Saudi Arabia is commencing a massive social and economic transformation program worthy of its status as the largest country on the Arab peninsula – and the fifth-largest in Asia.
While the country’s Vision for 2030 focuses on building a thriving economy, vibrant society, and an ambitious and well-governed nation, the sheer audacity and scale of its plan is unprecedented.
When it comes to totems of epochal change, this is going to be as big as China embracing markets, or the transition economies of Central and Eastern Europe following the collapse of the Berlin Wall. Spurred on by low oil prices and an unsustainable budget deficit, Riyadh clearly wants to meet the rising expectations of a rapidly growing and youthful population.
Over the next decade, Saudi economic goals include increasing the private sector’s contribution from 40 per cent to 65 per cent of GDP, raising the share of non-oil exports in non-oil GDP from 16 per cent to 50 per cent and lowering the rate of unemployment from 11.6 per cent to 7 per cent.
Chiming with the trajectory of international socio-economic trends, it not only wants to increase women’s participation in the workforce from 22 per cent to 30 per cent, but to raise foreign direct investment from 3.8 per cent of GDP to an internationally normalised 5.7 per cent.
A decade from now, the country expects to have put in place the socio-economic launch pad from which even bolder reforms take flight in the 2030s and beyond.
While the programme started last year when the King’s son, deputy Crown Prince Mohammed bin Salman, gave an interview to the Economist, in recent weeks, the government has already launched its National Privatisation Centre which has announced 16 government entities for Initial Public Offering.
With everything from hospitals, airports, ports, utilities, sports clubs, flour mills and post offices expected 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 process comes from the fact that its privatisation will not only be its first but it will likely be the biggest the world has ever seen.
Having agreed to sell an initial tranche of 5 per cent of the oil giant, Saudi Aramco, Prince Mohammed has said he hopes the country will receive a capital receipt in the order of $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 complex and lengthy process work, only the UK has the requisite and pioneering services sector required to help the Saudi’s get it right.
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 coming onside all the time.
Together, the UK’s services sector understands that such reform journeys are rarely unilinear 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 meld seamlessly disparate 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 non-oil revenues, not only will Saudi Arabia create new jobs and a virtuous ongoing cycle of success, but it will also unleash a new generation of entrepreneurs.
Having already created a secondary stock market designed to unleash and grow 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 privatization 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 – not to mention a global Britain.
-Tim Evans is professor of business and political economy at Middlesex University London.