Saudi Arabia’s official reserve assets highest in 19 months at $467.76bn
Holdings include monetary gold, SDRs, IMF’s reserve position and foreign reserves
International currency holdings made up 95% of the total, amounting to SR1.66 trillion in June
Updated 15 August 2024
Dayan Abou Tine
RIYADH: Saudi Arabia’s official reserve assets reached SR1.754 trillion ($467.5 billion) in June, the highest in 19 months and a 5.54 percent increase year-on-year, according to new data.
The Saudi Central Bank, known as SAMA, reported that these holdings include monetary gold, special drawing rights, the International Monetary Fund’s reserve position, and foreign reserves.
International currency holdings, which contain currency and deposits abroad and investments in foreign securities, made up 95 percent of the total, amounting to SR1.66 trillion in June. This category also saw a 6 percent increase during this period.
Saudi Arabia has one of the highest reserve coverage ratios among Fitch-rated sovereigns, standing at 16.5 months of current external payments, according to an agency report published in February.
This ratio indicates the country’s robust ability to meet its external financial obligations for an extended period, reflecting strong economic stability and prudent management of its foreign exchange holdings.
— SAMA | البنك المركزي السعودي (@SAMA_GOV) July 30, 2024
This high level of reserves provides a significant buffer against external shocks and underpins investor confidence in the Saudi economy.
June data showed that special drawing rights, making up 4 percent of the total at SR77.24 billion, decreased by 1.3 percent.
Created by the IMF to supplement member countries’ official reserves, SDRs derive their value from a basket of major currencies, including the US dollar, euro, Chinese yuan, Japanese yen, and British pound sterling. They can be exchanged among governments for freely usable currencies when needed.
SDRs provide additional liquidity, stabilize exchange rates, act as a unit of account, and facilitate international trade and financial stability.
The IMF reserve position totaled SR13.33 billion but decreased by 11 percent during this period. This category represents the amount a country can draw from the IMF without conditions.
Since its inception in 1952, SAMA has been managing foreign exchange reserves, with significant scale management beginning in the 1970s.
According to the Bank for International Settlements, SAMA’s reserves management has evolved as it accumulated holdings and gained expertise over time.
It has also developed internal models to validate reserve adequacy and assess reserve requirements, taking into consideration global practices and incorporating specific macroeconomic factors relevant to Saudi Arabia.
These models are regularly back-tested to ensure their reliability.
According to the BIS, SAMA has three primary investment objectives: preserving capital, maintaining liquidity, and achieving returns compatible with its risk appetite.
Saudi Arabia’s non-oil economy grows 4.9% in Q2: GASTAT
Updated 14 sec ago
Nirmal Narayanan
RIYADH: Saudi Arabia’s non-oil activities expanded 4.9 percent year-on-year in the second quarter of 2024, driven by gains in the financial and insurance sectors, official data showed.
According to data from the General Authority for Statistics, the financial, insurance, and business services sectors surged 7.1 percent in the second quarter compared to the same period last year.
Non-oil activity also rose 2.1 percent compared to the previous quarter, reflecting the Kingdom’s efforts to broaden its economic base.
The non-oil sector's growth aligns with Saudi Arabia’s Vision 2030, a strategic plan aimed at reducing the country's reliance on oil revenues.
The report further revealed that Saudi Arabia’s seasonally adjusted gross domestic product increased by 1.4 percent in the second quarter compared to the first.
However, GDP saw a slight year-on-year decline of 0.3 percent in the same period, largely due to an 8.9 percent drop in oil activities following the Kingdom’s decision to cut crude output in line with OPEC+ agreements.
To stabilize the market, Saudi Arabia reduced oil production by 500,000 barrels per day in April 2023, a cut that has been extended until December 2024.
GASTAT also noted that the Kingdom’s GDP at current prices reached SR1.02 trillion ($270 billion) in the second quarter.
“Crude oil and natural gas activities achieved the highest contribution to the GDP at 23.2 percent, followed by government activities at 16 percent, and wholesale and retail trade, restaurants, and hotels activities with a contribution of 10.1 percent,” stated GASTAT.
Government activities increased by 3.6 percent year-on-year and by 2.3 percent quarter-on-quarter.
Meanwhile, electricity, gas, and water activities saw an 8.9 percent rise year-on-year, while wholesale and retail trade, restaurants, and hotels grew by 6.8 percent.
The report also highlighted that government final consumption expenditure rose by 10.9 percent year on year and 4.3 percent quarter on quarter.
In the second quarter, gross fixed capital formation increased by 3.2 percent compared to the same period last year.
With continued investments in key sectors such as financial services, infrastructure, and energy, Saudi Arabia remains focused on achieving the goals set out in its Vision 2030 blueprint.
Emaar The Economic City launches $2.32bn capital optimization plan
Updated 19 min 40 sec ago
SYED AMEEN KADER
RIYADH: Saudi master developer Emaar The Economic City, the firm behind King Abdullah Economic City, has unveiled a SR8.7 billion ($2.32) capital optimization plan aimed at restructuring its financial framework.
The move, approved by the board, includes restructuring SR3.8 billion in bank debts, converting SR4.0 billion of debt owed to the Public Investment Fund into equity, and introducing a SR1 billion convertible shareholder facility from PIF, according to a press release.
The plan also involves a capital reduction to offset accumulated losses, with the goal of stabilizing EEC’s financial position and setting the stage for long-term value creation.
This comes as EEC strengthens its focus to key sectors, including industrial and logistics, tourism, and real estate.
KAEC, designated as a Special Economic Zone, is set to attract more businesses and residents, further advancing Saudi Arabia’s Vision 2030 objectives.
Fahad Al-Saif, chairman of EEC, said: “The implementation of the COP, which underpins EEC’s Board-approved strategy, will enable the company to capitalize on available opportunities to align its direction with Saudi Vision 2030.”
He added: “It also provides the blueprint for a stable platform for growth, focused on unlocking the full potential of KAEC and enhancing the sustainability of our business. We are setting the stage for a transformation that will not only drive value creation, but also redefine our role in the Kingdom to achieve the goals of Vision 2030.”
The restructuring will consolidate bilateral credit facilities from lenders including Alinma Bank, Saudi Awwal Bank, Banque Saudi Fransi, and Saudi National Bank into a single Shari’a-compliant syndicated facility.
“This carefully devised plan does more than fortify our balance sheet; it sets the stage for us to seize opportunities with greater agility. As we undertake the strategic rebalancing of our financial framework, our objective is clear: to improve our leverage ratios and bolster overall financial health,” said Abdulaziz Ibrahim Al-Nowaiser, CEO of EEC.
In parallel, he revealed that the company is evaluating a series of structural and functional measures aimed at restoring EEC to full financial health, while also strengthening key relationships with stakeholders.
Additionally, it plans to periodically refresh its “long-term strategy to establish a clear roadmap” for reviving the company's ability to fulfill its core mission of developing the property and delivering shareholder value.
King Abdullah Port, a major maritime hub, is expected to drive growth, while KAEC’s infrastructure projects, including a new stadium and multiple hospitality ventures, are aimed at boosting the city’s appeal as a tourism and business destination.
In the first half of 2024, EEC made progress by attracting investors and implementing cost optimization measures, supporting the company’s turnaround efforts.
Moelis & Co. serves as an independent advisor on the debt restructuring, with SNB Capital as financial advisor for the capital decrease and debt conversion, the release added.
Alkhorayef’s visit is part of a wider tour of East Asia, which also includes visits to China and Singapore.
Updated 07 September 2024
Arab News
HONG KONG: Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef began his official visit to Hong Kong on Saturday, the Saudi Press Agency has reported.
Alkhorayef will hold meetings with officials from Hong Kong’s Department of Trade and Industry, the Office of Innovation, Technology, and Industry, the Department of Trade and Economic Development, and the Global Research Collaboration Center InnoHK, and will discuss increased industrial cooperation with Hong Kong, investment in the Kingdom, and mutual opportunities in automation, innovation, and technology solutions, according to the SPA.
Alkhorayef will also meet with representatives from commercial and industrial companies.
Hong Kong, as a special administrative region of China, maintains economic relations with the Kingdom separate to Beijing.
In 2023, the volume of Saudi non-oil exports to Hong Kong amounted to SR1 billion ($266.3 million), while the value of its imports from Hong Kong reached SR6.6 billion.
Alkhorayef’s visit is part of a wider tour of East Asia, which also includes visits to China and Singapore.
Education Transformation: A Catalyst for Economic Breakthrough in the GCC
Updated 07 September 2024
MANAL AL-BARAKATI
RIYADH: Education quality needs to be improved across the Gulf if the region is to truly unlock its economic potential, experts have told Arab News.
Leading figures from the World Bank and regional consultancy firms, together with a range of recent reports and studies, argue that it is not just access to schooling that needs to increase, but the standard of education.
A report from the World Bank in May highlighted that according to its Human Capital Index, a child born today in the Gulf Cooperation Council region is expected to reach only 62 percent of their full potential productivity, mainly held back by low education quality
Speaking to Arab News, Safaa El-Tayeb El-Kogali, World Bank country director for the GCC: “Improving the quality of education is critical for fostering long-term economic growth and prosperity in the GCC.”
GCC countries are currently undergoing a significant transformation, driven by the need to diversify their economies in response to rapid technological advancements and escalating regional and global challenges.
This dynamic environment necessitates economies that are diversified and resilient, where knowledge and skills play a critical role, and El-Kogali said: “Quality education is critical for GCC countries in reaching their ambitious development goals.”
In recent years, governments across the region have made notable strides in expanding access to schooling and improving student learning outcomes. However, foundational literacy and numeracy skills still elude many students in the region, posing a major obstacle to human capital development and global competitiveness.
El-Kogali highlighted the importance of early investments in quality learning, saying: “Realizing the full potential of human capital in GCC countries requires smart and early investments in the quality of learning that children receive.”
Building solid foundational skills from an early age is crucial as they form the cornerstone of future learning and skills acquisition. Without this, children risk falling behind, becoming disengaged from school, and failing to acquire the advanced skills demanded by today’s labor market.
Effective teaching is pivotal in enhancing learning outcomes at all levels, making it essential to provide educators with the right knowledge and support mechanisms.
“Education contributes to long-term development and prosperity by improving people’s well-being and labor market prospects, leading to better employment opportunities and higher wages,” added El-Kogali.
Education also boosts individual productivity, propelling economic growth and building resilient economies that can adapt to a constantly changing environment.
The potential of education to spur economic growth is only achieved when it is of good quality and improves relevant skills and knowledge.
Increasing access to education is vital, but it is ultimately the skills people develop through high-quality education that determine its contribution to economic growth.
In a study conducted by El Mostafa Bentour for the Arab Monetary Fund in 2020, the contribution of human capital to GDP growth in 12 Arab countries was compared to Asian and OECD developed countries.
It found that Arab countries fell short, especially when compared to OECD economies, where a 1 percentage point increase in human capital leads to a 0.9 percentage point increase in GDP.
In contrast, the Arab world sees only a 0.5 percentage point increase, while Asian countries see a 0.6 percentage point increase.
A 2008 research paper published in Journal of Economic Literature also found that a 100-point improvement in standardized test scores is associated with a GDP increase of up to 2 percentage points.
Academics Gabriel Heller-Sahlgren and Henrik Jordahl further extended this analysis to 2016, revealing a 1.3 percentage point increase in GDP per capita for each 100-point improvement in test scores.
The role of private education
The GCC K-12 private education market is experiencing significant growth, driven by population increases, rising income levels, government initiatives, and a growing expatriate population.
Increased awareness of the importance of primary education and the need for high-quality options are key drivers of this growth.
Mansoor Ahmed, executive director for healthcare and education at Colliers in the MENA region, told Arab News: “Government initiatives such as Saudi Vision 2030 aim to enhance the quality and accessibility of education.”
Despite these positive trends, the market faces challenges such as high construction costs and the affordability of tuition fees, which limit accessibility for lower-income families.
However, opportunities for growth abound through technological advancements, partnerships with international institutions, and the development of specialized education programs in areas such as science, technology, engineering, and mathematics as well as artistic endeavors.
Mansoor Ahmed, executive director for healthcare and education at Colliers in the MENA region, told Arab News: “The GCC K-12 private education market presents a lucrative opportunity for investors, educators, and stakeholders aiming to capitalize on the region’s growing demand for high-quality education.”
Saudi Arabia’s educational landscape
Among the GCC nations, Saudi Arabia stands out due to its size and demographic trends. The Kingdom, with a population of 32.2 million in 2022, has a higher proportion of nationals compared to expatriates. This demographic reality suggests that K-12 education operators should focus primarily on Saudi nationals to attract sustainable demand, a Colliers report told.
Despite vast resources and investments, Saudi Arabia has the lowest total student penetration rates in the region for private sector K-12 education, with only 15 percent attending such institutions.
Saudi Arabia’s private education sector holds significant potential for growth, particularly by targeting the Kingdom’s nationals. The growing population and young demographics underscore the need for additional schools, with projections indicating that the school-going population will increase from 7.5 million to almost 9.4 million by 2030.
Opportunities are particularly on offer in second-tier cities such as Makkah, Madinah, and Al-Ahsa, as well as Abha, and Taif.
These cities currently lack high-quality private schools but are undergoing major expansion plans, creating increased demand for K-12 education.
The rise in white-collar expatriate populations and the opening of international branded schools in main cities are expected to drive the growth for private education.
Affordability remains a crucial factor, with average tuition fees in the GCC region and Saudi Arabia ranging from $10,000 to $30,000 per annum.
According to Ahmed: “The sweet spot for international private schools would range between $15,000 to $20,000 per annum.”
The transformation of education in the GCC is paramount for unlocking the region’s economic potential.
By focusing on quality education, the region can build a skilled workforce capable of driving long-term economic growth and prosperity.
This strategic investment in human capital is essential for the region to navigate the challenges of a rapidly changing global economy and to achieve its ambitious development goals.
Startup Wrap – Saudi ecosystem flourishes with funding and acquisitions
Updated 07 September 2024
Nour El-Shaeri
RIYADH: Saudi Arabia’s startup ecosystem continues to gain momentum, with multiple companies across diverse sectors securing significant funding.
From fintech to auto tech, these startups are attracting substantial investments, reflecting the growing confidence in the Kingdom’s entrepreneurial landscape.
One such company to pick up investment is Saudi Arabia-based autotech Syarah, which secured $60 million in a series C funding round led by Artal Capital, with participation from Elm, Impact46, Tawuniya, and Derayah Ventures.
This latest round brings the company’s total investment to more than $82 million.
Syarah was founded in 2015 by Salah Sharef and Fayez Al-Anazi. (Supplied)
Founded in 2015 by Salah Sharef and Fayez Al-Anazi, Syarah enables customers to purchase new and used cars online and have them delivered to their doorstep.
The company’s platform also offers used cars with a free inspection report, a five-day return policy, and a one-year warranty.
The funds will be used to drive Syarah’s continued expansion and growth in the Saudi automotive market.
Saudi fintech Malaa secures $17.3 million in Series A
Saudi fintech Malaa has closed a $17.3 million Series A round, led by SNB Capital, with additional support from Derayah Financial, Khwarizmi Ventures, Impact46, and WKN.
Established in 2021 by Ali Al-Oraini and Faisal Al-Qarni, Malaa provides a wealth management platform designed to help users make informed financial decisions through data-driven solutions.
The company plans to leverage the new funding to introduce a range of investment and savings products, enhancing its financial services offerings. Malaa previously raised $1.7 million in a seed round in 2022.
Saudi-based Thakaa Med secures seed funding for AI healthtech solutions
Saudi Arabia-based healthtech startup Thakaa Med has raised an undisclosed amount in seed funding from the Falak Angels syndicate.
Founded in 2022 by Al-Waleed Al-Badr, Thakaa Med specializes in AI-driven health care technologies aimed at providing predictive, preventive, and personalized medical solutions.
The funds will support the development of the company’s AI models and the market launch of its core products, Dental IQ and Chest IQ, which aim to revolutionize diagnostic capabilities in health care.
Tabby acquires digital wallet Tweeq
Saudi Arabia-based buy now pay later fintech Tabby has finalized its acquisition of Tweeq, a digital wallet licensed by the Saudi Central Bank.
Founded in 2019 by Hosam Arab, Tabby handles over $6 billion in annual transaction volume.
Tweeq, launched in 2020 by Saeed Albuhairi and Abdulaziz Almalki, offers a digital spending account that allows users to manage their finances efficiently.
The acquisition enables Tabby to expand its financial product suite by adding digital wallets, spending accounts, and money management tools. Tabby closed a $200 million Series D round in November 2023, crossing a $1.5 billion valuation.
Speaking to Arab News, Arab explained that the acquisition will open an array of services that tap into customer needs.
“We have really grown and seen extremely strong demand and appetite from the consumer for what we have offered. But we believe that the consumer needs are a lot broader and a lot wider,” he said.
“Tweeq’s acquisition really helps us to make the next step in our journey of starting to offer more than just a buy now, pay later solution and really getting into the financial needs of our everyday consumer,” Arab added.
Tarabut strengthens position with Vyne acquisition
Open banking platform Tarabut has acquired London-based fintech Vyne to expand its global reach.
Founded in Bahrain in 2019 by Abdulla Al-Moayed, Tarabut connects banks and fintechs through a universal application programming interface.
Vyne, established in 2019, offers real-time account-to-account payments for businesses. The acquisition will enhance Tarabut’s ability to deliver faster and more interconnected financial services across the region.
Earlier in 2023, Tarabut raised $32 million in a Series A round led by Pinnacle Capital.
In an interview with Arab News, Al-Moayed highlighted the reasons behind the acquisition.
“Vyne’s account-to-account payment technology brings a level of depth and efficiency to the region that’s unmatched by anything currently available,” he said.
“By enabling faster transactions and offering a comprehensive tech stack, we’re not just speeding up payments — we’re adding significant value with features like seamless reconciliation. This will make payments not only quicker but also more cost-effective, setting a new standard in the financial services sector across the Middle East, especially in Saudi Arabia,” he added.
Wattnow closes multi-million dollar funding round
Tunisia-based clean tech Wattnow has completed a multi-million dollar funding round, led by Lateral Frontiers and 216 Capital.
Other investors include Outlierz Ventures, Satgana, Octerra Capital, and strategic angels such as Karim Beguir, founder of InstaDeep, and Guillaume Amblard.
Founded in 2018 by Issam Smaali, Wattnow helps businesses optimize their energy usage through a combination of hardware and software solutions.
The fresh capital will support Wattnow’s global expansion and enhance its technology offering. The firm raised $1.3 million in a pre-series A round in 2022.
Cercli raises $4 million in seed funding
UAE-based HR tech Cercli has raised $4 million in a seed round led by Silicon Valley’s Afore Capital, with additional participation from COTU Ventures, Y Combinator, and Rebel Fund.
The round also included notable angels such as Karim Atiyeh, Sebastian Mejia, and Tony Jamous.
Founded in 2023 by Akeed Azmi and David Reche, Cercli offers businesses tools to reduce human error and compliance costs across different markets. (Supplied)
Founded in 2023 by Akeed Azmi and David Reche, Cercli offers businesses tools to reduce human error and compliance costs across different markets. The new funding will support the company’s growth and help attract top-tier talent.
This round marks Afore Capital’s debut in the Middle East and North Africa as it aims to tap into the region’s hidden potential.
Ziina closes $22 million series A
UAE-based fintech Ziina has raised $22 million in a series A round led by Altos Ventures, alongside Fintech Collective, Avenir Growth, and Activant Capital.
Founded in 2020 by Faisal Toukan and Sarah Toukan, Ziina allows users to send and receive payments via phone number, without the need for IBAN or Swift codes.
The funding will support the company’s plans to evolve from a payments platform into a full-suite financial services provider for both consumers and businesses, starting with the introduction of its new ZiiCard.
Hulexo secures seed investment for ERP expansion
UAE-based enterprise resource planning provider Hulexo has raised an undisclosed seed round from Arzan VC.
Launched in 2021, the firm provides customized ERP solutions to retailers, helping them streamline their operations through subscription-based services.
The investment will fund Hulexo’s expansion into the Kuwaiti and Saudi markets.
Verofax secures $3 million bridge round
UAE-based Web3 services provider Verofax has raised $3 million in a bridge round led by King Abdullah University for Science and Technology, Plug & Play Tech Center, Navig8 Group, and Trove Capital UK.
Verofax, founded in 2018 by Wassim Merheby and Jamil Zablah, uses Web3 technologies such as augmented reality, blockchain, and AI to enhance user experiences in tourism, retail, and brand marketing.
The funding will support Verofax’s expansion in the Middle East and Europe, including projects involving AI-powered guides for tourists and sports fans.
