Saudi Arabia's technology landscape thrives on innovation Arab News Japan

Miguel Hatchiti

RIYADH: Saudi Arabia's strategic location, thriving economy and strong government support have attracted a diverse range of funding partners eager to support startups and entrepreneurs.

Saudi Arabia has one of the highest technology spends in the Middle East and North Africa, about 2.5 times more than the next country, and is growing annually, said Housem Jemili, a partner at management consulting firm Bain & Company. It is said that there is .

Gemili told Arab News: Saudi Arabia has a mature and diverse pool of funding, including government agencies and programs (such as Monshart), large investment funds, and venture capitalists that provide startups and entrepreneurs with access to direct and indirect funding. We have supply partners.

He highlighted Saudi Arabia's emergence as a dynamic technology hub in the region, adding: Saudi Arabia has a large domestic audience (MENA's largest) seeking technology products and services.

Saudi-based economist Talat Zaki Hafiz told Arab News that Saudi Arabia's rise as MENA's technology hub is largely due to its status as the region's largest economy, accounting for more than 30 percent of gross domestic product. He said he was influenced by it. It ranks 16th among G20 countries.

Saudi Arabia's technology strategy includes ambitious goals and action plans based primarily on attracting large international companies specializing in advanced and emerging technologies to enable the Kingdom to develop mega-technology projects. he said.

Global Innovation Index

Global Innovation Index 2023 Announcement Event.WIPO/Violaine

Saudi Arabia's innovation progress is highlighted by its position in the 2023 Global Innovation Index, ranking it 48th out of 132 countries featured.

Saudi Arabia has certainly improved from its 51st and 66th place in 2022 and 2021, respectively, Gemili explained.

He further added that Saudi Arabia recognizes that innovation is a key driver of economic development, and its efforts will improve not only innovation input sub-indicators such as human capital and infrastructure, but also output sub-indicators such as knowledge and technology. It said there would be significant improvements across indicators. Global Innovation Index Outcomes and Creative Outcomes.

Saudi Arabia ranks 41st among high-income economies, further cementing its position as the region's fastest-growing technology hub.

Additionally, the kingdom ranks fifth out of 18 countries in North Africa and West Asia, underscoring its growing influence as a pioneer of innovation in the Middle East.

Hafiz believes that since announcing Vision 2030 in 2016, Saudi Arabia has focused on technology-related industries in general and the digital economy in particular.

As the digital economy is becoming the new trend of the 21st century, Saudi Arabia, where more than 60% of the population is young and under 35 years old, is using the internet frequently to purchase goods and services, he said. Ta.

The economist explained that statistics show that the scale of e-commerce in Saudi Arabia is growing significantly, and is expected to reach $15 billion by 2025, with online sales accounting for 66%.

Saudi Arabia's growing prominence in the localization of technological progress and innovation was highlighted at the LEAP conference in Riyadh. The event, which concluded with great success in early March, included agreements worth more than $12 billion.

LEAP serves as a nexus for the technology and innovation ecosystem in southern Saudi Arabia and has made great efforts to serve as a nexus that connects the ecosystem through community building and brings together all stakeholders, said Gemili. said.

strategic investment

Saudi Arabia's emergence as a digital powerhouse can be attributed to strategic investments in research and development, supportive policies, and a thriving startup ecosystem.

Through initiatives such as Vision 2030 and the establishment of the Digital Government Authority, the Kingdom is laying the foundations for a technologically advanced future.

Houssem Jemili, Bain & Co. Partner

According to Gemili, the presence of global technology giants in Saudi Arabia is proof that the country's technology and innovation landscape is growing.

Such players provide the minimum infrastructure that startups and entrepreneurs need to succeed, he added.

Jemili elaborated further. They provide world-class physical and digital infrastructure such as software labs and production studios, as well as cloud credits that enable large-scale innovation. Such advanced services help startups accelerate their ideas from early stages to large-scale commercialization.

Global tech giants are investing billions of dollars in Saudi Arabia, underscoring its attractiveness as an investment destination, and as the minister revealed earlier, Microsoft is investing $2.1 billion in a global superscalar cloud. , Oracle has committed $1.5 billion to build a new cloud region in Riyadh. Communication and Information Technology Abdullah Al Swaha.

Hafiz emphasized that the integration of technology in Saudi Arabia's traditional economy has been very successful.

He added that Kingdom's Vision 2030 is based on bringing major changes to the Saudi economy, not only to diversify its sector base, but also to drive technological transformation.

regulatory framework

Saudi Arabia's efforts to foster innovation have also extended to the regulatory realm, with the government introducing initiatives such as regulatory sandboxes and fintech hubs.

These initiatives provide a platform for startups and technology companies to test innovative products and services in a controlled environment, thereby fostering innovation while facilitating compliance with regulatory requirements.

According to Gemili, the flow and access of incentives is a major factor in Saudi Arabia's advancement of its innovation landscape.

He emphasized that the Kingdom has a rapidly evolving business environment and requires a structured regulatory system that is mature, growth-promoting, and easy to navigate.

Furthermore, it is important to enact clear and predictable regulations that continue to foster innovation, facilitate ease of doing business, and build confidence among both the business community and investors, he added.

Gemili emphasized the importance of having a physical center of gravity for the startup community and the community's important role in providing direct ecosystem direction and guidance to new Saudi entrepreneurs and foreign startups. emphasized the role.

Phygital refers to a combination of physical and digital centers that serve as a vital hub for the startup community, providing both in-person and online resources, guidance and orientation to emerging entrepreneurs and foreign startups .

With more than 1,600 startups backed by a diverse network of founders and venture capital, Saudi Arabia is poised to become a global leader in technology innovation.

Hafiz continued to emphasize. According to data from the 2022 GOVTECH Maturity Index published by the World Bank Group, Saudi Arabia is ranked 3rd in the world, highly advanced and a leader in the digital industry, and ranked 1st regionally. It is important to note that ranked

He noted that the Saudi government is supporting advanced technology and driving significant progress towards Vision 2030 goals by providing high-quality digital services that strengthen the national economy.

Startup ecosystem

Within Saudi Arabia's vibrant startup scene, several companies have emerged as pioneers of innovation.

Notable among these are the startups enrolled in the Saudi Unicorn Program, which exemplify the Kingdom's commitment to developing domestic talent and fostering entrepreneurship.

Gemili said the Saudi Unicorn Program is a one-stop-shop solution that supports and enables high-growth technology companies to reach the unicorn stage by providing integrated services and products. .

The program offers unparalleled solutions to startups and entrepreneurs by providing access to connect with various stakeholders such as international customers, talent, investors and the private sector, providing guidance and guidance. Offers.

He added that the program's objectives are in line with the overall Vision 2030, as it aims to increase the number of unicorn companies and have a direct and indirect impact on local GDP.

Gemili explained that the Saudi Unicorn Program's differentiation is that it offers differentiated services based on a startup's level of readiness.

Lean Tech, Mrsool, Quant, and Mozn are just a few of the startups making waves in the Saudi technology ecosystem.

These companies represent Saudi Arabia's vibrant culture of innovation and entrepreneurship and are actively shaping a dynamic business environment.

With strategic investments, supportive policies and a thriving startup ecosystem, Saudi Arabia is poised to lead the way towards a digital future.

By fostering collaboration, developing homegrown talent, and embracing emerging technologies, Saudi Arabia's current momentum is promising for technology and innovation.

Citing a Magnit report, Gemili said Saudi Arabia has emerged as a leading market for venture capital funding in the MENA region, attracting more than $1.38 billion in investments in 2023.

This is the second year in a row that KSA has raised more than $1 billion in VC funding.

Gemili cited the example of mega-rounds witnessed by Saudi-based platforms such as Tabby and Tamara, which helped both companies secure unicorn status. Continuing efforts to improve livability aspects, improving ease of doing business, and continued growth and maturation of funding institutions keep KSA on track for continued success.

As these elements become more active, the maturity of the ecosystems of cities like Riyadh and Jeddah may move from an early activation stage to a globalized stage.

Hafiz concluded: “I don't think Saudi Arabia faces pressing economic challenges to establishing a technology ecosystem simply because it has strong leadership.”

He said encouraging the use of technology at scale is a good ecosystem, especially considering that more than 60 percent of Saudis are young people under the age of 35 and our country has one of the highest usage rates. He emphasized that he believes that it is helping to build the The state of the internet in the Arab world and around the world.

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