Saudi Arabia continues industrial growth to minimise dependency on oil

In June 2023, the Nammat industrial investment programme in Saudi Arabia announced the launching of 31 local and international companies, valued at EUR 23 billion. These companies range from a cloud storage provider to an iron sheet manufacturer, and a logistics management centre. The Namaat (growth) programme was launched in 2021 by Saudi Aramco as part of Saudi Arabia’s ambitious initiatives to drive its industrial development and economic diversification. 

The Namaat programme aims to support national initiatives and establish strong international partnerships that can stimulate economic expansion and diversification. In June 2022, Namaat witnessed considerable expansion as 55 agreements and Memoranda of Understanding (MoUs) were agreed upon across sectors such as sustainability, digital technology, manufacturing, and social innovation. Notable was an agreement with Shell & AMG Recycling to build a metal reclamation and catalyst manufacturing facility within the Kingdom.

By ramping up investments in the industrial and manufacturing sectors, Saudi Arabia expects to triple its GDP and double its industrial exports by 2030. The government also envisions industrialisation as a means to not only stimulate economic growth but also generate employment opportunities in the private sector. 

In November 2022, Saudi Arabia launched its “National Strategy for Industry” as an integral part of Vision 2030, the national strategy for economic diversification. The Prime Minister explained that "through the National Industrial strategy and in partnership with the private sector, the kingdom will become a leading industrial powerhouse that contributes to securing global supply chains and export high-tech products to the world."

In 2019, the Saudi government had already launched “The National Industrial Development and Logistics Programme”, designed to maximise the development of the mining and energy sectors in the context of the 4th Industrial Revolution. Since Vision 2030 was launched, the number of factories in the country has increased by more than 50 per cent to reach more than 10,000 facilities in 2022. This number is expected to reach 36,000 by 2035. 

Recent data released by the General Authority for Statistics (GASTAT) indicate that the Kingdom is making steady progress towards achieving its objective. In April 2023, there was a 3.2 per cent increase in the Industrial Production Index (IPI) compared to the corresponding month of the previous year. The increase was predominantly propelled by significant output in mining and quarrying, manufacturing operations, and electricity and gas supplies.

“Relative weights of the mining and quarrying, manufacturing and electricity and gas supply sectors in the IPI are 74.5 per cent, 22.6 per cent and 2.9 per cent, respectively. Thus, the trend of the industrial production index in the mining and quarrying sector dominates the trend in the general IPI,” the latest GASTAT report reads.

Developments in Saudi Arabia have attracted keen interest from EU investors regarding business opportunities in Saudi Arabia and other Gulf states. In early June 2023, France held the first edition of “Vision Golfe”, a two-day business forum aimed to foster business cooperation initiatives between the private and public sectors in the Gulf and France with a focus on markets with high growth potential in various sectors, including trade, sports, culture, the energy transition and digitisation.