The Kingdom of Saudi Arabia (KSA) is opening new economic opportunities with its digital transformation well underway. The Saudi Vision 2030 aims to transform KSA into a global ICT hub, supported by modern technologies, advanced digital infrastructure, competent talents, and diverse investments.
Among the most connected populations in the world, Saudi Arabia’s internet penetration rate stood at 98% with a population of 36 million, at the start of 2022. With this in mind, it’s expected that the ICT market in KSA grows in size in parallel to tech investments.
A leading G20 economy, Saudi Arabia has been ranked second globally among the G20 countries in the 2021 Digital Competitiveness Report. This reflects the qualitative leaps made by the Kingdom in boosting its telecom infrastructure, enhancing its digital capabilities, and executing mega projects.
Its strategic location in the Middle East also makes it at the heart of major trade routes and home to natural resources. Despite being one of the leading oil exporters in the world, the focus within the economy is shifting towards a tech-powered path.
Saudi Arabia’s GDP marks Middle East’s biggest economy, which the International Monetary Fund (IMF) forecasts to exceed $1 trillion in 2022. In line with this, Arthur D Little expects the digital economy to contribute around 20% of the country’s GDP by 2025.
Saudi Arabia’s ICT Market
One of the major enablers of KSA’s Vision 2030 is the ICT market. Its core objective is to build tomorrow’s digital foundations for a connected and innovative Saudi Arabia. Developing standards, partnerships, and investments are key to attaining ICT’s affordability, accessibility, and service quality.
Relatively, as per the Saudi Arabia ICT Strategy 2023, the ICT sector in KSA encompasses several key technologies in IT, emerging tech, and telecommunications. Reportedly, Saudi Arabia’s ICT infrastructure market growth is driven by increased spending in the telecom and ICT industry by the Saudi government, bring your own device (BYOD) trend, supportive government initiatives for 5G commercialization, and massive cloud adoption.
As a matter of fact, the government, finance, and communications sectors are expected to spend more than $3.6 billion on ICT. More so, the overall ICT spending is expected to increase to over $46 billion by 2023. With legislation and policies facilitating access to the internet and other digital-centric services, Saudi businesses have started to adopt cloud computing, data analytics, artificial intelligence (AI), and IoT technologies.
Having said that, in June 2022, the Ministry of Communications and Information Technology (MCIT) announced the new ICT Law approved by the Cabinet that would boost the Kingdom’s position as a regional hub for innovation and technological investments.
On the other hand, KSA’s ICT workforce is anticipated to reach beyond 200,000 professionals, highlighting the need to develop the skills of the existing Saudi ICT talent pool and encourage STEM education to the youth.
- Telecommunications
Saudi Arabia is a global leader in 5G penetration and speeds. Its wireless ecosystem is also thriving, showing support for next-generation Wi-Fi standards and spectrum regulations. Saudi Arabia’s Communications and Information Technology Commission (CITC) announced that KSA would be the first country in the EMEA region to make the full 6 GHz frequency band available for Wi-Fi use.
CITC has collaborated with vendors in the industry to facilitate importing Wi-Fi 6E devices into the Kingdom. In the hopes of accelerating the adoption and deployment of Wi-Fi 6E in Saudi Arabia, CITC has also published its WLAN regulations which strengthen the Kingdom’s regional and global leadership in the field of Wi-Fi and license-exempt technologies and activates the latest generation of high-speed telecom technologies in the Kingdom.
By and large, the telecom market in Saudi Arabia is one of the fastest-growing markets for G20 nations. CITC Governor Mohammed Al-Tamimi commented, “The Kingdom has also achieved the highest level of progress and achievement, through the amount of frequency spectrum allocated to mobile communication services globally, thus ranking second among the G20 countries.”
Across the country, 5G rollouts continue to expand and CITC is aiming to award spectrum in the 600 MHz, 700 MHz, and 3.8 GHz bands in June 2022 to support the expansion of 5G across the country.
CITC Governor also highlighted the strength of the telecom infrastructure in the Kingdom, as the average mobile internet speed reached 179.9 Mbps by the end of 2021 and the fiber coverage reached over 3.5 million homes. Additionally, 5G networks exceeded 12,000 towers in more than 51 cities and governorates in the Kingdom.
The frequency spectrum allocated to mobile services exceeded 1,110 MHz, with the percentage of IoT coverage reaching 95% in urban areas.
- Emerging tech
Limitless opportunities exist in the cloud, IoT, AI, and blockchain, among other emerging technologies in Saudi Arabia. KSA is the largest technology market in the MENA region, worth more than $40 billion, and has been attracting new investments to transform into an innovation-based economy.
“These investments and initiatives are a manifestation of the Kingdom’s push toward the growth of the digital economy for the greater good of people, the planet, and the prosperity of the MENA region. They mark the next level of growth for the digital economy in Saudi Arabia, the MENA region’s largest technology and digital market,” said HE Eng. Abdullah Alswaha, Saudi Minister of Communications and Information Technology (MCIT).
By 2030, AI is expected to contribute $133 billion to local GDP, with support from SDAIA’s multibillion-dollar AI and data strategy while the domestic data center market will gain around $1 billion worth of investments by 2026.
According to MCIT, there are over 400 data centers benefiting from KSA’s strategic location which allows global cloud service providers (CSPs) to serve the MENA region. During LEAP 2022, stc announced its billion-dollar investment in MENA HUB for regional connectivity and infrastructure. This will support Saudi Arabia’s rapidly expanding digital and cloud sectors.
Saudi Cloud Computing Company (SCCC), a new joint venture formed by Alibaba Cloud, stc Group, eWTP Arabia Capital, SCAI, and SITE, has chosen Riyadh as a regional hub for Alibaba Cloud operations. Two new data centers have been unveiled in the capital city to provide a wide range of proven and secure public cloud computing solutions.
A billion-dollar investment was also stated by NEOM Tech & Digital Company with a focus on future technologies. As part of it, they launched the world’s first cognitive metaverse, XVRS, and M3LD, a personal data management platform.
Citing an example of blockchain integration, the Saudi Arabian Monetary Authority (SAMA) is among the first Saudi government authorities and central banks in the world that announced the deployment of blockchain technology for money transfer.
For AI, pilgrims visiting Makkah’s Grand Mosque can now get guidance from new four-wheeled AI robot guides that speak 11 languages and are designed with a smart stoppage system that will prevent them from running over people or objects while roaming.
According to CITC, by the end of 2022, 82% of medium-to-large organizations in the Kingdom are expected to adopt an IoT solution for their business; elevating customer experiences among other priorities.
Digital Saudi
Is Saudi Arabia technologically advanced? This is a no-brainer question, evidenced by the Saudi innovation initiatives being carried out. From within the public sector to the various sectors of the economy, a digital Saudi phenomenon is on its way to maturity.
Building a digital economy is not a choice but a requirement that conveys economic vibrancy and resilience, and within GCC countries, Saudi Arabia has been proactively building adaptive regulatory frameworks, developing talents, expanding innovation capacity, and increasing local production of digital goods and services.
- Government
Saudi Arabia’s digital maturity level percentage of eGovernment services is 71%. The Smart Government Strategy sets an ambitious goal that, by 2024, KSA will be agile, capable, and innovative in delivering smart government experiences. As an example, the digital government authority (DGA) launched the regulatory sandbox initiative that would govern and enhance digital government services and prepare the necessary regulations to improve the business environment. The Saudi Arabia Government also pursues a digital-by-default approach and a mobile-first strategy.
- Healthcare
For the next five years, Saudi Arabia’s National Transformation Plan has estimated almost $1.6 billion worth of investment in electronic health initiatives. Middle East healthcare providers including those in KSA can deploy visibility and mobility solutions to empower staff and gain intelligence to perform better patient care. By 2025, the Health Sector Transformation Program aims to cover 100% of the population with a unified digital medical records system.
- Education
KSA has taken a step in the right direction by initiating new ICT programs in Saudi universities, a Saudi digital academy, and a national information technology academy, to promote the learning of specific technical skills, tools, and programs. Saudi Arabia’s Ministry of Education recognizes the need for a long-term strategy for blended learning needs and for children as well as teachers having access to devices and connectivity. KSA’s innovative distance learning platform "Madrasati" benefited six million children benefited during the pandemic.
- E-Commerce
E-commerce will help drive Saudi Arabia’s economic growth, with the domestic online market expected to double to $2 billion by 2025. The Kingdom is also well positioned to become a regional e-commerce hub, reaching most Middle East markets, with ICT and financial services supporting e-commerce’s advancement. The government’s e-commerce law has defined e-payment services and created a customer protection framework; increasing the trustworthiness of the technology.
- Transportation
Saudi Arabia has reportedly earmarked $140 billion for mobility optimization over the next ten years. In fact, some of the world’s top engineering minds are helping to design a fully autonomous transportation system for NEOM. Self-driving electric vehicles will use advanced radar technology and communicate with each other to transport goods and people. Riyadh has also invested in a multibillion-dollar public transportation project with driverless trains.
- Startups
One initiative launched during LEAP 2022 was The Garage, which aims to inspire Saudis to start their own tech business. Acting as an innovation hub, The Garage focuses on the financing and mentoring of emerging and disruptive technology-based startups. Around $1.4 billion will be spent on fostering entrepreneurs through this program. It involves multiple stakeholders such as King Abdulaziz City for Science and Technology (KACST), MCIT, and SAFCSP.
- Fintech
In 2021 alone, a record level of over SAR 1.3 billion ($347 million) in venture capital investment was plowed into Saudi Arabia-based fintech companies. More so, over $33 billion of transactions are expected through KSA’s fintech market by 2023. The shift to instant payments would not have been possible without increasing the accessibility of digital payment channels which SAMA, the Central Bank, has spearheaded as a priority. New fintech ideas are also being nurtured within the SAMA regulatory sandbox. In compliance with SAMA’s open-banking policy, by the end of 2022, the first examples of consumer-facing open banking products and services will be accessible.
- Infrastructure
Saudi Arabia is currently building smart cities, aiming to be the world’s most connected and digitized nation by 2030. According to MCIT, approximately $4 billion has already been invested in digital infrastructure, focusing on industrialized IoT, AI, cloud computing, and data centers. Al Ula, Qiddiya, NEOM, Red Sea Project, Jabal Omar, Amaala, Ad Diriyah, Al Widyan, and King Salman Park are among the mega projects that will make Saudi Arabia embody the future of business, livability, and sustainability.
- Cybersecurity
Saudi Arabia is ranked second in the world on the Global Cybersecurity Index (GCI). Raising the level of cybersecurity in the Kingdom, the National Cybersecurity Authority (NCA) launched the national portal for cybersecurity services (HASEEN). In retrospect, the National Digital Transformation Program allotted cybersecurity investments reaching $425 million in 2020.
