The digital transformation driving Saudi Arabia’s shift towards an innovation-driven economy

The digital transformation driving Saudi Arabia’s shift towards an innovation-driven economy

The Saudi delegation at WEF is a client of Business Reporter

When we think about the future and technological advances, perceptions are often shaped by movies and TV shows. Visions of chatty robots, flying cars, and entire populations dressed in silver jumpsuits are the classic stereotypes. AI-powered four-wheeled robots taking visitors through Riyadh airport and welcoming them to Saudi Arabia in dozens of different languages ​​is perhaps a less-imagined future at this stage.

But such technological capabilities are becoming a reality in the kingdom, as visible a symbol of the ongoing technological and digital transformation as any in the world today.

As part of the Saudi government’s Vision 2030 initiative, which aims to diversify the economy and boost the private sector’s contribution to national GDP, the development of localized solutions of the Fourth Industrial Revolution (4IR) will drive the kingdom’s shift towards a more driven by innovation. knowledge-based economy.

So far, the plan appears to be working.Saudi Arabia’s digital sector is valued at around $40 billionwhich comprises318,000 jobs and making it one of the largest in the region. And with more investments plannedof $24.7 billion set for various technologies by 2025it is one of the highest government spending on technology in the world.

In return, major global tech players such as Google, Alibaba, Oracle and SAP are investing in the kingdom, which is helping foster the growth of local tech-based companies while creating jobs and expertise in the Saudi market.

It all leads to some impressive numbers and remarkable global progress.The internet penetration rate in Saudi Arabia stood at 98%out of a population of 36 million, by early 2022.

The kingdom was also ranked second globally among G20 countries in the Digital Competitiveness Report 2021; second in the world in the 2022 Global Cybersecurity Index; 3rd globally for its digital government transformation by the World Bank’s GovTech Maturity; and first in the Arab world, and 22nd globally, in the latest Global Artificial Intelligence Index.

With Saudi Arabia’s location between Africa, Asia and Europe, it also acts as a strategic logistics hub for the movement of data between major inbound markets.

big numbers

The digital transformation taking place in Saudi Arabia is being driven by strategic financing. The Digital Government Authority is leading the charge here, with plans for smart cities, digital healthcare initiatives, improved infrastructure and autonomous transportation, blockchain technology for money transfers, and aThe eCommerce market is expected to skyrocket in value to over $13 billion by 2025. It is also part of a movement, along with the Communications, Space and Technology Commission, that is urging companies to adopt more IoT solutions for their businesses.

Much of the funding comes from the Vision 2030 National Investment Strategy and has so far led to the digitization of government services, the launch of a digital academy, a national IT academy and a variety of funds and support packages. .

In 2021, the government announced a series of programs worth $1.2 billion to improve the digital skills of 100,000 Saudi students by 2030., with a focus on cyber security, programming and electronic games. At the same time, he announced $1.4 billion to support start-ups, with an initiative called Garage, working with stakeholders like the King Abdulaziz City for Science and Technology, investing in early-stage companies.

international companies, includingGoogle has invested $2.5 billion in cloud technology in the kingdomand they are also working to educate the nation’s youth with the launch of the Google for Startups technology center and the Cisco Networking Academy.

Local players have also made their own announcements:Neom, with an investment of one billion dollars in technology and autonomous transportas well as the world’s first cognitive metaverse, XRVS and M3LD, a personal data management program.Saudi Telecom Company has revealed centre3, a $1 billion investment in regional technology and infrastructure, weatherAramco has its billion dollar Prosperity7 fund. Meanwhile, Alibaba helped form the Saudi Cloud Computing Company (SCCC), creating two secure data centers in Riyadh.

Rise of tech start-ups in the kingdom

With such a wide range of support, Saudi Arabia’s growing tech market already has its own share of success stories and a number of start-ups showing great promise.Tamara, a buy-now-pay-later fintech startup, recently raised $100 million in a Series B equity round led by venture capital firm Sanabil Investments, a company owned by the kingdom’s Public Investment Fund. Founded in 2020, it has partnered with well-known global brands such as Ikea and Adidas, with more than three million customers and revenue growth 10 times higher than the previous year.

B2B platformSary, meanwhile, has raised $75 million in its Series C financing, again led by Sanabil Investments, with a total of $112 million to date. This start-up already has 350,000 clients and serves more than 40,000 businesses. The platform connects small businesses with wholesalers and brands to increase supplies more efficiently.

Qawafel provides a market data service to help small factories create and innovate new products. So far, it has helped more than 300 local factories, which has led to an increase in its average order rate.

challenges to overcome

Digital transformation is already benefiting the Saudi Arabian economy. The digitization of vital sectors comprises more than 50 percent of the nation’s GDP, including energy, finance and government services, and is boosting productivity and efficiency while reducing the risk of human error.

Embracing technology and the digital economy ahead of other countries, and a focus on creating agile regulation that supports emerging sectors, also makes Saudi Arabia more attractive in an uncertain global landscape.

And it presents opportunities for its growing female workforce, which has grown from 15% of the total workforce in 2018 to 35.6% in 2022. The first Apple Developer Academy in the Middle East, in Riyadh, for example, offers women the opportunity to become programmers and developers, teaching coding, design, entrepreneurship and more.

But in a rapidly expanding market, steps must be taken to ensure there is a sufficient workforce available, with a strong talent pipeline equipped and ready to bring digital-native skill sets and an innovative, problem-solving mindset to future jobs. Tailored and sufficient training programs will be needed to foster the relevant skills.

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