Saudi Arabia on the path to socioeconomic transformation
In a recent TV interview to mark the fifth anniversary of the launch of the Saudi Vision 2030 reform plan, Crown Prince Mohammed bin Salman outlined the achievements of the program in a number of economic and financial sectors, including housing, and tackling unemployment.
One of the most difficult challenges faced by the Kingdom for a number of years has been its heavy dependence on oil revenues as a main source of income. Within the first five years of Vision 2030, the country has managed to diversify its economy and reduce its reliance on oil.
The crown prince indicated in the interview that in the fourth quarter of 2019 the non-oil economy grew by around 4.5 percent and, if it had not been for the coronavirus disease (COVID-19) pandemic, it would have exceeded 5 percent. This has been evidenced by the growth of non-oil revenues in the past five years to SR350 billion ($93.3 billion), from SR66 billion.
Another major achievement outlined by Crown Prince Mohammed was the housing challenge, which existed before the Vision 2030 program came into effect.
The Kingdom had suffered from a housing problem for 20 years and an individual who applied for a housing loan used to have to wait for up to 15 years before receiving a loan. This resulted in a low and slow growth of home ownership among citizens while the level of housing did not increase for years.
The crown prince noted that during the reign of King Abdullah the government had allocated about SR250 billion in 2011 to support housing sector growth. However, only SR2 billion out of that amount was disbursed in 2015. The main reason behind this was because the Ministry of Housing could not utilize the funds and transfer them into projects because of the weak situation of the state. Last year, the percentage of housing ownership had increased from 47 percent to 60 percent in just four years and the target is 70 percent by 2030.
Unemployment was another challenge facing the Kingdom, with the jobless rate among Saudi nationals reaching 14.9 percent in the third quarter (Q3) of 2020 due to the impact of the COVID-19 pandemic. However, it dropped to 12.6 percent in Q4 of the same year.
Despite that, Saudi Arabia came sixth among the G20 nations in terms of performance and unemployment. The target set out for unemployment as part of Vision 2020 was to decrease it to at least 7 percent or lower by 2030.
The crown prince said in the interview that the Saudi Public Investment Fund (PIF) had witnessed significant growth in its assets under management. Over the past four years, the fund has grown by almost 300 percent and over the coming five years it will grow by 200 percent or more to reach SR10 trillion ($2.7 trillion) by 2030.
The PIF has garnered outstanding achievements since its formation, in line with Vision 2030, as the assets under management have grown from SR570 billion ($154 billion) in 2015 to SR1.5 trillion ($0.4 trillion) in 2020. Also, the fund has established more than 30 companies across 10 strategic sectors, and this has generated in excess of 331,000 direct and indirect job opportunities.
I believe that Vision 2030, in the short time it has been in operation, has succeeded in achieving many of its goals and objectives, not only in connection with diversifying the national economy and improving the percentage of home ownership, but also in other aspects of life such as health, education, culture, tourism, and entertainment.
Such outstanding achievements have made Saudi Arabia the fastest-growing nation among G20 countries.
• Talat Zaki Hafiz is an economist, financial analyst and a board member of the Saudi Financial Association. Twitter: @TalatHafiz