Saudi heritage city Diriyah awards $2bn contract for mixed-use district

Saudi heritage city Diriyah awards $2bn contract for mixed-use district
Ahmed Al Bassam, CEO of El Seif Engineering Contracting, Chuanhai Wei, CEO of China State Construction Engineering Corp., and Diriyah Company Group CEO Jerry Inzerillo signed the contract
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Updated 11 July 2024
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Saudi heritage city Diriyah awards $2bn contract for mixed-use district

Saudi heritage city Diriyah awards $2bn contract for mixed-use district

RIYADH: Saudi heritage city Diriyah has awarded its largest single contract to date for the development of a district featuring educational institutions, cultural venues, and a luxury hotel. 

The SR7.8 billion ($2 billion) deal was agreed with a joint venture of El Seif Engineering Contracting Co. and China State Construction Engineering Corp., with work on the area in the north of the city due to commence in the third quarter of the year.

Developing historical sites like Diriyah is crucial for Saudi Arabia as the Kingdom aims to diversify its economy by reducing its dependence on oil and focusing more on sectors like tourism. 

Upon completion, the project will host 100,000 residents, workers, students, and visitors, offering a diverse range of cultural, entertainment, and retail, as well as hospitality, educational, and residential spaces. 

Diriyah Co. Group CEO Jerry Inzerillo said: “This (contract) represents a major step in our accelerating development strategy and commitment to making Diriyah a place for the world to be able to learn, absorb culture, and experience a vibrant and welcoming visitor destination.” 

He added: “The size and scale of this joint venture demonstrates the increasing speed and momentum of our plans for building The City of Earth and creating one of the world’s truly remarkable gathering places, and marks a major milestone in our master planning process.” 

Moreover, the contract marks the first major implementation of Diriyah Co.’s new delivery partnership procurement strategy. This approach fosters a collaborative environment among Diriyah and its main contractors, small and medium enterprises, manufacturers, and suppliers, ensuring efficient and effective project execution. 

Diriyah CEO further mentioned that the agreement with China State Construction Engineering Corp. exemplifies the growing economic ties and constructive business partnerships between Saudi Arabia and China. 

Ahmed Al-Bassam, CEO of El Seif Engineering Contracting Co. welcomed the deal by saying: “We are enormously proud to continue our strategic partnership with the Diriyah Co. and to be entrusted with a project of such importance in developing some of the highest profile assets within the Diriyah development area, and indeed across the Kingdom.” 

Diriyah is located on the outskirts of Riyadh, the Kingdom’s capital city, and is home to the UNESCO World Heritage Site of At-Turaif, the historic capital of the first Saudi state. 

Amidst these developments in the Kingdom’s tourism sector, Inzerillo was appointed as a UN Tourism ambassador in April, joining an elite group including Lionel Messi, Giorgio Armani, and Plácido Domingo. 


Oman’s Islamic banks report 13.2% asset growth to $19.5bn

Oman’s Islamic banks report 13.2% asset growth to $19.5bn
Updated 27 sec ago
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Oman’s Islamic banks report 13.2% asset growth to $19.5bn

Oman’s Islamic banks report 13.2% asset growth to $19.5bn

RIYADH: Islamic banks in Oman reported total assets of about 7.5 billion Omani riyals ($19.5 billion) by the end of April, a 13.2 percent increase from the previous year. 

According to official data, this represents 17.7 percent of the country’s total banking sector capital, highlighting the growing influence of Islamic finance in the nation. 

The total financing extended by these Shariah-compliant units increased by 12 percent annually, amounting to 6.3 billion riyals by the end of April, according to the Central Bank of Oman. 

In tandem, deposits at these banks and windows saw a 15.9 percent annual increase, reaching about 5.8 billion riyals.  

The broad money supply in Oman experienced a 12 percent year-on-year growth, reaching approximately 23.6 billion riyals by the end of April.  

This boost was driven by a 7 percent rise in the narrow money supply and a 13.9 percent increase in quasi-money, which includes total savings and time deposits in riyals, certificates of deposit issued by banks, margin accounts, and all foreign currency deposits within the banking sector.  

However, cash held by the public decreased by 7 percent, while demand deposits rose by 11.2 percent.  

The weighted average interest rate on deposits in riyals at conventional commercial banks rose from 2.19 percent in April 2023 to 2.58 percent by April 2024. 

Similarly, the weighted average interest rate on loans in riyal rose from 5.36 percent to 5.60 percent during the same period.  

On the industrial front, the total output of refineries and petroleum industries in Oman saw a slight decline of 0.4 percent by the end of May compared to the same period in 2023, reported the Oman News Agency, citing preliminary statistics from the National Centre for Statistics and Information.  

Despite this overall decrease, the production of automotive fuel increased by 1.8 percent.  

Breaking down the figures, the production of regular 91-octane automotive fuel decreased by 5.2 percent, totaling approximately 6.67 million barrels, with sales of 5.67 million barrels.  

In contrast, the production of premium 95-octane automotive fuel rose by 12 percent, recording 5.40 million barrels, with sales reaching 5.30 million barrels. The production of diesel fuel fell by 8.8 percent to 13.28 million barrels, with sales amounting to 5.68 million barrels.  

Conversely, jet fuel production increased by 13.5 percent, reaching 4.75 million barrels with sales of 1.666 million barrels. The production of liquefied petroleum gas stood at 3.78 million barrels, with sales reaching 4.25 million barrels.


Iraq seeks Egyptian and Saudi investment for developing new cities

Iraq seeks Egyptian and Saudi investment for developing new cities
Updated 27 min 42 sec ago
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Iraq seeks Egyptian and Saudi investment for developing new cities

Iraq seeks Egyptian and Saudi investment for developing new cities

RIYADH: Iraq has unveiled plans to attract Egyptian and Saudi investment for five new cities in Baghdad and other governorates, as part of efforts to address the housing shortage. 

Iraqi Prime Minister Mohammed Shia Al-Sudani presented these projects under the government’s initiative to launch 11 new cities, emphasizing their crucial role in addressing the urban housing challenge, especially for low-income groups, according to an official statement. 

The country has long been affected by political instability, impacting its economy and infrastructure, and faces a significant housing shortage. 

The prime minister highlighted Iraq’s rapid growth and recovery phase, noting numerous promising investment opportunities, particularly in housing and new city projects.  

With a demand for around 3 million housing units, he emphasized the government’s commitment to developing integrated cities that incorporate all sectors, services, entertainment, and commercial facilities, linked to Baghdad through a strong transportation network. 

The prime minister hosted a delegation of Egyptian, Saudi, and Iraqi businessmen, including Hisham Talaat Moustafa, chairman of TMG Holding; Sulaiman Al-Muhaidib, group chairman of Al Muhaidib Group; and businessman Ahmed Talaat Hani. The delegation specializes in real estate development and the establishment of integrated and smart residential cities. The meeting was attended by the Saudi Ambassador to Iraq, Abdulaziz bin Khalid Al-Shammari. 

Al-Sudani urged Egyptian and Saudi company owners to invest in resorts, hotels, and entertainment facilities, highlighting Iraq’s diverse tourist destinations. He emphasized that Iraq’s development and progress align with the economic interests of other Arab countries. 


Saudi stock market’s nominal value split benefits 42 companies in 2023: CMA

Saudi stock market’s nominal value split benefits 42 companies in 2023: CMA
Updated 14 July 2024
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Saudi stock market’s nominal value split benefits 42 companies in 2023: CMA

Saudi stock market’s nominal value split benefits 42 companies in 2023: CMA

RIYADH: Investors saw increased affordability and liquidity as 42 companies on Saudi Arabia’s benchmark index and parallel market benefitted from the nominal value split mechanism in 2023, official data showed. 

In its latest update, the Capital Market Authority noted that the Kingdom’s parallel market, Nomu, saw significant momentum in stock split operations last year, with 24 companies, representing 37 percent of listed firms, implementing the measure. 

This follows the CMA’s execution of the Companies Law and its Executive Regulations on Jan. 19, 2023, permitting listed firms to split stock par values from SR10 ($2.67) to various lower options. 

As part of the mechanism, a company divides its existing shares into multiples to enhance trading volume and accessibility for investors, without altering its total market capitalization. 

“The Companies Law allowed every company more flexibility to increase or decrease its stock nominal value, which is different from the previous mandatory ones that encompassed all companies with a unified nominal value,” said CMA. 

It added: “The nominal value split of a share can be defined as increasing the number of a company’s shares to a larger number of shares with a lower nominal value, without any impact or change in the shareholders’ rights.”  

This regulatory action, aimed at lowering per-share prices and increasing the number of tradable shares, evaluates the potential trading opportunities for a maximum number of investors. 

On the other hand, 18 companies, comprising 8 percent of the listed firms on Saudi Arabia’s Tadawul All Share Index, also benefited from the mechanism last year. 

The latest update also noted that seven listed companies reversed their split decisions for various reasons. 

CMA plays a crucial role in advancing the goals outlined in Saudi Arabia’s Vision 2030, implementing various measures to transform the Kingdom into a favorable investment destination. 

In its June report, CMA highlighted significant growth in the Kingdom’s sukuk and debt capital market since 2019, surpassing SR30 billion with an annual growth rate of 7.9 percent. 

The report also emphasized that net foreign investments in the Saudi capital market reached SR198 billion in 2023, marking a 7.7 percent increase from the previous year. 

Furthermore, Saudi Arabia’s capital market achieved prominent global recognition in 2023, ranking first among G20 countries in the Board of Directors Index. 

CMA noted that these achievements underscore the Kingdom’s advancements in governance, market accessibility, investor protections, and overall market vibrancy. 


Saudi Arabia’s digital lead in education opens up investment opportunities

Saudi Arabia’s digital lead in education opens up investment opportunities
Updated 14 July 2024
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Saudi Arabia’s digital lead in education opens up investment opportunities

Saudi Arabia’s digital lead in education opens up investment opportunities
  • Kingdom’s edutech landscape offers numerous opportunities for both local and foreign investors

CAIRO: Saudi Arabia is making significant strides in education technology, with substantial investments aimed at transforming and enhancing the sector.

The Kingdom’s government is actively promoting initiatives in this field, also known as edutech, recognizing their potential to revolutionize the schooling system.

According to industry experts, the Kingdom’s edutech landscape offers numerous opportunities for both local and foreign investors.

Venture data platform MAGNiTT has revealed the edutech sector is now one of the top five most-funded fields in the Kingdom.

In 2023, the industry saw a total of $50 million raised by Saudi-based startups, a 6 percent growth from the year before.

Furthermore, the edutech sector in the Kingdom witnessed substantial growth in 2022, surging by 2,069 percent compared to the previous year.

Nasser Al-Shareef, senior adviser of investment and privatization at the Saudi Ministry of Education, reiterated the possibilities for the industry in an article for Arab News earlier this year.

“By investing in education technology, both local and international investors can tap into a rapidly growing market with a high demand for innovative educational solutions. Saudi Arabia’s large youth population, coupled with its strong focus on education and digital transformation, creates a fertile ground for edutech investments,” he said.

“The Saudi government is supporting the growth of the edutech sector through various initiatives, policies, and funding programs. This support includes financial incentives, regulatory reforms, and partnerships with educational institutions. These measures not only attract investment but also provide a conducive environment for edutech startups to flourish,” he added.

Al-Shareef further stated that investing in the Kingdom’s edutech field offers opportunities across various segments of the education ecosystem.

This includes online learning platforms, virtual classrooms, and adaptive learning technologies, as well as educational content development, teachers’ training, and more.

“The potential for scalability and market penetration is significant, considering the increasing adoption of technology in schools, universities, and lifelong learning programs,” he added.

A national vision

Investing in Saudi edutech aligns with the Kingdom’s vision of establishing a knowledge-based economy, according to Al-Shareef.

By supporting innovative edutech solutions, investors play a crucial role in shaping the future of education and providing Saudis with modern, accessible, and personalized learning experiences. 

The edtech industry is likely to make a significant contribution to the Saudi economy, especially after the privatization of the education sector.

Salem Ghanem, CEO of Faheem

The Vision 2030 initiative, which seeks to diversify the economy and reduce reliance on oil, is a significant driver behind the Kingdom’s investment in edutech.

The Saudi government has identified the development of a knowledge-based economy and the improvement of education quality as essential goals. Edutech is considered a key enabler in achieving these objectives.

Various government programs and initiatives have been launched to support the growth of edutech startups and companies in the country, Al-Shareef explained.

“For example, the Ministry of Investment has introduced initiatives to attract foreign investment in the edutech sector. These initiatives include offering incentives and streamlined processes for setting up edutech companies in the Kingdom,” he said.

An entrepreneurial spirit

Private investors have also shown increasing interest in the Saudi edutech sector. Venture capital firms and private equity holders are actively investing in edutech startups, recognizing the sector’s growth potential, Al-Shareef added.

Speaking to Arab News, Salem Ghanem – CEO of Saudi-based edutech startup Faheem – emphasized the critical role of digital tools in supporting the national vision.

“The edtech industry is likely to make a significant contribution to the Saudi economy, especially after the privatization of the education sector following the Kingdom’s Vision 2030,” Ghanem said.

He added: “The impact will be apparent in the created job opportunities and the decreasing unemployment rates, taking into consideration that the tutoring market could create an estimated 45,000 to 60,000 job opportunities.”

In an interview with Arab News, Mohamed Zohair, CEO and founder of Saudi-based YaSchools, emphasized the significant rise of the Kingdom’s edutech sector.

“The Saudi market, in general, is an excellent market, and the current period is more mature than before, especially with the unprecedented support in digital transformation, financial services, and accompanying legislation and regulations,” Zohair said.

Al-Shareef further emphasized Zohair’s point, stating that Saudi Arabia has witnessed a surge in venture capital investments in edutech startups, with three of the top 10 most-funded startups in the Middle East and North Africa region originating from the Kingdom.

“The increase in venture capital investments has had a significant impact on the sector in Saudi Arabia. It has provided a boost to the growth and development of edutech startups by injecting much-needed funding and resources into the sector,” Al-Shareef explained.

“With greater access to capital, these startups have been able to innovate, expand their operations, and enhance their technological solutions,” he added.

According to Al-Shareef, the influx of venture capital has drawn attention from both local and international investors, creating a favorable investment climate for the edutech sector in Saudi Arabia.

This increased investor interest has provided financial support and brought valuable expertise, mentorship, and networking opportunities to startups.

Furthermore, the availability of venture capital has enabled startups to attract and retain top talent by offering competitive salaries, benefits, and career growth opportunities.

This has helped build a skilled workforce in the edutech sector and drive innovation.

Overall, the rise in venture capital investments has fueled the growth and transformation of the edutech industry in Saudi Arabia, positioning it as a key player in the regional digital schooling landscape and contributing to the advancement of education and learning technologies in the Kingdom. 


Saudi MSMEs see 16% growth in credit offerings in 1st quarter

Saudi MSMEs see 16% growth in credit offerings in 1st quarter
Updated 14 July 2024
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Saudi MSMEs see 16% growth in credit offerings in 1st quarter

Saudi MSMEs see 16% growth in credit offerings in 1st quarter
  • Saudi banks extended 94 percent of credit facilities, with the remaining 6 percent granted by finance companies

RIYADH: Credit facilities provided to micro, small, and medium enterprises in Saudi Arabia saw an annual rise of 16 percent in the first three months of 2024, according to recent data.

Figures from the Kingdom’s central bank, known as SAMA, indicated that borrowing lines allocated to this sector totaled SR293.43 billion ($78.25 billion), up from SR252.02 billion in the first quarter of 2023.

According to SAMA data, Saudi banks extended 94 percent of these credit facilities, with the remaining 6 percent granted by finance companies. 

Medium enterprises received the majority share of the sector’s total granted facilities at 55 percent, amounting to SR160.6 billion, with the most notable annual growth observed in small companies, which saw 32 percent increase to reach SR103.5 billion.

Credit extended to micro enterprises, constituting 10 percent of the overall share of MSME financing, increased by 30 percent during this period, reaching a total of SR29.4 billion.

Micro enterprises are characterized by revenues up to SR3 million and a workforce of no more than five full-time employees.

Small enterprises, on the other hand, exhibit earnings ranging from SR3 million to SR40 million, accompanied by up to 49 full-time workers.

In contrast, medium enterprises have revenues falling within the range of SR40 million to SR200 million, with employee numbers ranging from 50 to 249.

Saudi Arabia is heavily investing in its SMEs to diversify its economy away from oil and foster a competitive funding environment. 

Saudi Arabia is heavily investing in SMEs to diversify its economy away from oil and foster a competitive funding environment. (SPA)

Reforms have significantly simplified business investment and startup processes, boosting this sector’s share of GDP from 21 percent in 2013 with a Vision 2030 goal of reaching 35 percent.

The government is urging financial institutions to allocate 20 percent of their loan portfolios to this sector, demonstrating strong and ongoing support for these enterprises.

Currently, advances to MSMEs account for 8.6 percent of total credit from Saudi banks in what is an annual rise of 8.3 percent. Additionally, they represent 20 percent of advances from finance companies, a slight decrease from 22 percent.

Monsha’at key figures 

In the first quarter of 2024, the Small and Medium Enterprises General Authority, also known as Monsha’at, reported that 9,644 SMEs benefited from dedicated support centers, 15,766 trainees used the e-Academy,  and 1,558 accessed the Mazaya platform.

Some 719 also qualified for the Jadeer service, and 555 utilized the Commercial Innovation Portal.

Additionally, 463 SMEs joined the Tomoh program, facilitating Nomu market offerings.

The report highlighted that despite a regional dip in total Venture Capital funding this quarter, Saudi Arabia led MENA in capital deployed, securing 35 deals worth $240 million, according to Magnitt’s Q1 2024 KSA Venture Investment Report.

The Kingdom’s startup scene showed remarkable progress, highlighted by Salla app’s $130 million pre-initial public offering fundraiser, which was the region’s sole mega deal.

In this quarter, 65 percent of capital deployed in MENA went to Saudi-based firms. This investment, though significant, reflected a 70 percent quarterly drop from the fourth quarter of 2023 and a 42 percent year-on-year decline, mirroring broader regional trends.

Philip Bahoshy, founder and CEO of MAGNiTT, highlighted that despite Saudi Arabia maintaining its position as the leading investment destination in MENA, there is a noticeable downturn. 

FASTFACT

Medium enterprises received the majority share of the sector’s total granted facilities at 55 percent, amounting to SR160.6 billion, with the most notable annual growth observed in small companies, which saw 32 percent increase to reach SR103.5 billion.

Notably, $33 million was allocated to six early-stage venture and Series A deals. In a comment in Monsha’at’s report, Bahoshy observed that despite the funding downturn, deal flow in Saudi Arabia experienced only a modest 13 percent decrease compared to the same quarter of 2023.

This suggests that the Kingdom’s entrepreneurial ecosystem remains attractive to investors. The smaller average ticket sizes reflect a recalibration rather than a retreat in investor sentiment.

Key enablers

The Kafalah Program is one of the many government initiatives designed to support this sector by mitigating risk through guarantees that can cover up to 95 percent of the loan amount.

Additionally, Monsha’at, a key enabler to Saudi Arabia’s ambitious Vision 2030, plays a pivotal role in the SME ecosystem by enhancing access to finance, promoting entrepreneurship, and providing crucial support for business development. 

The authority enhances funding to this sector through partnerships with financial institutions and initiatives like the Kafalah Program, which increases lending. It prioritizes up-skilling SMEs via training programs and advocates for regulatory reforms to improve the business environment.

The institution also promotes market expansion by linking SMEs to opportunities and encouraging collaboration through networking events and trade platforms. Additionally, it cultivates an entrepreneurial culture with mentorship and advisory services, aiming to bolster the capacity and resilience of Saudi SMEs.

Global trends boosting SME growth

In the first quarter of 2024, Monsha’at highlighted how new technologies are empowering Saudi SMEs to scale, expand their market presence, and compete effectively against larger firms.

The Kingdom’s rapid advancements in IT and digitalization are particularly beneficial, fostering trends such as hybrid work models that enhance flexibility and resilience.

Furthermore, a significant number of SMEs are embracing e-commerce to drive growth, with 75 percent planning to adopt online shopping globally, as reported by the World Economic Forum’s Future of Jobs study.

Saudi SMEs are strategically positioned to capitalize on international opportunities across several sectors due to the Kingdom’s expanding global influence. In renewables, they can leverage local expertise in solar and wind energy before venturing abroad.

The logistics sector also presents opportunities as Saudi Arabia aims to establish itself as a global hub. Leveraging the Kingdom’s rich fashion heritage, SMEs can explore growth prospects in the fashion industry, the report stated.

In Islamic finance and fintech, there are openings for SMEs to innovate and develop new products for regional markets. The healthcare and biotech sectors offer expansion opportunities through initiatives like the Health Sector Transformation Program.

The report also noted that regional investments in agri-tech support growth, while rising interest in e-learning and edtech, exemplified by successes like the iStoria app, indicates a promising sector for Saudi SMEs.