Saudi Arabia’s ongoing economic transformation offers up massive opportunities for the UK’s services sector, says Professor Tim Evans.
Saudi Arabia is initiating a huge social and economic transformation process worthy of its status as the largest country on the Arab peninsula and the fifth-largest in Asia.
While Saudi Arabia’s ‘Vision for 2030’ focuses on building a healthy economy, vibrant society and a well governed nation, the sheer scale and audacity of its plan is unprecedented.
When it comes to seismic shifts in statecraft, this is going to be as big as China embracing markets, or the transition economies of Central and Eastern Europe ditching socialism.
Spurred on by low oil prices and a woeful budget deficit, Riyadh clearly wants to meet the rising expectations of a rapidly expanding and youthful population.
Over the next decade, Saudi economic goals include increasing the private sector’s contribution from 40% to 65 per cent of GDP; raising the share of non-oil exports in non-oil GDP from 16% to 50% and lowering the rate of unemployment from 11.6 per cent to 7 per cent.
Chiming with global trends, the government not only want to increase women’s participation in the workforce from 22 per cent to 30 per cent but they also want to raise foreign direct investment from 3.8% of GDP to a normalised 5.7 per cent.
A decade from now, the country expects to have put in place a socio-economic launch pad from which even bolder reforms take flight in the 2030s.
While the programme started last year when the King’s son, deputy Crown Prince Mohammed bin Salman gave an interview to the Economist, the government has recently launched its National Privatisation Centre and identified 16 government entities for Initial Public Offering.
With everything from hospitals, airports, ports, utilities, sports clubs, flour mills and post offices to be included, HSBC predict that there will soon be 100 listings in the country’s privatisation programme.
Perhaps the clearest sign of Saudi Arabia’s commitment to such a transformational agenda comes from the fact that its largest privatisation will not only be its first but it will be the largest the world has ever witnessed.
Having agreed to sell an initial tranche of 5% of the oil giant, Saudi Aramco, Prince Mohammed has said that he hopes the country will receive a capital receipt around $2 trillion.
While time will tell on the numbers, many stakeholders agree that when it comes to the necessary experience and support needed to make such a process work, only the UK has the required services sector.
Whether under Prime Ministers Thatcher, Major, Blair or Cameron, or in countries across Eastern Europe, Latin America or Asia, only the UK’s services sector has the proven breadth, depth and experience across finance, law, management, training, communications and policy: the full spectrum required to launch and sustain successful privatisations, joint ventures, contracting out and public private partnerships.
Many organisations, like HSBC, already have years of experience working alongside Saudi colleagues and have Joint Ventures in place. Others are using their proven track records, with more getting involved all the time.
Together, the UK’s services sector understands that such reform programmes are rarely straightforward or transactional but, instead, iterative and riven with complexity.
Above all else, the UK’s services sector understands the importance of developing culturally sensitive reform programmes that seamlessly bring together local, national and international expectations.
That is why across the diverse worlds of finance, law, management, training, communications and policy, it is the UK’s obsession with high quality, bespoke and culturally tailored services that will prove so successful in turning Saudi Arabia’s vision into a reality.
With the country taking such dramatic strides in freeing up the wealth creating capabilities of its private sector, getting more women into work, and increasing its non-oil revenues, only the UK has the expertise to help Saudi Arabia unleash a new and much-needed generation of entrepreneur.
Having already created a secondary stock market designed to dramatically expand the country’s SME sector, it is the conjuncture of the UK’s pioneering services sector and its determination to unleash Saudi talent that will bring about the desired changes.
In starting the privatisation process with its national oil company, Saudi Arabia is not only signalling a new future with better standards of transparency and governance. It is also proactively enabling a better future for the world.