Vision 2030, government spending to drive non-oil sector growth, says Jadwa Investment.

Saudi Arabia's economy is set to grow by 7 percent year-on-year in 2022 due result of significantly higher oil sector growth and robust levels of non-oil growth, Riyadh-based Jadwa Investment said.

The strong level of growth of this year is expected to continue into next year, the investment bank said in a report on Tuesday.

International Monetary Fund said in July the kingdom is expected to grow 2.4 per cent this year and 4.8 per cent in 2022.

According to Jadwa, within the oil sector, growth will be driven by higher Saudi crude oil production, in-line with yearly rises in global oil demand.

"We note that circa 40 percent of OPEC+’s spare capacity resides with Saudi Arabia, and thus any uplift in demand will likely be met with proportionally higher oil supply from the Kingdom."

In terms of the non-oil sector, despite a moderation in year-on-year growth the economy will be driven forward by the continued implementation of the Vision 2030, Jadwa said.

According to a finance ministry report, Saudi Arabia’s oil sector revenue grew 60 percent year-on year in Q3-2021 to nearly 148 billion riyals while non-oil revenue in Q3 contracted 22 percent year-on-year to 95.4 billion riyals.

Jadwa said the Saudi economy will be supported by another sizable outlay in government expenditure, which, despite declining on a yearly basis in 2022, is still set to total just under 1 trillion riyals. “Overall, we expect the Kingdom’s non-oil private sector to grow by 3.2 percent in full year 2022.”

Additionally, both the Public Investment Fund (PIF) and the National Development Fund (NDF) will be the engines of capital deployment and economic development in the Kingdom, as detailed in the recently unveiled National Investment Strategy (NIS).

Jadwa said the main risk to its forecast is related to the disruptive nature of Covid-19, or, more specifically, to global developments related to the ‘Omicron’ variant seen in the last few days.

“As it stands, it is too early to gauge the full impact of the variant on the Saudi economy, especially so without knowing to what extent, if any, the variant poses a threat to the current crop of Covid-19 vaccines' effectiveness."

source: zawya

Wa’ed, the entrepreneurship arm of Aramco, tripled the amount of money it loaned to Kingdom-based start-ups during 2020, and injected significantly more money into new businesses through venture capital (VC) investments, as it began a multi-year effort to raise support for Saudi entrepreneurs.

The Dhahran-based venture, a wholly-owned subsidiary of Aramco, increased loan disbursements to small and medium-sized enterprises (SMEs) in Saudi Arabia to SR31 million in 2020, from SR10 million in 2019. In venture capital investments, Wa’ed deployed  SR43 million, up 34 percent from SR32 million in the previous year.

The number of loans financed rose to 12 in 2020 from four in 2019, and venture capital deals executed increased from seven to nine over the same period.

Since its inception in 2011, Wa’ed has deployed more than SR375 million to enable the growth of hundreds of innovative, disruptive digital businesses in Saudi Arabia through a unique end-to-end combination of loans, VC investment and incubation services.

Under its mandate to help diversify the Saudi economy and support entrepreneurs, Wa’ed targets game-changing SMEs across all sectors whose technologies are unique, innovative, ready for market, and address a gap in the country.

Diversifying the Saudi economy beyond oil and gas by investing in other sectors is one goal of the Kingdom’s Vision 2030 initiative, a bold, ambitious blueprint to ensure sustainable economic growth into the future.

By supporting first-mover companies whose products measurably raise the quality of life in Saudi Arabia, Wa’ed has helped grow the Kingdom’s nascent start-up ecosystem into one of the fastest-growing hotbeds of entrepreneurship in the world.

In 2020, Wa’ed responded to the challenges of COVID-19 by going virtual and redesigning workflows to streamline procedures and manage new realities, creating efficiencies that generated higher loan and VC investment volumes. Wa’ed believes the workflow enhancements it introduced will continue to boost operating performance long after the pandemic ends.

“I am very grateful for the confidence and support we receive from Aramco and the Kingdom, which enables Wa’ed to fulfil its unique pioneering role as an advocate for innovative new businesses that localize technologies and services which are needed in Saudi Arabia and can help improve quality of life,” said Wassim Basrawi, Wa’ed’s Managing Director.

“In a very challenging year, I am proud of the Wa’ed family, which includes my team and our resilient entrepreneurs, for rising to the challenges and keeping us on track to deliver an even greater impact in 2021.”

Through its mentoring and start-up incubation activities, Wa’ed is a thought leader in Saudi Arabia, offering a wide range of cutting-edge professional certification, patent development and incubation support services, as well as a range of entrepreneur networking events that attracted more than 3,000 people during 2020.

Wa’ed’s Innovation Ecosystem team is a Gulf leader in creating new incubation techniques.

In 2020, personnel from the efactory, a prototyping development lab at Wa’ed, were named inventors on three patents from the U.S. Patent & Trademark Office. The team incubated 10 new tech start-ups during the year, and three were awarded national contracts after receiving funding, interest and scouting from Aramco.

Following the onset of COVID-19, Wa’ed adopted virtual training of entrepreneurs by developing an online platform that attracted 60 new mentors, who reviewed over 130 applications from entrepreneurs with “minimum viable products” ready for market.

Social distancing also did not hinder Wa’ed from expanding the Innovation Ecosystem Society (IES), a Wa’ed-sponsored network of more than 1,600 entrepreneurs who meet in virtual events called Google Grind, which is co-sponsored with the U.S. technology giant.

As it prepares to close out its first decade, Wa’ed plans to increase its impact as the largest and most active institutional venture capital investor for Saudi-based start-ups and the only SME-sized lender in the Kingdom offering non-collateralized loans.

Wa’ed currently supports 66 Saudi SMEs through loan financing and, with its venture capital investment arm Wa’ed Ventures, a portfolio of more than 30 companies, including tech platforms Golden Scent, an e-commerce merchant for beauty products; Wahed, a global Shariah-compliant fintech robo-advisory platform licensed by the Saudi Capital Market Authority; and FalconViz, a provider of unmanned aerial drone systems.

In December, Wa’ed announced five new venture capital deals, including Ynmo, which develops Arabic-language instructional software for children with learning disabilities, and Postage, a last-mile logistics provider and rapid courier service for businesses.

Through bridge rounds, Wa’ed raised venture capital investments in Averos, a developer of real-time location-based monitoring systems, Hazen.ai, a developer of intelligent road safety systems, and GetMuv, a platform to access more than 100 health clubs and centers in the Kingdom.

Looking ahead to 2021, Wa’ed is planning a series of new initiatives to support development of Saudi’s venture capital ecosystem, which is increasingly attracting foreign innovators who are interested in localizing their technologies in the Saudi market.

The newest innovation in 2021 is expected to be Wa’ed’s new Venture Builder, a one-of-a-kind breeding ground for promising start-ups in Saudi Arabia, which provides entrepreneurs and start-ups with essential back-office services such as marketing, new business development and networking, allowing innovators to get their companies off the ground.

The Venture Builder will allow Wa’ed to specifically nurture start-up businesses that target existing market needs and gaps in Saudi Arabia, which are critical to the Kingdom’s economic future and diversification.

Overall, Mr. Basrawi said Wa’ed plans to double the number of loan and venture capital deals in next three years by entering new collaborations, better leveraging Saudi Aramco’s own business ecosystems, and actively reaching out to investors.

In its first decade, Wa’ed benefited from co-investment and innovation collaborations with King Abdullah University of Science and Technology (KAUST) and King Fahd University of Petroleum & Minerals (KFUPM).

In December, Wa’ed signed a Memorandum of Understanding (MoU) to collaborate with OQAL, the largest network of angel investors in Saudi Arabia and Bahrain, with the goal of creating a new pipeline of potential deals.

Also during the month, Wa’ed signed an MoU with Namaa Almunawarah, the business development agency for the city of Medina, to support local SMEs there.

Medina is one of the fastest-growing Saudi hubs for start-up investment, based in part on well-developed research universities that have spearheaded the development of new technologies.

Wa’ed is also in advanced discussions to execute an MoU with the Royal Commission of Jubail and Yanbu, to promote entrepreneurial opportunities in the industrial sector.

source: zawya