Saudi Arabia’s Vision 2030 is an extremely ambitious project that sparked our interest here at Vazco, as it stands as a benchmark for many countries on how to think big. What we find evident is how Saudi Arabia turns former challenges into opportunities and learns from prior experience.
I personally believe that Saudi Vision 2030 is a game changer that may serve as an inspiration not only for the Middle East. I like to think of it as a story of how to navigate complex challenges to make a real difference.
That’s why I decided to embark on a new journey to discover what has ignited Vision 2030 and how to navigate it to success with cutting-edge technologies. I have divided it into a three-part series, which will be released here on our blog.
Introduction
Today, I would like to cover the evolution of Saudi Arabia and delve into its historical, economic, and cultural background. This will allow you to understand the specific challenges Saudis face more profoundly. Then, I will explain Vision 2030 as a third-party observer, highlighting focal points. It’s a worthwhile lecture for business executives who would like to understand Saudi Arabia better.
Throughout the next article, I will connect the challenges mentioned throughout this article with plausible solutions. Particularly, I would like to share some of my thoughts on how to use state-of-the-art technology to help the Saudi government and citizens in achieving their most fundamental goals. Finally, I will focus on one of the key strategic objectives - education.
Without further ado, let’s dive deep into what has caused Saudi Arabia to come up with their revolutionary Vision 2030.
Charting the Course to Vision 2030
Vision 2030 is the Kingdom of Saudi Arabia's national transformation program, which was announced in April 2016. The transformative and ambitious plan aims to diversify the Saudi economy, reducing dependence on natural resources. However, in my view, Vision 2030 is primarily about improving the quality of life for all citizens.
The three pillars of this transformative project revolve around building:
👉 a vibrant society,
👉 a thriving economy,
👉 and an ambitious nation.
Before I explain Saudi Arabia's Vision 2030 in detail, I would like to provide you with context.
The Evolution of Saudi Arabia
Historic background
Historically, Saudi Arabia has essentially been a Bedouin culture, as Khalid bin Bandar Al Saud, Saudi Ambassador to the UK, points out in an interview for Oxford Union. However, we mustn't forget that Saudi Arabia has always been an important site for the Arab and Islamic worlds. In fact, modern-day Saudi Arabia is where Islam was born.
The Kingdom of Saudi Arabia was formed in 1932 after uniting the tribes and regions of the Arabian Peninsula. Soon after, in 1938, oil was discovered in commercial quantities, which has forever transformed the country's economic prospects.
Without a doubt, Saudi Arabia has experienced unparalleled growth and has become one of the most influential countries in the world. Rapid modernization and the increase of its wealth and GDP have resulted in the increase of geopolitical influence. Its potential to connect the Middle East with European and Asian powerhouses is still a point of ongoing debate and related projects.
Economic and development affairs throughout the years
However, Saudi Arabia, throughout the vast majority of its most recent history, could be best described as a petrostate. In 2022, Glimpse from the Globe stated Saudi Arabia controls 17% of proven petroleum reserves. 80% of its exports are oil-related, and 40% of GDP depends on it.
What if the global shift towards green energy causes the value of Saudi Arabia's most valuable resource to plummet?
Historically, Saudi Arabia has been vulnerable to fluctuations in oil prices. It was particularly evident in the 80s when Saudi Arabia experienced budget deficits and an increasing unemployment rate among Saudi nationals (which was significantly higher than the unemployment of foreign laborers). This particularly affected younger generations. The dramatic fall in oil prices around 2014-2015 served as a stark reminder of this vulnerability.
Learning from experience
Understanding the economy of Saudi Arabia is pivotal for understanding Vision 2030. So, allow me for a quick detour from the Middle East to... the Netherlands.
In the 1960s, they discovered vast gas resources. Their currency, the Dutch guilder, strengthened significantly. However, at the same time, the discovery of “black gold" caused a decline in other sectors, such as manufacturing and agriculture. Moreover, their exports became less competitive in the global market. Simply put, as the Dutch glider strengthened, the imports from the Netherlands became too pricey to buy. The phenomenon of "unwisely managed wealth" is called the Dutch disease in economics.
(Source: Yahoo Finance)
Similarly to the Netherlands in the past, Saudi Arabia relies heavily on one type of export over the others. Sometimes, vast wealth has its price. In their case, it was the development of a highly subsidized and oil-dependent economy. The mere fact that the Saudi Riyal is kept at a stable exchange rate (3.75 SAR = 1 USD) might indicate that they have learned from the experience of the Dutch nation.
The main challenge for Saudi Arabia is that when oil prices are high, the country can prosper, but when oil prices fall, it can face economic challenges.
And, according to the Brookings Institute (2020), “in the medium term, revenues from oil [in the Gulf] are expected to decline in the face of reductions in global demand starting around 2040, if not sooner”.
What does the Saudi government plan to do?
Saudi Arabia has recognized the need to address the aforementioned issues and has undertaken various economic reforms and diversification initiatives in recent years. Their main economic goal is to reduce the Kingdom's dependence on oil and promote growth in different sectors.
These efforts include the Vision 2030 plan, which aims to transform the economy. It focuses on various sectors and industries, including education, tourism, entertainment, technology, and renewable energy, to create new economic opportunities. The plan also emphasizes improving governance, infrastructure, and the quality of life for Saudi citizens, with the goal of making the country more globally competitive by 2030.
I will focus on areas that are particularly interesting from my point of view to accentuate synergies between Saudi Arabia and EU countries.
Diversified economy
With an ambition to build a thriving economy, Vision 2030 hopes to balance the public sector and the private sector. This includes the privatization of various state-owned assets to create new opportunities. For example, the state-owned oil company Aramco "is considering selling a stake worth as much as $50 billion through a secondary share", according to Reuters.
Riyadh also aims to achieve an increase in the private sector’s contribution from 40% to 65% of GDP and increase direct foreign investment from 3.8% to the international level of 5.7% of GDP. The goals of Vision 2030 include empowering small and medium-sized enterprises (SMEs).
Monsha'at (SMEs general authority) releases a quarterly report, "SME Monitor", to let the world know of their progress. In Q1 2023,
"the SME ecosystem grew remarkably to reach 1.2 million businesses, a nearly 5% increase compared to Q4 2022 that was supported by a young population".
Education
Education is the cornerstone of building human capital. In 2023, 63% of Saudi nationals are under 30, according to Arab News. A well-educated Saudi youth can not only drive economic growth but also promote local workforce participation and reduce the need for foreign labor. This shift can also support the ongoing progress of women's empowerment in the country.
Investment in higher education and vocal training can also support the goal of lowering the rate of unemployment from 11.6% to 7% and may become a fundamental driver of economic diversification. As I previously noted, the higher unemployment rate among Saudi youth in the 1980s has been a tough lesson which Saudi Arabia learned from.
(Source: SHRM)
What solution does the government have? Saudi Arabia partners with world-class professionals and top universities to create a modern curriculum that will prepare Saudis for the demands of the job market. They prioritize STEM education (Science, Technology, Engineering, and Mathematics) to drive innovation.
Saudi Arabia's goal was also to increase parent engagement in their children's learning process to 80% by 2020. They've launched the Irtiqaa program to measure how effectively this ambition is achieved.
Vision 2030 promotes the use of technology and e-learning platforms to enhance education accessibility and effectiveness. EdTech is now of paramount importance. There has been a rapid increase in integrating technology into the education system through e-learning platforms, digital textbooks, and virtual classrooms. I project that these efforts will only increase over time.
Sports & Tourism Experience
If you haven't heard about Christiano Ronaldo's transfer to Al Nassr, you must have been living under a rock. And... it's merely the tip of the iceberg. Saudi league is packed with international superstars. Other sports, like F1, golf, or Esports, also seem to have sparked the Kingdom's interest.
Saudis purposefully invest in sports and entertainment - in part to attract foreign investment, in part to fuel the economy with revenue-generating championship events, and in part to become a destination for sports fans worldwide.
I expect software solutions related to event management, ticketing systems, virtual events, and AR experiences to be highly sought-after by Saudi investors.
(Source: WWOS - Nine)
Did you know that Saudi Arabia opened its doors to international visitors in... 2019? By 2030, they hope to attract 100 million tourists and create 1 million new jobs within the sector. Saudi Arabia has also launched ambitious projects to become a world-class tourism destination.
The Red Sea Project, NEOM, and Qiddiya are ambitious projects set to become major tourism hubs, offering entertainment, leisure, and adventure opportunities. Simultaneously, Saudi Arabia's long-standing role as the epicenter of Islam ensures a significant influx of pilgrims visiting the holy cities of Mecca and Medina.
Software solutions for the HoReCa sector, like reservation management systems, AI-powered guest recognition, CRMs, and payment processing systems can support tourism initiatives in Saudi Arabia.
Green energy
Similarly to EU, Saudi Arabia is making significant strides in the realm of green energy. As part of its Vision 2030 plan, the country is committed to diversifying its energy sources and reducing its carbon footprint.
One notable initiative is the Saudi Green Initiative, which aims to plant 10 billion trees in the coming decades and reduce carbon emissions by 60% through renewable energy projects. By 2030, Saudi Arabia aims to have 50% of its energy generated from renewable sources.
The flagship project in this endeavor is NEOM (image above, source: Hydrogen Insights), a futuristic city that plans to be powered entirely by renewable energy, including wind and solar. Saudi Arabia is also investing heavily in solar energy, with plans to develop one of the world's largest solar projects, which is expected to produce 200 gigawatts of electricity by 2030.
The development of large-scale renewable energy projects, such as solar farms and wind farms, has the potential to produce surplus electricity that could be exported to regional markets.
Technology & Digital
Saudi Arabia is actively investing in digital infrastructure and smart cities. The high-tech metropolises, like NEOM, aim to leverage cutting-edge technologies such as artificial intelligence, renewable energy, and autonomous transportation to create a sustainable and innovative urban environment. Additionally, the country is pushing for the widespread adoption of digital services in areas like e-government, healthcare, and education to enhance efficiency and improve the quality of life for its citizens.
One significant focus is on fostering a robust digital ecosystem that encourages entrepreneurship and the growth of technology startups. Initiatives like the Saudi Vision Realization Program aim to provide support, infrastructure, and funding to nurture homegrown tech companies, spurring economic diversification.
Conclusion
Vision 2030 is about three main aspects: building a vibrant society, a thriving economy, and an ambitious nation. However, what I particularly like about this project is its uncompromised effort to aim higher and higher. Will Vision 2030 be completely achieved? Will all its goals be met? I'm curious to hear your thoughts on the matter on my LinkedIn profile.
Thank you for staying with me until the very end of this article. In the coming weeks, I will publish the next article on the matter. If that sounds like something you might be interested in, don't hesitate to follow Vazco - you'll get a direct line of getting notified when we post new articles!
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Aleksander Zygmunt
Business Development Director
Navigating the diverse world of business processes for +15 years, I became a Business Developer, but I also have gained experience in Delivery Management and Recruitment. I've worked in both global and local companies. At Vazco, I thrive on connecting with great folks across Western Europe, the USA, Scandinavia, and the Middle East. I also focus on forging genuine, long-lasting connections in business. When the office lights go off, you’ll find me reveling in the great outdoors, tackling offroad trails, diving into unconventional sports, or anything with an engine. And, of course, there’s my most cherished role - being a dad.
