With over $1 trillion of investment committed to giga-projects since the unveiling of Saudi Arabia’s Vision 2030 agenda eight years ago, the Kingdom is already making significant strides toward achieving its ambition of diversifying its economy while introducing a raft of social reforms.
Now, with the price of oil at $110 a barrel, the Kingdom finds itself facing a windfall of extra cash, which will see its vision to bolster the digital economy no doubt benefit. Coupled with the acceleration of key digital trends in the region, it is clear that Saudi Arabia is uniquely positioned to take bold steps in the pursuit of digital sovereignty to control its own flow of data.
Saudi Arabia’s digital services market has long been the largest in the region, one that is expected to top $38 billion by 2025. In recent years, the Kingdom has invested significantly in a better experience for residents and visitors and more efficient public services, through its digital transformation program. The government spent an estimated $2 billion on IT last year alone, eclipsing any other market segment.
Through this investment — not least of which has been spending in smart cities such as NEOM — the Kingdom has made great strides across its cloud, artificial intelligence, Internet of Things, fintech, cyber and countless other digital capabilities.
Today, Saudi Arabia is home to more than 60 fintech startups and has seen exponential growth in IoT, reaching over 10 million connections. Sovereign investment in companies operating in these fields has also energized the market and created much-needed local alternatives for some key technologies such as cloud services.
This is also, in some ways, shaping Saudi Arabia as a global force in emerging digital technologies. As global private sector investment in fossil fuels eases, and as the Kingdom’s oil revenues flourish, companies such as energy giant Saudi Aramco will not only have the global scale but also the cash to bankroll the local development of applications, such as IoT and AI, related to its oil and gas value chain.
Similarly, the Kingdom’s giga-projects are good opportunities to develop countless new technologies. They are by and large greenfield, digitally-native cities that inherently have a captive demand for such services. They are also great places to test and refine some of these technologies, while offering great vehicles for attracting foreign direct investment.
But the Kingdom remains largely a consumer of digital technologies. As of 2020, information and communications technology contributed only 3.6 percent to Saudi Arabia’s gross domestic product. Key technologies such as cloud services have the potential to contribute five times more to GDP than they currently do.
The COVID-19 pandemic, and more recently the Russia-Ukraine conflict in Europe, have proven that the status quo may be disrupted. Global supply chains are weak, microchips used in a plethora of products are in very short supply leading to backlogs of various products. These factors will undoubtedly spur Saudi Arabia to shift its focus toward digital sovereignty.
Of course, the Kingdom is not alone in grappling with these issues. Across Gulf Cooperation Council states, the public sector is undergoing a region-wide digital paradigm shift. The impact of the health crisis has driven existing digital transformation investments to power next-generation e-government services.
These efforts have been enabled by the deliberate cultivation of capabilities across cloud infrastructure, cybersecurity, and data management. And the next frontier of technologies such as artificial intelligence, digital currencies, and the metaverse hold vast potential for nations that hope to be on the cutting edge of digital innovation. With these themes in mind, but also the Kingdom’s significant upper hand and established infrastructure, Saudi Arabia’s staggering opportunity and advantage is clear.
The country has a robust digital regulatory environment and infrastructure, a young and educated population, financial resources, and — above all — a vision to become a beacon of innovation, talent, and foreign direct investment in the digital world. Digital sovereignty is within reach — will the Kingdom take the leap?