to invest more than USD1 trillion in the tourism sector over the next decade.
By 2030, the tourism sector in the kingdom is expected to contribute more than 10% of GDP, owing to Neom, a USD500 billion futuristic metropolis that includes a natural reserve and historical sites on Red Sea islands, as well as Qiddiya, a major entertainment and sports project.
In 2021, fintechs took centre stage in Saudi Arabia. According to the annual Saudi Fintech Report, the Kingdom has seen a significant increase in venture capital investment in the fintech sector, with 16 deals totaling USD157.2 million completed in the first eight months of 2021. This compares to 2020, when seven venture capital deals totaling USD7.8 million were signed because of pandemic restrictions.
Moreover, in line with Saudi Vision 2030 and the Financial Sector Development Programme, the Kingdom’s central bank, SAMA, has recently announced its move to ‘open banking’, which includes developing the digital economy and allowing financial intermediaries to support private sector growth by opening-up the financial services industry to new players. This will further support the continuing development of the fintech sector and will encourage the development of an advanced capital market in the country.
“Saudi Arabia is fast becoming a regional hub for inbound investment because of the economy’s growth, particularly during the pandemic, when many investors were forced to pivot due to supply chain delays and inflation in their home countries. Saudi investors, on the other hand, are looking to diversify their portfolios through outbound investment to bring global expertise and capabilities to Saudi Arabia,” said Arnold.
The Kingdom intends to transform Riyadh into one of the world’s top ten cities by 2030, through doubling its population to 15 million to 20 million and increasing visitor arrivals to more than 40 million, the board of the Royal Commission for Riyadh City announced last month.