Saudi Arabia’s non-oil exports surge as trade ties with China flourish

Saudi Arabia’s non-oil exports surge as trade ties with China flourish
File photo of the Saudi Minister of Finance Mohammed Al-Jadaan with Chinese Minister of Finance Lan Fo’an. (X:@MAAljadaan)
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Updated 18 August 2024
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Saudi Arabia’s non-oil exports surge as trade ties with China flourish

Saudi Arabia’s non-oil exports surge as trade ties with China flourish
  • Kingdom exported non-oil goods worth $594 million to the Asian country in May

RIYADH: Saudi Arabia exported non-oil goods worth SR2.23 billion ($594 million) in May, representing a rise of 19.25 percent compared to the previous month, official data showed.

According to the General Authority for Statistics, China was the third-largest destination for Saudi Arabia’s non-oil products in May, behind the UAE and the US, which received goods worth SR6.06 billion and SR3.62 billion, respectively.

Strengthening the non-oil private sector and exporting those goods to countries like China is crucial for Saudi Arabia, as the Kingdom is steadily pursuing its economic diversification journey by reducing its dependence on oil.

The report revealed that China was also the top destination for Saudi Arabia’s overall exports, with the Kingdom sending outgoing shipments amounting to SR15.91 billion. 

In May, oil was the main export from Saudi Arabia to South Korea, with shipments totaling SR13.68 billion.

According to the latest data, Saudi Arabia exported plastics and rubber products worth SR876.9 million to China, followed by chemical products at SR851.8 million. 

In May, the Kingdom also exported mineral products totaling SR313.4 million to China, while outgoing shipments of base minerals amounted to SR103.7 million.

China was also Saudi Arabia’s most important import partner in May, with incoming shipments from the Asian nation amounting to SR17.55 billion, representing a rise of 22 percent compared to April.

According to GASTAT, China was followed by the US and the UAE, with the Kingdom importing goods worth SR6.56 billion and SR4.54 billion, respectively, from these nations.

The authority revealed that Saudi Arabia imported mechanical equipment and electrical parts worth SR8.23 billion in May from China.

The Kingdom also imported transport equipment and base metals worth SR2.68 billion and SR1.61 billion, respectively, in May.

Chinese imports to the Kingdom also included antiques and artworks worth SR961.8 million, followed by plastic products at SR806.7 million and textile goods at SR792.4 million.

In May, Saudi Arabia also imported chemical products worth SR479.5 million, while the Kingdom also received incoming shipments of leather, fur, and handbags from China amounting to SR118.4 million.

A blossoming relationship

Saudi Arabia and China have shared strong bilateral relations for several years, with the Kingdom being the largest trading partner of China in the Middle East since 2001, and bilateral trade between the nations reaching $107.23 billion in 2023.

The Kingdom and China are strategic partners in various sectors, including energy and finance, as well as the Belt and Road Initiative.

According to the Chinese government, one out of every six barrels of crude oil imported by China comes from Saudi Arabia, while every Saudi riyal out of every SR7 of the Kingdom’s export revenue comes from the Asian nation.

In May, Saudi Finance Minister Mohammed Al-Jadaan spoke highly of the economic and trade cooperation between the two countries, saying that the two countries have maintained positive cooperative communication under the framework of the Economic and Financial Subcommittee of the High-level Chinese-Saudi Joint Committee.

Al-Jadaan also noted that bilateral trade between the two countries surged 31-fold since 1990, adding that outbound investment from China into Saudi Arabia has also been growing rapidly in recent years, making the Asian nation an important partner for the Arab country to realize its vision for economic transformation.

As the diplomatic and economic relationship between Saudi Arabia and China prospers, the Kingdom’s Central Bank, also known as SAMA, and the People’s Bank of China, in November 2023, signed a local currency swap agreement worth SR26 billion ($6.93 billion).

After the agreement, SAMA said that the deal would help strengthen financial cooperation between Saudi Arabia and China, promote the use of local currencies, and strengthen trade and investments between the countries.

Major developments

The first half of this year witnessed several major developments that could enhance the bilateral, economic, and trade relationships between Saudi Arabia and China.

Earlier this month, Saudi Arabia’s sovereign wealth fund signed six deals amounting to $50 billion with top Chinese financial institutions to enhance bilateral capital flows.

In a press statement, the Public Investment Fund said that it signed memoranda of understanding with China Construction Bank, Agricultural Bank of China, China Export and Credit Insurance Corp., Bank of China, Export-Import Bank of China, and the Industrial and Commercial Bank of China.

According to the statement, these agreements will focus on facilitating two-way capital flows through both debt and equity between Saudi Arabia and China.

In the same month, Saudi Basic Industries Corp. signed a potential investment agreement with the Fujian government in China to develop an engineering thermoplastic compounding plant in the Asian nation.

In July, the stock exchange relationship between both nations strengthened further as two new exchange-traded funds focused on the Kingdom’s stocks debuted in Shanghai and Shenzhen.

The first fund, CSOP Saudi Arabia ETF QDII, managed by China Southern Asset Management, is listed on the Shenzhen Stock Exchange after raising $87 million.

The second fund, the Huatai-PineBridge managed CSOP Saudi Arabia ETF QDII, started trading on the Shanghai Stock Exchange after raising $82.32 million.

The debut of these ETFs in Chinese exchanges occurred at a time when investor relations between the two nations continued to flourish, with China becoming the top greenfield foreign direct investor in the Kingdom with investments amounting to $16.8 billion in 2023, representing a 1,020 percent rise compared to the previous year.

China and Saudi Arabia are also deepening their relationship in the tourism sector, with the implementation of the Approved Destination Status arrangement, which came into effect on July 1.

The Chinese ADS policy is a bilateral agreement between countries that allows its citizens to travel to specific overseas destinations for tourism purposes in organized groups.

The decision to implement ADS aligns with Saudi Arabia’s goal of attracting 5 million Chinese tourists by 2030, facilitated by new direct flights from Air China, China Eastern, and China Southern, alongside existing Saudia flights.

In June, the Saudi Tourism Authority and Taiba Investments, a major hospitality and real estate firm in the Kingdom, also signed another agreement to develop integrated residential ecosystems and a specialized network of hotels catering to tourists from China.

In the same month, Riyadh Air, backed by the PIF, signed an agreement with China Eastern Airlines to enhance future connectivity and collaborate on digital transformation, further cementing its entry into the Chinese market.

“Our partnership with Air China, a leading global carrier with a vast network in key Chinese markets, complements Riyadh Air’s ambitious future plans,” said Tony Douglas, CEO of Riyadh Air, at that time.

The agreement also focuses on interline connectivity, codeshare arrangements, and potential collaboration in frequent flyer programs as well as cargo services, customer experience, and digital innovation.

On the cultural front, King Abdulaziz Public Library in Riyadh, in August, implemented an initiative to introduce Saudi culture to Chinese-speaking audiences through its publishing program.

As part of this program, a series of scientific, cultural, and literary works in Arabic were selected for translation into various languages, including Chinese.

According to an official statement, the primary purpose of this initiative is to present a comprehensive portrait of contemporary Saudi culture to Chinese readers.

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Oman’s Islamic banking assets surge 18%, reflecting broader GCC growth trends

Oman’s Islamic banking assets surge 18%, reflecting broader GCC growth trends
Updated 10 sec ago
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Oman’s Islamic banking assets surge 18%, reflecting broader GCC growth trends

Oman’s Islamic banking assets surge 18%, reflecting broader GCC growth trends
  • Combined total represented 11.4% of the sultanate’s total banking sector assets
  • Islamic banking sector rose by 10.4%, amounting to around 6.4 billion rials

RIYADH: The combined assets of Oman’s Islamic banks and windows reached around 7.8 billion Omani rials ($20.2 billion) by June, an 18.1 percent increase from the same period in 2023.

According to data from the central bank, the combined total represented 11.4 percent of the sultanate’s total banking sector assets. 

The analysis showed that total financing provided by the Islamic banking sector rose by 10.4 percent, amounting to around 6.4 billion rials. 

Additionally, deposits in Islamic financial institutions and windows grew by 14.7 percent, reaching nearly 6 billion rials by the end of June.

This growth in Oman aligns with a broader regional trend. A report by Moody’s Investors Service predicts that Islamic financing across the Gulf Cooperation Council will outpace conventional banking, driven by increasing demand for Shariah-compliant financial products and the stability of Islamic banks’ net profit margins. 

Unlike conventional banks, Islamic institutions benefit from fixed-rate retail financing, insulating them from US Federal Reserve monetary policy shifts.

As a result, GCC Islamic banks are expected to maintain superior returns on assets and a stronger net profit margin compared to conventional counterparts. 

Moody’s further highlighted that the profitability of Islamic financial institutions in the GCC will remain strong over the next 12 to 18 months, fueled by stable oil prices, ambitious economic diversification efforts, and strong business confidence. 

Globally, the sukuk market is also set to expand, with Moody’s projecting issuance to reach $200 to $210 billion in 2024, up from under $200 billion in 2023.


Startup Wrap – MENA funding drops in August; recovery signs emerge in September 

Startup Wrap – MENA funding drops in August; recovery signs emerge in September 
Updated 15 September 2024
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Startup Wrap – MENA funding drops in August; recovery signs emerge in September 

Startup Wrap – MENA funding drops in August; recovery signs emerge in September 

RIYADH: The startup ecosystem across the Middle East and North Africa experienced a substantial decline in investment in August, with total funding reaching $83 million across 30 rounds. 

This reflects a 76 percent drop from July’s $355 million and a 24 percent year-on-year decrease, according to Wamda and Digital Digest’s monthly report. 

Unlike previous months, August did not see any megadeals, with the largest round being UAE-based Yuze’s $30 million deal. Debt financing played a minimal role, accounting for only 3 percent of the total raised capital. 

The UAE once again led the region in startup investments, as 13 UAE-based startups raised $55.7 million. 

Saudi Arabia followed with $16 million secured across nine deals. Egypt, which had been a top performer in July, saw a sharp decline, raising just $7.6 million from four deals, while Kuwait made it to the top four with a single deal — Kem’s $3 million raise. 

Investor interest remained concentrated on fintech, which continued to be the most funded sector for the third consecutive month, raising $54 million across eight deals. Web3 also regained momentum, securing $13.5 million in three rounds, while food tech reappeared on the scene, raising $9 million through four deals. 

The month was dominated by early-stage funding, with two startups raising a total of $19 million in Series A rounds, and five startups raising $15.6 million in seed rounds. Seven startups did not disclose their funding stages, accounting for $35.4 million of the total investment. 

Business-to-business models remained highly attractive to investors, with 13 startups raising $46 million. Business-to-consumer models attracted $15 million across five rounds, while the remaining funds went to startups operating in both sectors. 

Female-led startups continued to face challenges in raising capital, securing just 0.3 percent of the total investment in August. Only one female-founded startup, Powder Beauty, raised an undisclosed pre-series A round, and another female co-founded startup received a $150,000 accelerator grant. 

The MENA entrepreneurial ecosystem also saw other notable developments in August, including the formation of the Waad Investment firm, a coalition of Gulf-based family offices targeting a $200 million fund, and a $100 million fund launched by Singapore-based Gate Ventures and the Blockchain Center in Abu Dhabi to promote Web3 innovation. 

In Egypt, T-Vencubator launched the “Where’s the Problem?” initiative to support the local startup ecosystem. 

On the mergers and acquisitions front, August saw the UAE-based property crowdfunding platform Maisour acquired by Meteora Developers, while Kuwait-based proptech Sakan acquired Qatari company Hapondo. 

FlapKap raises $34m in pre-series A round 

UAE-based fintech FlapKap raised $34 million in a pre-series A round consisting of both debt and equity financing. The round was led by BECO Capital, with additional participation from Pact VC, A15, Nclude, QED Investors, and debt financing from Channel Capital. 

Founded in Egypt in 2022 by Ahmad Coucha, Khaled Nassef, Sherif Bichara, and Kunal Harisinghani, FlapKap offers revenue-based and embedded finance solutions to help small and medium-sized enterprises scale up their inventory and digital ad spending with fast access to capital and the flexibility to pay later. 

The new capital will enable FlapKap to expand its SME financing services across the Gulf and the broader Middle East region. The company previously raised $3.6 million in a seed round, bringing its total funding to $37.6 million. 

Paymob raises $22m in series B extension 

Egypt-based fintech Paymob secured an additional $22 million in a series B extension round, bringing the company’s total Series B funding to $72 million. 

The round was led by EBRD Venture Capital, with participation from Endeavor Catalyst, as well as existing investors including PayPal Ventures, BII, FMO, A15, Nclude, and Helios Digital Ventures. 

Founded in 2015 by Islam Shawky, Alain El-Hajj, and Mostafa El-Menessy, Paymob provides digital payment solutions to both online and offline merchants.Supplied 

Founded in 2015 by Islam Shawky, Alain El-Hajj, and Mostafa El-Menessy, Paymob provides digital payment solutions to both online and offline merchants. The additional funding will help the company pursue its growth strategy across the MENA region. 

HissaTech secures $666k in pre-seed funding 

Saudi Arabia-based proptech HissaTech raised SR2.5 million ($666,164) in a pre-seed round led by undisclosed angel investors. 

Founded in 2024 by Ali Al-Shareef, HissaTech provides a platform that allows individuals to co-own properties, offering rental income and potential capital gains, making property investment more accessible to smaller investors. 

The company plans to use the funding to expand its customer base, enhance its digital platform, and build strategic partnerships within the property tech sector. 

Entlaq acquires stake in food tech Brotinni 

Egypt-based entrepreneurship support company Entlaq has acquired a stake in Brotinni, an Egyptian food tech startup, for an undisclosed amount. 

Founded in 2020 by Dalia Abu Omar, Brotinni operates as a dark store, providing customers with online access to meat and poultry products. 

The investment will support Brotinni’s plans to expand its operations both within Egypt and in regional markets. The company previously raised $600,000 in a seed round in 2022, led by Innlife Investments. 

IO Kitchens closes $2.8m seed round 

Oman-based cloud kitchen startup IO Kitchens has closed a $2.8 million seed round, led by Tanmia Small-Cap Fund, with additional backing from regional family offices and investors. 

Founded in 2021 by Hisham Hasan, IO Kitchens operates delivery-only cloud kitchens and manages a portfolio of over 30 food and beverage brands. The funding will allow the company to scale its operations across Oman. 

Oyster raises $59m, reaches $1.2bn valuation 

Lebanese-founded Oyster raised $59 million in its latest series D funding round, reaching a valuation of $1.2 billion. 

Founded by Lebanese entrepreneur Tony Jamous, the company offers a payroll and human resources platform that specializes in distributed workforces or global employment. 

The new funding brings Oyster’s total raised to $286 million and pushes its valuation to $1.2 billion, up from $1 billion in 2022 when it secured its $150 million series C. 

This marks a notable achievement, as the company has maintained its valuation while many tech firms have faced downturns amid challenging market conditions, according to a report by Tech Crunch.  

“We’ve grown significantly, more than 7x in two years, and we improved our margins tremendously. It’s a completely different business financially. So I’m glad that we did not have a down round, which would have been the expected scenario if we didn’t grow that much and improved the business in that time,” Jamous told Tech Crunch.


Saudi Arabia’s inflation rate hits 1.6% in August: GASTAT 

Saudi Arabia’s inflation rate hits 1.6% in August: GASTAT 
Updated 15 September 2024
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Saudi Arabia’s inflation rate hits 1.6% in August: GASTAT 

Saudi Arabia’s inflation rate hits 1.6% in August: GASTAT 

RIYADH: Saudi Arabia’s annual inflation rate reached 1.6 percent in August compared to the same month last year, driven by higher housing costs, official data showed. 

According to the General Authority for Statistics, actual housing rents surged by 10.7 percent year on year in August, with apartment rents rising by 10.8 percent. 

Saudi Arabia's inflation rate remains among the lowest in the Middle East and North Africa, reflecting the Kingdom’s proactive measures to stabilize the economy and mitigate the effects of global price pressures. 

“The increase in this category (housing) had a significant impact on maintaining the annual inflation rate for August 2024, given the weight this group represents 21 percent,” said GASTAT.  

The report showed that food and beverage prices in the Kingdom saw a slight increase of 0.9 percent in August, while restaurant and hotel expenses rose by 1.6 percent during the same period. 

In the education sector, costs increased by 1.6 percent in August, driven by a 3.8 percent rise in fees for intermediate and secondary education. 

Prices for furnishing and home equipment dropped by 3.5 percent, driven by a 6.2 percent decline in the costs of furniture, carpets, and flooring. 

Additionally, clothing and footwear prices fell by 3.2 percent, and transportation expenses decreased by 3.4 percent compared to August 2023. 

On a month-to-month basis, Saudi Arabia’s consumer price index edged up by 0.1 percent in August.  

The report highlighted that the monthly inflation was influenced by a 0.4 percent rise in housing, water, electricity, gas, and other fuel costs. 

GASTAT also noted a 0.4 percent month-on-month increase in food and beverage prices, while restaurant and hotel expenses grew by 0.2 percent. 

Prices for education, personal goods and services, health, communications, and tobacco remained relatively stable compared to July. 


Startup of the Week – US-based SambaNova sets sights on Saudi market

Startup of the Week – US-based SambaNova sets sights on Saudi market
Updated 14 September 2024
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Startup of the Week – US-based SambaNova sets sights on Saudi market

Startup of the Week – US-based SambaNova sets sights on Saudi market

CAIRO: Saudi Arabia’s potential as a global leader in artificial intelligence is drawing attention from major industry players, with SambaNova Systems being one of the latest to invest in the region.

The US-based, multi-billion-dollar AI solutions provider plans to deliver advanced infrastructure to support Saudi Arabia’s economic growth, aiming to position the Kingdom as a key hub for innovation and development.

The company specializes in providing advanced machine learning and AI solutions to enterprises.

SambaNova’s technology helps businesses accelerate adoption of the technology, improve decision-making, and drive operational efficiency across industries.

Marshall Choy, senior vice president of product at SambaNova Systems, highlighted the company’s intent to provide durable AI facilities that will fuel economic growth in the region, positioning Saudi Arabia as a key player in the industry.

“We are making a strategic investment in Saudi Arabia because the region — like the US — believes AI is a strategic imperative to fuel its economic growth and become a global hub for knowledge-based innovation,” Choy told Arab News.

Marshall Choy, senior vice president of product at SambaNova Systems. (Supplied)

He stated that AI is reshaping global dynamics and enabling businesses to gain a competitive edge by improving decision-making, reducing costs, and allowing companies to operate on-premise with enhanced data privacy.

A prosperous future

“Our goal is to provide durable AI infrastructure to promote the prosperous future of the Kingdom by deploying SambaNova Systems,” Choy added.

He also noted that collaboration with local Saudi organizations will be key in developing AI expertise in the region, stating that SambaNova aims to “help enable, through collaboration, durable model leadership to help establish the Kingdom’s leadership in the Middle East and North Africa.”

Choy also explained that the company’s expansion into Saudi Arabia will enable it to reach other Gulf countries.

Skill enablement, he said, will be another pillar of the partnership, achieved through structured training programs to foster deep expertise in AI engineering.

This expansion aligns with SambaNova’s broader strategic vision, which focuses on forming partnerships that support digital transformation for both government institutions and corporations. Choy noted that AI is increasingly essential for nearly every organization.

“Nearly every company needs to be an AI company. We believe AI is an asset, not a tool, and SambaNova delivers enterprise customers secure ownership of their models, as well as the ability to train them on their data, maximizing the value of their AI investment,” Choy said.

The senior vice president sees AI as an accelerant for productivity that will not only drive technology and business but societal and economic advancement.

Choy further emphasized the critical role of the Saudi government in the region’s AI expansion.

With the government’s $40- billion investment plan in the technology, there is strong support for the industry’s development.

“Having native sovereign AI capabilities in the Kingdom will enable that fast transition and acceleration from a technology and infrastructure perspective,” he added.

The company is also working with the Kingdom to build a strong infrastructure that will position the nation as a regional leader for the technology, Choy explained.

He highlighted that partnerships between government ministries, private enterprises, and providers like SambaNova will be fundamental to success, both at the national and corporate levels.

The company aims to be the number one AI provider in the Saudi market. Accordingly, SambaNova has partnered with the Kingdom’s largest company, Aramco.

The partnership saw SambaNova deploy systems on site for the energy giant, serving up AI capabilities for its internal intelligence system called Metabrain.

“Metabrain was a project where we co-developed an AI model trained on 90 years of Aramco historical data, this is a model that was completely built on SambaNova infrastructure,” Choy stated.

This model of collaboration has proven effective in other markets, and SambaNova expects the same success in Saudi Arabia.

Boosting the startup ecosystem

Beyond technological advancements, Choy stressed that AI would have a significant impact on the Kingdom’s growing startup ecosystem, fostering innovation and enabling businesses to scale.

“We see this as having a very profound impact on how the growing Saudi startup ecosystem is able to foster innovation and properly grow their businesses using state-of-the-art AI capabilities like SambaNova Suite,” Choy said.

The business environment in Saudi Arabia is also well-suited to SambaNova’s growth and innovation goals, according to the official.

He observed a “willingness and an appetite to engage, collaborate, and move forward quickly” in the Kingdom, fueled by the ambitious AI adoption and acceleration goals set by the Saudi government.

Looking to the future, SambaNova envisions further developments in its operations in the Kingdom, including co-designing with its Saudi partners to create more localized or regionalized solutions and capabilities specific for the domestic market.

“The people of Saudi Arabia are incredibly welcoming,” Choy said, adding: “I was thrilled to exchange ideas with people who are equally passionate about the possibilities of AI and how it will impact the way we all live and work.”

As SambaNova Systems continues to expand into Saudi Arabia, the company remains committed to its mission of helping the Kingdom achieve its long-term AI goals while contributing to the region’s broader digital transformation.


Saudi Arabia’s bold recycling plan will see it become a world-leader, experts believe

Saudi Arabia’s bold recycling plan will see it become a world-leader, experts believe
Updated 15 September 2024
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Saudi Arabia’s bold recycling plan will see it become a world-leader, experts believe

Saudi Arabia’s bold recycling plan will see it become a world-leader, experts believe
  • This initiative is anticipated to contribute approximately SR120 billion ($31.99 billion) to Saudi Arabia’s gross domestic product

RIYADH: In an era marked by growing environmental concerns and the pursuit of sustainable development, recycling has emerged as a crucial driver of economic prosperity for countries worldwide.

Beyond its environmental benefits, recycling holds significant economic advantages, fostering job creation, stimulating local industries, and bolstering long-term economic stability.

Saudi Arabia is seeking to make the most of this industry, and in January the Kingdom’s Ministry of Environment announced a comprehensive plan to recycle a significant portion – up to 95 percent – of the country’s waste. 

This initiative is anticipated to contribute approximately SR120 billion ($31.99 billion) to Saudi Arabia’s gross domestic product, and aims to generate over 100,000 employment opportunities for the Kingdom’s nationals. 

When fully implemented, the plan will see the recycling of around 100 million tonnes of waste annually, showcasing the nation’s commitment to sustainability.

The program aligns with Saudi Arabia’s broader sustainable development goals, emphasizing the implementation of well-designed strategies and processes across various sectors, including the National Environment Strategy.

Thinking behind the plan

According to Julien Vermersch, partner at Bain and Co. Middle East, the Kingdom’s ambition to divert 90 percent of its waste away from landfills by 2040 is not only going to be achieved via recycling.

“Whilst increasing circularity and materials recovery will certainly be a very significant lever – in particular because today only about 5 percent of the waste is recycled – this cannot be the only lever,” Vermersch told Arab News.

“Some waste streams, e.g. specific hazardous waste, cannot easily be recycled and in some cases incineration with heat recovery, i.e. waste-to-energy, will remain a better option,” he added.

There are more than economic factors at play in this plan, Vermersch explained, pointing to the rapid urbanization and population growth in the Kingdom putting existing infrastructure under significant pressure.

“All key urban centers are struggling with landfill saturation and whilst it is possible to open new sites or expand existing ones, this trend will rapidly become unsustainable as urban developments continue. Then landfills pose a real environmental threat,” he said.

The Bain and Co. partner shed light on the fact that despite some advancements in this area, the effective management of leachate remains a persistent challenge in urban and industrial areas, as evidenced by numerous reported instances of soil and groundwater contamination over time.

“Additionally, in the absence of gas capture systems, the decomposition of organic wastes in landfills is a major source of methane emissions  – estimated to be around 30-50 Mtpa (million tonnes per annum) of CO2 equivalent emissions, which is 5-7 percent of the total greenhouse emissions of the Kingdom,” Vermersch said.

He further noted that the Kingdom’s landfill diversion target is consistent with what is already achieved in a number of European countries or select advanced Asian countries.

“The ambition to get there by 2040 however is quite bold. For these countries that have made the transition, getting to 90 percent landfill diversion has been a 25-plus years journey requiring stringent regulations, public engagement to build awareness and support and massive capital investments in new waste management infrastructure,” the partner clarified.

Yves Takchi, principal and global co-lead for Arthur D. Little Waste, Water and Circularity Competence Center, told Arab News that according to the National Center for Waste Management the overall ambition is similar across all waste streams, with the combined landfill diversion targets close to 90 percent for all types.

“To achieve this diversion rate, Saudi Arabia has put a great emphasis on recycling, but is also aiming to deploy a variety of other techniques such as waste-to-energy to complement it. The landfill diversion targets that the Kingdom of Saudi Arabia has embraced are rooted in an ambitious and yet scientific approach to transform the waste management sector in the country,” Takchi said.

He went on to explain that at a strategic level, countries have three high level options to manage the waste that is generated by its economy.

“Firstly, most economies with a nascent waste management sector treat waste management as a sanitation service and focus on reducing expenditures while safeguarding public health. This often means that they heavily rely on sanitary landfilling as a cheap and effective method to dispose of waste. The second approach is adopted by countries that want to minimize the waste that goes to landfills while still maintaining convenience and ease of implementation,” said Takchi.

He added that the usual objectives in this scenario are to avoid landfilling in recognition of its environmental damage and unnecessary space usage, as well as to leverage waste to fuel the increasingly energy demanding economies.

The Arthur D. Little official also said that countries in this situation usually end up relying heavily on recovery technologies such as waste-to-energy and refuse-derived fuel, which although have a higher cost and only marginal improvements in environmental performance, are much easier to put in place and rely much less on citizen participation and behavioral change.

Takchi argued that world-leaders in waste management follow the third approach. 

“These countries have managed to put in place systems that strive toward a circular economy approach – as opposed to the linear use-throw-dump model. Their waste systems follow the waste hierarchy, which maximizes first the reduction and reuse of waste materials, then the usage of recycling as the next best alternative, with waste to energy and energy recovery transitional and residual treatments before landfilling,” he said.

With regards to the Kingdom, Takchi believes that Saudi Arabia has “rightly understood” that it is in a unique position to leapfrog from its current model to the more advanced, ambitious model. 

“The country as a whole is embarking on a massive transformation journey embodied by Vision 2030, which has paved the way for massive investments in infrastructure across sectors and has demonstrated that the Saudi people are remarkably adaptable and embracing of positive change,” he said. 

The benefits of this model include environmental protection of land, air and water, a growth in local socio-economic value by increasing investments in infrastructure and creating jobs, and enabling self-sufficiency in materials by keeping scarce resources – like rare metals and minerals – flowing within the economy, which improves the trade balance.

Initiatives implemented to support recycling goals

According to Takchi, the Kingdom has galvanized the sector through the creation of two separate entities – Saudi Investment Recycling Co., and the National Center for Waste Management, also known as MWAN.

The former was established by the Public Investment Fund to act as a sector champion, unlocking access to capital and investing in sector-building investments in partnership with local and world leading companies.

MWAN created a unified sector regulator that consolidated the previously fragmented regulatory ecosystem and took the lead on putting in place the ambitious public-sector led efforts to enable the sector’s transformation.

“We have already seen developments from both entities, with SIRC having put in place recycling initiatives and multiple massive investments announced  – including mega scale infrastructure for Riyadh City. On the other hand, MWAN has already put in place the unified Waste Management Law and its Implementing Regulations, the new regulatory framework for the sector that has finally resolved fragmentation of regulation challenges,” Takchi added.

The Global Co-Lead for Arthur D. Little Waste also said that MWAN has also begun to improve the compliance environment, having embarked on a large-scale master-planning exercise across the different regions in Saudi Arabia. 

It has also announced multiple sector-enabling initiatives aimed at preventing waste at the source, incentivizing resource recovery and maximizing diversion from landfills and including the launch of hundreds of investment opportunities.

“The key success factors to accelerate this paradigm shift will be to find the optimal balance of planning and action and to maintain collaboration and alignment behind the national agenda of an extremely complex ecosystem of many actors, including regulators, municipalities, royal commissions, investors, operators, commercial and industrial players and even citizens,” Takchi said.

Key government support

Strong government backing and regulatory support are essential for the successful transformation of the waste management sector.

Bain and Co. Middle East’s Vermersch highlighted the costly nature of the transition from landfilling to recycling, incineration or waste-to-energy.

“When you look at countries that have very low landfilling rates today, they have introduced over 30 years ago either landfill taxes that have risen to significant levels and/or very stringent landfill restrictions/bans,” he added.

That said, the partner underlined that in order to make this transition possible, an effective system to sort the waste is essential – which typically relies on segregation at the source and requires municipalities to step in.

“As we can see with the example of Riyadh that has been piloting a multi-bin system in recent years, it is not enough to just roll out the new collection infrastructure. It takes awareness campaigns and meaningful community engagements to educate residents and businesses on the importance of sorting waste and on how to use the new system effectively,” Vermersch said.

Takchi said that like most complex and ambitious transformation initiatives that fall within the framework of Vision 2030, the government has a crucial role to play to ensure success for the waste management sector, and that was the impetus behind the creation of MWAN.

“Such a massive leapfrog requires a clear national level direction of travel and strategy to be clear to all actors in the sector. That will allow us to fully synergize efforts and accelerate change. The government also has an important part to play in laying down the necessary enablers to unlock private sector investment and ensure the successful deployment of infrastructure and services,” he said.