Pharmaceutical industry growth proving just the pill for Saudi Arabia’s healthcare goals

Pharmaceutical industry growth proving just the pill for Saudi Arabia’s healthcare goals
A key factor in fueling this increase is the increasing localization of the pharmaceutical industry – a strategy which plays into the Kingdom’s economic diversification strategy Vision 2030. (File/Shutterstock)
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Updated 01 September 2024
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Pharmaceutical industry growth proving just the pill for Saudi Arabia’s healthcare goals

Pharmaceutical industry growth proving just the pill for Saudi Arabia’s healthcare goals
  • According to Statista, the pharmaceuticals market in the Kingdom is anticipated to achieve a revenue of $5.53 billion by 2024
  • Saudi Arabia is set to see a compound annual growth rate of 4.62 percent, resulting in a market volume of $6.93 billion by 2029

RIYADH: As the Saudi government makes substantial investments in healthcare infrastructure, there is a notable increase in the demand for pharmaceuticals in the country.

According to Statista, a German online platform that specializes in data gathering and visualization, the pharmaceuticals market in the Kingdom is anticipated to achieve a revenue of $5.53 billion by 2024.

While significantly lower than the global leader the US – poised to generate $630.3 billion in revenue in 2024 – Saudi Arabia is set to see a compound annual growth rate of 4.62 percent, resulting in a market volume of $6.93 billion by 2029.

A key factor in fueling this increase is the increasing localization of the pharmaceutical industry – a strategy which plays into the Kingdom’s economic diversification strategy Vision 2030.

“While we will have to ascertain the quantified impact of localization on the pharmaceutical industry in Saudi Arabia, we definitely expect it to increase access, reduce cost and make the local pharmaceutical industry more resilient and innovative,” Partha Basumatary, principal in Oliver Wyman’s India, Middle East and Africa Healthcare and Life Sciences Practice told Arab News.

“Localization initiatives have laid the foundation for the Kingdom to become a regional hub of manufacturing for biotech products for the entire Middle East region,” Basumatary added, noting that the Kingdom’s focus on localization for NCD drugs, particularly those targeting type-2 diabetes, is a strong start.    

“To truly maximize its impact, however, the Kingdom needs to expand these initiatives beyond NCDs and encompass other critical areas like cancer, infectious diseases, and auto-immune disorders,” Basumatary said.

According to Matthew Lawrence, director of Pharma and Life Sciences, Operations Transformation Lead at PwC Middle East, the Kingdom’s access to, cost of, and standard of healthcare services have all significantly improved thanks to Saudi Arabia’s transformation of the industry.

As a result of these current localization actions, the pharmaceutical industry in Saudi Arabia will continue to see significant change towards accessibility, quality, and economic impact, Lawrence disclosed.

In terms of accessibility, he told Arab News: “Local production ensures a sustainable economy, reducing reliance on imports, therefore, a stable supply of medications, and faster response time during health crises.”

As for quality, he explained that the Saudi Food and Drug Authority ensures that locally manufactured pharmaceuticals meet high quality standards, which leads to improved healthcare services.

With regard to economic impact, Lawrence noted that the industry’s growth has spurred job creation and attracted investments, aiding in economic diversification.

“According to the Kingdom’s National Biotechnology Strategy, there will be 11,000 job opportunities by 2030, and contribute $34.6 billion to the non-oil GDP, by 2040 - potentially positioning Saudi Arabia as one of the leading global hubs for pharmaceutical manufacturing, research, and innovation,” he said.

“This is a clear testament to the major impact Vision 2030 has created in order to improve the healthcare sector across the Kingdom,” the PwC partner added.

Key steps taken by Saudi Arabia to localize the pharmaceutical industry

In keeping with the Kingdom’s Vision 2030 drive, Saudi Arabia has taken important steps to incentivize local manufacturing.

“First and foremost, it (Saudi Arabia) has offered various incentives to the pharma companies to drive localization, including lower minimum capital requirement, tax incentives, customs duties exemptions etc,” Basumatary said.

“It has also taken steps to improve regulatory approvals for drugs in the country with the introduction of abridged verification and registration processes,” he added, before going on to explain how the Kingdom has also developed a framework to favor locally manufactured products for tenders.

The Oliver Wyman principal highlighted successful examples of localization, such as Boehringer Ingelheim’s partnership with Alpha Pharma for localization of a Type-2 diabetes product in Saudi Arabia.

“Other notable examples include MSD’s partnership with Jamjoom Pharma to localize another Type-2 diabetes drug sitagliptin phosphate. Such initiatives will help the industry to become more resilient when it comes to future outbreaks such as COVID-19,” Basumatary said, adding: “It would also sow the seeds for future innovation and growth of the domestic pharma industry, including potentially giving a positive push to the Kingdom’s aspirations of becoming a regional biotech hub.”

Government support

As expected, the Saudi government plays a pivotal role in accelerating the localisation of the pharmaceutical industry and is already investing in driving strategic programs to advance the healthcare system:

From Oliver Wyman’s perspective, Basumatary said: “As observed in other geographies, Singapore government’s stable policy framework, favorable incentives, and access to knowledge/talent motivated BionTech to establish a state-of-the-art mRNA manufacturing facility in the country.”

The principal further noted that the pharmaceutical industry expects enhanced market accessibility, support for localization, and strong IP protection when it comes to making localization decisions.

“Saudi Arabia’s involvement and support has delivered an impact as we have seen from the recent pharma localization initiatives. It will, however, be critical to continue innovating on that front, as the competition for such localization initiatives continues to increase globally and regionally,” he underlined.

PwC Middle East’s Lawrence revealed that some of the notable government efforts include favorable policies like tax incentives and labor laws to incentivize research and development as well as manufacturing.

They also entail enabling regulatory frameworks to drive life science sector growth, with measures around strong intellectual property laws, patent protection, mutual recognition agreements to facilitate market access, and competition laws.

Other initiatives include not-for-profit funding, such as targeted grants, to incentivize research, as well as public financing such as subsidies or incentives to enable long-term growth of the healthcare ecosystem.   

“The government's ongoing commitment to localization is a clear long-term strategic plan, building on Vision 2030. The alignment of government policies with Vision 2030 goals underscores their influence in driving the progress of pharmaceutical localization across the Kingdom,” Lawrence said.

“These policies and initiatives will not only attract future investment but also foster innovation, build local capabilities, and ultimately contribute to the sustainable growth of the healthcare sector,” he added.

Looking to the future

In recent years, Saudi Arabia has intensified its focus on life sciences and has made substantial advancements to align with the objectives of Vision 2030.

This has involved endeavors to enhance the overall health and well-being of individuals, promote economic expansion and diversity, reinforce the Kingdom's global leadership in the sector, stimulate innovation, and enhance patient outcomes and quality of life.

According to Lawrence, one of the key initiatives contributing to the advancements of the life science industry is national biotechnology strategy.

“This helps to develop end-to-end vaccine manufacturing, establish biotechnology platform for biologics and biosimilars, and expands genomics programs for preventative medicine,” Lawrence told Arab News.

The PwC partner also shed light on the Healthcare Sector Transformation Program, explaining that it is responsible for strategizing the Kingdom’s resilient supply chain through different initiatives that help in enabling the localization of the pharmaceutical industry.

Other key players include the Local Content and Government Procurement Authority, which works on enhancing awareness and participation in local content and provides knowledge-based policies and tools, as well as the National Industrial Development and Logistics Program which focuses on expanding the pharmaceutical manufacturing sector.

It also includes incentives for local and international companies to establish production facilities in Saudi Arabia.

The Saudi Food Drug Administration is also playing a pivotal role as it enhances regulatory frameworks to help speed up the approval process for new drugs and encourage innovation in local pharmaceutical production.

Pharmaceuticals and Vision 2030

The strategic initiatives of the pharmaceutical industry are closely aligned with the Kingdom’s Vision 2030 goals, echoing ambitions in economic diversification, job creation, and innovation, as well as technology transfer and self-sufficiency.

“Life science sector expansion is expected to create thousands of jobs, helping to reduce unemployment rates among Saudis, particularly in high-skilled areas. Encouraging partnerships and collaboration leads to technology transfer and innovation,” Lawrence said.

With regards to self-sufficiency, the PwC partner noted that localizing pharmaceutical production ensures a stable supply of essential medicines and reduces the health sector's vulnerability to global supply chain disruptions.

“These initiatives are aligned with Vision 2030 goals as they contribute to the Kingdom’s economic growth, job creation and localization initiatives for Saudi nationals, as well as the enhancement of healthcare services across the country,” he said.

“By localizing the pharmaceutical industry and expanding these initiatives, Saudi Arabia can further improve healthcare accessibility, reduce healthcare costs, and ensure sustainability in the healthcare demands of its growing population,” Lawrence said.


Closing Bell: Saudi main index slips to close at 11,769

Closing Bell: Saudi main index slips to close at 11,769
Updated 06 October 2024
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Closing Bell: Saudi main index slips to close at 11,769

Closing Bell: Saudi main index slips to close at 11,769
  • Parallel market Nomu lost 259.40 points, or 1.04%, to close at 24,655.96
  • MSCI Tadawul Index lost 22.10 points, or 1.48%, to close at 1,474.92

RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Sunday, losing 188.50 points, or 1.58 percent, to close at 11,769.04.

The total trading turnover of the benchmark index was SR6.20 billion ($1.65 billion), as 19 of the stocks advanced and 213 retreated. 

The Kingdom’s parallel market Nomu lost 259.40 points, or 1.04 percent, to close at 24,655.96. This comes as 17 of the listed stocks advanced while 48 retreated. 

The MSCI Tadawul Index lost 22.10 points, or 1.48 percent, to close at 1,474.92. 

The best-performing stock of the day was Al-Baha Investment and Development Co., whose share price rose 7.14 percent to SR0.30. 

United Wire Factories Co. and Kingdom Holding Co. were among the other top performers.

The worst performer was Saudi Ceramic Co., whose share price dropped 7.26 percent to SR28.75. 

Other worst performers were Elm Co. and Arab Sea Information System Co.

Announcements

Almarai Co. has announced its interim condensed consolidated financial results for the period ending on Sept. 30. According to a Tadawul statement, the firm recorded a net profit of SR1.88 billion in the first nine months of the year, reflecting a 12.15 percent surge compared to the same period in 2023.

The increase in consolidated profits attributable to the company’s shareholders in the current period compared to last year is due to higher revenue growth, disciplined cost control, a favorable product mix, and stabilized commodity costs.

Al-Etihad Cooperative Insurance Co. has announced that it is signing a contract with the Ministry of Human Resources and Social Development to ensure the financial dues of non-Saudi workers in the private sector per the agreed terms and conditions and the insurance policy approved by the Insurance Authority.

A bourse filing revealed that the one-year SR391 million contract provides insurance coverage for the financial dues of non-Saudi workers in the delinquent entities of the private sector, in cooperation with several Saudi insurance and reinsurance companies, and in accordance with the agreed terms and conditions for one year. This will commence from the date of signing the agreement with the Ministry of Human Resources and Social Development and after obtaining the final approval of the Insurance Authority.

The policy represents the cooperation between the Ministry of Human Resources and Social Development and the Insurance Authority to protect the financial rights of non-Saudi workers in delinquent entities according to the ministry’s classification.

The insurance cover includes wages, unpaid dues, and a return ticket to the worker’s home country within the agreed-upon cover limits and following an agreed set of terms and conditions.

It is expected that the financial impact of this agreement will be reflected in the company’s financial performance starting from the fourth quarter of the year.


EVIQ, Ceer partner to enhance Saudi EV infrastructure

EVIQ, Ceer partner to enhance Saudi EV infrastructure
Updated 06 October 2024
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EVIQ, Ceer partner to enhance Saudi EV infrastructure

EVIQ, Ceer partner to enhance Saudi EV infrastructure
  • Initiative will establish a comprehensive charging network to support widespread electric vehicle adoption
  • Kingdom aims to convert 30% of vehicles in Riyadh to electric by 2030

JEDDAH: Saudi Arabia’s Electric Vehicle Infrastructure Co., EVIQ, has formed a strategic partnership with the Kingdom’s first EV brand, Ceer, to expand the nation’s charging infrastructure and promote sustainability. 

EVIQ, a joint venture between the Public Investment Fund and the Saudi Electricity Co., aims to bolster the electric vehicle ecosystem by collaborating with manufacturing brands and local partners to implement installation and maintenance operations.  

This initiative will establish a comprehensive charging network to support widespread electric vehicle adoption. 

EVIQ CEO Mohammad Baker Gazzaz highlighted the agreement’s significance in supporting the electric vehicle sector in Saudi Arabia.   

“This partnership will help encourage the wider adoption of electric vehicles, making them a seamless and convenient choice for drivers in the Kingdom. We look forward to fruitful cooperation with Ceer to achieve a more environmentally friendly and sustainable future for the Kingdom.” 

Saudi Arabia aims to convert 30 percent of vehicles in Riyadh to electric by 2030, part of a larger strategy to cut emissions in the capital by 50 percent and achieve carbon neutrality by 2060.  

The Kingdom is also targeting the production of approximately 300,000 vehicles by 2030, seeking a 50 percent share of car sales in the Gulf Cooperation Council countries by 2025. 

Ceer CEO James DeLuca emphasized that the partnership extends beyond building an electric vehicle industry. “We are also committed to providing an exceptional experience for electric vehicle owners in the Kingdom. We are pleased to partner with EVIQ to ensure a comfortable and seamless driving experience for electric vehicles in the Kingdom,” he said.   

The partnership signifies a major step toward realizing the Kingdom’s vision of developing an automotive industry and promoting sustainable transportation.  

By aligning Ceer’s commitment to advanced Saudi electric vehicles with EVIQ’s goals of building an effective network, this collaboration paves the way for a smooth transition to electric mobility. 

Last year, EVIQ announced plans to install over 5,000 fast chargers across 10,000 locations throughout the Kingdom.  

This strategic initiative not only enhances Saudi Arabia's electric vehicle infrastructure but also aligns with broader economic and environmental objectives, paving the way for a sustainable future and diversified economy. 

Ceer is investing significantly in research and development to produce competitive electric vehicles, with government support through incentives and regulations designed to foster industry growth. 


Saudi Arabia secures over half of MENA startup funding in September

Saudi Arabia secures over half of MENA startup funding in September
Updated 06 October 2024
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Saudi Arabia secures over half of MENA startup funding in September

Saudi Arabia secures over half of MENA startup funding in September
  • Investors express confidence in Saudi entrepreneurial talent by pouring $165 million into 13 firms
  • Fintech emerged as the leading sector in September, attracting $134.84 million

RIYADH: The startup ecosystem in the Middle East and North Africa is experiencing significant growth, with Saudi Arabia emerging as a key driver of funding activity.

According to a recent report by Rasmal, MENA startups raised a total of $328.3 million across 60 companies in September, reflecting increasing investor confidence in the region’s entrepreneurial talent.

This surge in funding highlights MENA’s expanding role in the global startup landscape, fueled by government initiatives and a rising appetite for risk and innovation in the private sector.

Saudi Arabia led the regional funding efforts, securing $165.34 million across 13 startups — accounting for more than half of the total capital raised in MENA. This significant investment underscores the Kingdom’s strategic economic diversification goals outlined in Vision 2030, which aims to reduce dependence on oil and foster growth in technology and innovation sectors.

Cities like Riyadh and Jeddah are emerging as key startup hubs, supported by government initiatives and increasing private investment that contribute to a robust ecosystem for entrepreneurial growth.

Government programs, including the Public Investment Fund and various venture-focused initiatives, have been instrumental in driving this transformation. The Saudi government’s proactive stance has attracted private investment, with venture capital firms, accelerators, and incubators keen to nurture local talent.

FASTFACTS

  • MENA startups raised $328.3 million across 60 companies in September.
  • Saudi cities like Riyadh and Jeddah are emerging as key startup hubs supported by government initiatives.
  • The UAE has emerged as another significant player in the MENA startup ecosystem, raising $114.32 million across 28 companies.
  • Egypt attracted $25.09 million, primarily focused on technology and innovation sectors.
  • Countries like Bahrain, Oman, and Morocco are also gaining investor interest, albeit on a smaller scale compared to regional leaders.

These efforts are fostering an enabling environment for startups across diverse industries such as technology, logistics, healthcare, and energy, laying the foundation for sustainable long-term growth.

The UAE has emerged as another significant player in the MENA startup ecosystem, raising $114.32 million across 28 companies. Dubai, in particular, continues to attract investors due to its business-friendly policies and status as a global gateway.

In September, sectors like fintech, e-commerce, and property technology saw substantial investments, reinforcing the UAE's commitment to becoming a leader in financial technology. Initiatives such as the Dubai International Financial Centre Innovation Hub have been pivotal in attracting both funding and talent to the region.

This growth underscores the UAE’s efforts toward economic diversification, reducing dependence on oil and positioning itself as a resilient, innovation-driven economy. The variety of sectors receiving investments further highlights the country’s comprehensive growth strategy to build a sustainable and diversified future.

While Saudi Arabia and the UAE led the funding landscape, other countries in the region also showed promise. Egypt attracted $25.09 million, primarily focused on technology and innovation sectors.

Cairo’s startup ecosystem has benefited from government initiatives designed to support small and medium enterprises, providing essential infrastructure for early-stage companies. This growth occurs amid significant economic challenges, as Egypt faces turbulence due to weakening monetary policies.

Countries like Bahrain, Oman, and Morocco are also gaining investor interest, albeit on a smaller scale compared to regional leaders. Bahrain’s emphasis on fintech and Oman’s investments in logistics and e-commerce signal these nations’ intent to establish their presence in the regional ecosystem. However, challenges remain in countries like Iraq and Kuwait, where political instability and regulatory barriers hinder the attraction of venture capital, resulting in an uneven distribution of funding across the region.

According to the Rasmal report, fintech emerged as the leading sector in September, attracting $134.84 million. This strong focus underscores the region's rapid adoption of digital financial solutions and the increasing demand for technology-driven banking services. Governments and businesses are prioritizing financial inclusion, which is driving further growth in the sector.

Logistics technology also attracted significant attention, driven by the ongoing e-commerce boom. As consumer preferences shift toward online shopping, the need for efficient supply chain solutions has grown. SHIFT, a logistics technology company, secured the largest investment of the month with $83 million, highlighting the growing importance of infrastructure to support e-commerce and evolving supply chain demands in MENA.

In September, late-stage startups garnered the majority of funding, securing $129.08 million of the total amount raised. This trend indicates a growing preference among investors for ventures that have demonstrated market success and scalability.

Given global economic uncertainties, late-stage startups with proven business models are often viewed as safer investments. Nevertheless, early-stage companies continue to play a vital role in the ecosystem, with seed-stage startups raising $57.30 million across 33 deals, reflecting ongoing interest in nurturing new ideas and emerging businesses.

The presence of government-backed incubators and accelerators remains crucial in supporting early-stage companies, providing mentorship and infrastructure to facilitate growth. However, the Rasmal report highlighted a significant gender disparity in funding: male founders secured 96.79 percent of the funds raised in September, while female founders received only 3.21 percent. This imbalance underscores the ongoing challenges faced by female entrepreneurs in accessing venture capital.

Addressing this gap will require a more inclusive investment approach, with increased support for women-led startups. Initiatives like the TiE Women MENA Programme are working to promote gender inclusivity, but more action is needed to foster a balanced and diverse entrepreneurial landscape across the region.

Among the notable startups funded in September were Syarah, an online car sales marketplace that raised $40 million, and TON, a fintech firm that secured $30 million. These companies illustrate the diversity of sectors gaining traction, from automotive e-commerce to financial services, showcasing the breadth of opportunities for investors in the MENA region.

Overall, the MENA startup ecosystem is well-positioned for continued growth, driven by investor interest in key markets and favorable government policies. However, rising geopolitical tensions may impact this growth trajectory. The focus on fintech and logistics is likely to persist, aligning with the region’s broader digital transformation. Simultaneously, other industries, such as healthtech and renewable energy, are expected to grow, reflecting shifting priorities and emerging opportunities.

Challenges, including the gender funding gap and difficulties in attracting venture capital in certain countries, remain significant. Nonetheless, ongoing efforts by governments, investors, and entrepreneurs to foster innovation are likely to gradually address these issues.


Oman’s broad money supply surges 13.3%

Oman’s broad money supply surges 13.3%
Updated 06 October 2024
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Oman’s broad money supply surges 13.3%

Oman’s broad money supply surges 13.3%
  • Climb mainly attributed to 16.5% increase in narrow funds and 12.1% in quasi-money
  • Sultanate’s public revenue saw an annual decline of 2% year on year in the second quarter of the year, reaching $16.1 billion

RIYADH: An increase in Oman’s narrow money led the country’s broad capital supply to grow 13.3 percent year-on-year to reach 24.2 billion Omani rials ($62.6 billion) by the end of July.

Statistics issued by the Central Bank of Oman showed the climb was mainly attributed to a 16.5 percent increase in narrow funds and 12.1 percent in quasi-money. 

This consists of total savings deposits and time deposits in Omani rials, certificates issued by financial institutes, margin accounts, and all foreign currency reserves in the banking sector. 

The growth in figures suggests vibrant and expanding economic activity, with more funds circulating within the economy. 

Oman’s public revenue saw an annual decline of 2 percent year on year in the second quarter, reaching $16.1 billion, the country’s news agency reported in August.  

The sultanate’s economic landscape is heavily influenced by its reliance on oil and gas revenues, making it vulnerable to global price fluctuations. 

The government has been actively working to diversify the economy and reduce dependence on hydrocarbons as part of its Vision 2040 plan. 

The figures also indicated that cash held by the public decreased by 5.2 percent by the end of July, while demand deposits increased by 22.8 percent, the Oman News Agency reported.

Regarding the interest rate structure of conventional commercial banks, the weighted average interest rate on deposits in Omani rials jumped from 2.3 percent in July 2023 to 2.71 percent in July 2024. The weighted average interest rate on loans in Omani rials increased from 5.4 percent to 5.6 percent during the same period.

The average interest rate in the interbank lending market for one night recorded an increase of 5.32 percent in July compared to 5.54 percent in the same month last year. 

This was due to a rise in the weighted average interest rate on repurchase operations, which rose to 6 percent from 5.79 percent during the same period last year. The change aligns with the policies of the US Federal Reserve.

The total credit balance granted by conventional commercial banks in the Gulf country increased 1.6 percent by the end of July and by 0.7 percent for credit given to the private sector to reach 20.4 billion rials.

The total investments of conventional commercial banks in securities increased by 35.8 percent to reach about 6 billion rials by the end of July.

The statistics showed that the investment of these banks in government development bonds decreased by the end of last July by 6.5 percent to reach 1.9 billion rials, while the investment of commercial banks in foreign securities increased by 115 percent to reach 2.5 billion rials.

Regarding the budget’s liabilities, total assets at conventional commercial banks increased by 11.4 percent to reach 24.8 billion rials during the same period.

Within total deposits, government balances at commercial banks decreased by 1.7 percent to reach 5.4 billion rials, while public sector institutions increased by 23.4 percent to reach 1.9 billion rials.

Private sector deposits increased 9.7 percent to reach 16.3 billion rials in July, constituting 65.9 percent of total assets at conventional commercial banks.

S&P Global has raised Oman’s long-term sovereign credit rating for both local and foreign currencies from “BB+” to “BBB-,” with a stable outlook.

The general credit rating of Energy Development Oman has been modified to align with the sovereign score, confirming the company’s role in supporting and enhancing financial stability.

Sultan bin Ali Al-Mamari, the firm’s chief financial officer, said the modification of the credit rating to “BBB-” will enable the company to obtain financing for its investment program at better competitive rates and expand the investor base when issuing sukuk and bonds. Companies with investment credit worthiness are an attractive factor for major investors, which facilitates the process of attracting funding for oil and gas projects.

Energy Development Oman plays a pivotal role in the country’s government strategy to enhance financial stability, Al-Mamari said in a statement to the Oman News Agency. 

This will improve efforts to strengthen the credit rating, he said, adding that the firm’s total annual income amounts to 6.3 billion rials, and its contribution to the gross domestic product by the end of 2023 reached 22 percent.

The CFO further highlighted that sukuk issued by the company in September 2023 and July was met with great interest from investors, which enabled it to issue sukuk worth 750 million rials.

Azhar bin Ahmed Al-Kindi, the company’s chief operating officer, said that the firm is undertaking several initiatives to raise operational efficiency and reduce production costs while maintaining and increasing capacity.

He added that the company, through Petroleum Development Oman, plays an effective role in implementing many initiatives to support local communities and enhance national undertakings, reflecting the organization’s commitment to promoting sustainable development and achieving a lasting positive impact.


Saudi Arabia offers October ‘Sah’ sukuk savings products with over 4.9% return 

Saudi Arabia offers October ‘Sah’ sukuk savings products with over 4.9% return 
Updated 06 October 2024
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Saudi Arabia offers October ‘Sah’ sukuk savings products with over 4.9% return 

Saudi Arabia offers October ‘Sah’ sukuk savings products with over 4.9% return 
  • Investors will receive bond allocations on Oct. 15, with the redemption period spanning four days starting Oct. 20
  • Subscriptions start at a minimum of SR1,000 per bond, with a maximum limit of SR200,000

JEDDAH: Saudi Arabia has launched its October subscription for the subscription-based savings product, Sah, offering a 4.92 percent return to promote financial stability and growth among citizens. 

The Shariah-compliant, government-backed sukuk issuance began at 10:00 a.m. Saudi time on Oct. 6 and will close at 3:00 p.m. on Oct. 8, as announced by the National Debt Management Center. 

Investors will receive bond allocations on Oct. 15, with the redemption period spanning four days starting Oct. 20. Redemption amounts will be disbursed seven days later. 

Subscriptions start at a minimum of SR1,000 ($266.66) per bond, with a maximum limit of SR200,000, allowing for the purchase of up to 200 bonds. 

Issued by the Ministry of Finance and organized by the NDMC, the fee-free savings products offer low-risk returns and are distributed through the digital channels of approved financial institutions. 

Sah is Saudi Arabia’s first government sukuk designed to foster saving habits by encouraging citizens to set aside a portion of their income regularly. The initiative supports the Financial Sector Development Program, part of Vision 2030, which aims to raise the national savings rate from 6 percent to 10 percent by 2030. 

Saudi nationals aged 18 and above can invest in Sah through SNB Capital, Aljazira Capital, and Alinma Investment, as well as SAB Invest, or Al Rajhi Bank. The bonds are issued monthly, with a one-year savings period and fixed returns, paid out upon maturity. 

In September, the NDMC successfully allocated SR2.603 billion in sukuk. In a detailed statement, the authority outlined the distribution of the sukuk into six tranches. 

The first tranche comprised SR255 million, set to mature in 2027, while the second tranche secured SR375 million for bonds maturing in 2029. 

The third tranche reached SR638 million for Islamic bonds maturing in 2031, followed by the fourth tranche totaling SR1.021 billion, with maturity set for 2034. 

Moreover, the fifth tranche encompassed SR202 million for sukuk maturing in 2036, and the final tranche accounted for SR112 million, set to mature in 2039. 

As demand for such low-risk investment options continues to rise, it demonstrates the evolving preferences of individuals seeking stable, Shariah-compliant savings opportunities, further enhancing financial inclusion in the Kingdom.