Silicon Kingdom: Saudi's digital leap opens doors for global business

According to our latest Saudi Trade Corridors report, as of February 2024, the total value of Saudi Arabia's digital economy reached $122.6 billion. While the country’s ICT market is already the largest and fastest growing in MENA – valued at $40.9 billion and representing 4.1% of national GDP.

This push to fully digitise its economy is also not just a grand ambition, it's a necessity to meet the demands of its people. Around 67% of Saudi citizens are under 35, 97% of the population own smartphones, and according to SAMA (the Saudi Arabian Monetary Authority), digital payments surpassed cash as early as 2021.

A State-led strategy to build a digital powerhouse

Under the Vision 2030 National Investment Strategy, the Saudi government has undertaken a series of measures to make sure that the Kingdom has the digital backbone in place to support its plans.

According to the GSMA, Saudi Arabia is already one of the leading 5G nations with some of the fastest networks in the world, while Saudi Telecoms Company Group is currently constructing the Saudi Vision Cable, the region’s first high-capacity submarine cable in the Red Sea.

The Kingdom has set up a series of innovation hubs and academies like The Garage in Riyadh, special economic zones such as the Cloud Computing SEZ, and smart cities like NEOM, to act as focal points for expanding its tech industry. Additionally, in early 2024, the Public Investment Fund (PIF) established advanced technology firm Alat. Focused on artificial intelligence (AI), semiconductors, green technologies and robotics, Alat intends to invest approximately $100 billion by 2030 and has already established strategic partnerships with Softbank and Dahua Technology.

The government has also committed to digitising as much of its own operations as possible. In March, the Digital Government Authority launched the Digital Transformation Measurement ‘Qiyas’ 2024 to raise government agencies' commitment to digital transformation. The digitisation of basic government services in Saudi Arabia has already led to SAR 23 million of savings, while it is actively working on digitising trade and modernising the rules and laws that underpin trade, such as implementing UNCITRAL’s Model Law on Electronic Transferable Records (MLETR).

Saudi’s leaders have also committed to the long-term when it comes to establishing a world leading tech economy. Government spending on technology is expected to be $24.7 billion by 2025, accounting for 21.7% of national spending and the highest in the world. By 2040, policymakers pledge that investment in research, development, and innovation will rise to 2.5% of GDP.

What are the trade opportunities in a digitised Saudi?

With the World Bank estimating that a fully digital MENA economy could lead to a rise in GDP of 46% over 30 years, amounting to a long-term gain of $1.6 trillion, the continued technological innovation in the region is creating multiple opportunities for global corporates and investors.

Like many countries, artificial intelligence (AI) has been identified as a key growth driver. The Kingdom established the National Strategy for Data & AI with five main goals: cultivate 20,000 data and AI specialists, enact new progressive legislation for AI businesses and talents, attract SAR 75 billion ($20bn) investment into data and AI opportunities, establish leading data and AI institutions to lead innovation, and nurture an ecosystem of 300 data and AI start-ups.

The Saudi Trade Corridors report also identifies four leading tech sub-sectors poised for growth – cybersecurity, e-commerce, Internet of Things, and cloud computing. Tech giants such as Google, Alibaba, Oracle and SAP have already invested $2.5 billion in cloud technology in the Kingdom, while the e-commerce market is expected to soar in value to more than $13 billion by 2025. Another space to watch is the geospatial analytics market projected to grow to $570 million by 2029.

Beyond the tech industry, the development of the digital economy is creating opportunities for global corporates in digital-heavy industries including fintech, healthcare and life sciences, energy, and education.

As we enter the second half of the 15-year journey towards Vision 2030, the government’s considerable commitments to advancing its digital economy are coming to fruition and this has created an environment where now could be the time for corporates and investors to capitalise on the multiple sector opportunities out there.