Saudi Arabia and Azerbaijan explore joint sovereign investment fund to boost bilateral economic ties
Updated 01 October 2024
MANAL AL-BARAKATI
RIYADH: Azerbaijan has proposed the creation of a joint sovereign investment fund with Saudi Arabia, aiming to enhance investments in key sectors and potential third-party markets.
The initiative was discussed during a meeting in Azerbaijan between the country’s Minister of Economy, Mikayil Jabbarov, and Hassan Al-Huwaizi, chairman of the Federation of Saudi Chambers, who led a business delegation from the Kingdom to explore investment opportunities in the nation.
The minister highlighted that the proposed fund could drive investments in priority sectors such as energy, tourism, and infrastructure, crucial for both economies’ diversification agendas, the Saudi Press Agency reported.
Saudi companies are already significantly involved in Azerbaijan, reflecting strong economic ties between the two countries.
Jabbarov emphasized the presence of major corporations such as Aramco, SABIC, and ACWA Power in Azerbaijan, highlighting the country’s appeal as an investment destination, according to the report.
In addition to the establishment of the fund, discussions focused on the broader spectrum of Saudi investments in Azerbaijan, with key areas identified, including petroleum, renewable energy, and industry, as well as tourism, agriculture, and mining.
Both sides acknowledged the necessity of signing an investment protection agreement to ensure a secure environment for investors, safeguarding the flow of capital between the nations.
Al-Huwaizi stressed the importance of this document, highlighting that legal and financial security is pivotal for attracting more Saudi investments into Azerbaijan.
He also discussed the potential for Azerbaijani companies to engage in infrastructure projects within the Kingdom, as well as opportunities to export food products to Saudi Arabia.
The Federation of Saudi Chambers further expressed support for a proposal to hold a regional exhibition showcasing regional products in Azerbaijan, further solidifying trade relations between the two regions.
The visit coincided with the second edition of the Gulf Cooperation Council-Azerbaijan Economic Forum, held in Baku, which focused on fostering sustainability, investments, and partnerships between nations.
Organized by the Federation of GCC Chambers in collaboration with Azerbaijan’s Export and Investment Promotion Agency, the forum provided a platform for businesses to explore new investment opportunities and strengthen ties.
A memorandum of understanding was signed during the event, facilitating cooperation on investment projects and trade promotion between the GCC and Azerbaijan.
Azerbaijan’s Minister of Finance, Samir Sharifov, also met with the Kingdom’s delegation, offering attractive incentives to Saudi investors.
Sharifov outlined key benefits, such as the allocation of free land for manufacturing projects and assurances of smooth capital flows, backed by the stability of the Azerbaijani currency. These incentives aim to make Azerbaijan’s free economic zones more appealing to Saudi investors.
The recent developments underscore the growing economic cooperation between the Kingdom and Azerbaijan, driven by mutual interests in expanding sectors such as energy, infrastructure, and tourism.
Both nations view this collaboration as a strategic step toward diversifying their economies and boosting bilateral trade.
BAKU: The highly anticipated COP29 UN climate change conference opens on Monday in Baku, Azerbaijan, bringing together world leaders, experts, and activists to tackle the urgent environmental challenges facing the planet.
Running through Nov. 22, this year’s event is centered around the theme “In Solidarity for a Green World.”
With over 50,000 participants expected, including top industry leaders and policymakers, COP29 aims to drive global climate action. However, several key leaders — EU President Ursula von der Leyen, US President Joe Biden, and Brazil’s President Luiz Inacio Lula da Silva—will be notably absent, according to Reuters.
COP29 has a special focus on climate finance, as parties aim to set a New Collective Quantified Goal on funding.
Expectations are high as delegates prepare to discuss topics including carbon emissions reduction, sustainable development, and the integration of climate resilience into national policies.
Azerbaijan is a significant producer of fossil fuels, just as last year’s host the UAE, but COP29 President-Designate Mukhtar Babayev told Arab News recently that hosting the conference is a sign of change.
“Like Saudi Arabia, Azerbaijan has historically been a significant energy producer, particularly in oil and gas. Hosting COP29 signifies our shift from traditional energy sources to embracing renewable energy solutions,” he said.
“This event will allow us to showcase our ongoing efforts to diversify our energy mix, investing heavily in wind, solar, and hydrogen energy projects,” he added.
The conference aims to deliver support for urgent action and foster a sense of shared responsibility between international organizations.
Babayev highlighted Azerbaijan’s role in coordinating global efforts. “We hope that COP29 in Azerbaijan will serve as a platform for developing nations to voice their unique climate challenges and solutions.
“As a country that has faced environmental and economic transformation, Azerbaijan understands the delicate balance between development needs and climate responsibility,” he said.
He added: “We can facilitate inclusive dialogues between the Global South and developed nations to ensure that climate action is equitable and just.”
Commenting on the country’s preparations for the influx of visitors, Babayev said: “In terms of logistics and to ensure Baku is ready to host thousands of delegates from across the globe, we have been investing in the city’s infrastructure, with a strong emphasis on sustainability.”
Moreover, investments are being made in expanding green public transportation options, enhancing conference facilities, and optimizing urban mobility to minimize environmental impact during the event, he stated.
“Additionally, we are committed to achieving a green COP by integrating renewable energy into the event’s operations and aiming for a zero-waste policy throughout the conference,” said Babayev.
Some of its established environmental protection initiatives, according to Babayev, include reforesting degraded areas and protecting the Caspian Sea.
“COP29 will spotlight these initiatives and encourage international collaboration to replicate them.”
Although the path ahead is challenging, COP29 represents a crucial opportunity to turn ambition into tangible results for generations to come.
“We are prepared to lead, innovate, and foster the international cooperation needed to tackle the climate crisis and build a more sustainable future for all,” said Babayev.
Egypt’s monthly inflation eases to 1.5% in October
Updated 50 min 51 sec ago
NOUR EL-SHAERI
RIYADH: Lower food prices helped ease Egypt’s inflation rate in October to 1.5 percent, down from 2.3 percent in September, according to official data.
The Central Agency for Public Mobilization and Statistics said that the general consumer price index reached 240 points last month, reflecting the modest decline in inflationary pressures.
The easing was primarily driven by a 2.1 percent decrease in fruit prices and a 0.4 percent decline in vegetable and hotel services prices, which helped mitigate cost increases in other sectors.
While some categories saw price reductions, others continued to exert upward pressure. Meat and poultry prices surged 3.3 percent, while fish and seafood prices climbed 2.1 percent.
Dairy products, including cheese and eggs, rose by 2 percent, while sugar, tea, and cocoa recorded a 1.2 percent increase. Bottled water and natural juices increased by 1.1 percent, and cereal and bread prices rose by 0.8 percent.
Energy costs remained a key factor, with a 7.2 percent increase in electricity, gas, and fuel prices. Housing maintenance expenses rose by 1.5 percent, while rent increased by 0.7 percent.
Medical services also contributed to the inflationary trend, with outpatient services up 2.4 percent and hospital services increasing by 1.7 percent.
On an annual basis, Egypt’s inflation rate dropped to 26.3 percent in October, a sharp decline from the 38.5 percent reported in the same month of the previous year, signaling a cooling trend in price pressures.
Biban 24 concludes with $9bn in deals, boosting Saudi Arabia’s SME sector
Updated 10 November 2024
MIGUEL HADCHITY
RIYADH: Agreements exceeding SR35.4 billion ($9.42 billion) were signed at Biban 24 in Riyadh, an event organized by the General Authority for Small and Medium Enterprises, also known as Monsha’at
The five-day event, themed “A Global Destination for Opportunities,” attracted over 182,000 visitors, reflecting the Kingdom’s rapid development in the SME sector and entrepreneurship, the Saudi Press Agency reported.
According to Monsha’at Gov. Sami bin Ibrahim Al-Husseini, Biban 24 marked a landmark achievement for Saudi Arabia’s entrepreneurial framework. He highlighted the forum’s record-setting agreements and innovative initiatives, strengthening entrepreneurship within the country.
Al-Husseini emphasized that these achievements align with Vision 2030’s objectives to boost the SME sector’s contribution to the national gross domestic product.
“The forum’s success is a testament to the commitment of public and private sector enablers, partners, and sponsors to support SMEs and empower entrepreneurs to launch and grow their ventures,” he said.
Biban 24 featured partnerships with prominent international organizations, including the Estonian Business and Innovation Agency, Bahrain’s Tamkeen Labor Fund, and the Korea Franchise Association, as well as Malaysian SMEs, Korea’s Ministry of SMEs and Startups, Malaysian Franchise Development, Miltton CIO World, Alibaba Cloud, Zoom, and Oracle.
Several financing agreements were signed with local banks, amounting to over SR15 billion to support Saudi entrepreneurs and SMEs.
The event drew a global crowd of business owners and featured over 300 panels and workshops with over 250 international and local speakers.
The e-commerce section included 59 service providers and enablers, showcasing emerging technologies, modern retail, and e-commerce solutions. Specialists provided guidance on digital payments, online marketplaces, and supply chains throughout the forum.
Biban Talks, a dedicated stage, hosted over 100 speakers covering diverse topics such as media, tourism, and the environment, as well as education, sports, finance, investment, and the non-profit and financial sectors.
This interactive platform enabled entrepreneurs to share success stories and discuss the challenges they encountered.
In the Investor Arena, over 115 business owners showcased their projects to potential investors, resulting in preliminary agreements for deals with 65 companies, totaling over SR15 million.
The event also welcomed more than 1,350 startups from 72 countries worldwide.
Biban 24 celebrated the graduation of 12 startups from its Real Estate Innovation Accelerator, while also launching a virtual lab to support business owners.
The event brought together over 70 local and international incubators and accelerators to showcase projects and share success stories. The forum also promoted collaboration between entrepreneurs and investors, aiming to build a robust entrepreneurial environment that fosters innovation and economic growth in Saudi Arabia.
Asrar Al-Omiri, CEO of “A’akelha Incubator,” said that Biban 24 was an essential platform for startup hubs and accelerators to spotlight their supported projects.
She added that A’akelha’s participation through the “360 Platform” virtual incubator aimed to showcase success stories and assist projects in expanding through investment rounds.
Al-Omiri highlighted the launchpad’s commitment to attracting entrepreneurs and offering an ideal environment for transforming ideas into scalable businesses.
Ghassan Halawa, founder and CEO of Parachute16, affirmed that Biban 24 is the leading event focused on high-growth startups and entrepreneurship.
Halawa underscored the extensive local and international participation, which allows business incubators to showcase projects and directly engage with investors and key players in the entrepreneurial space.
Lama Ghalayini, business development specialist at VentureTactics Fund, described Biban 24 as a valuable opportunity for fintech startups to enhance their investment prospects.
She said the forum provides a crucial platform for entrepreneurs to understand the fund’s role in enabling startups to overcome financing challenges through innovative solutions that foster their market growth.
Saudi Arabia’s industrial production holds steady in September: GASTAT
The manufacture of chemicals and chemical products grew by 2 percent, while food product manufacturing saw a 12.3 percent increase
GASTAT revealed that the sub-index for mining and quarrying activity remained stable in September
Updated 10 November 2024
Nirmal Narayanan
RIYADH: Saudi Arabia’s industrial production held steady in September, showing a slight year-on-year decrease of 0.3 percent due to a modest decline in manufacturing output, official data showed.
According to data from the General Authority for Statistics, the Kingdom’s manufacturing sector decreased by 0.5 percent in September, bringing the Industrial Production Index to 105.6 points. This decrease was largely attributed to a 12.3 percent drop in the production of coke and refined petroleum products.
In contrast, the manufacture of chemicals and chemical products grew by 2 percent, while food product manufacturing saw a 12.3 percent increase.
Saudi Arabia’s growth in the manufacturing sector is crucial to achieving the goals outlined in Vision 2030, as the Kingdom continues to diversify its economy and reduce its dependence on crude revenues.
GASTAT revealed that the sub-index for mining and quarrying activity remained stable in September compared to the same month in 2023.
“Oil production level in Saudi Arabia reached 8.97 million barrels per day in September 2024, which is the same level recorded in the previous year,” said GASTAT.
In a bid to maintain market stability, Saudi Arabia, in alignment with the decision of OPEC+, reduced its oil output by 500,000 barrels per day in April 2023. This cut has now been extended until December 2024.
IPI is an economic indicator that reflects the relative changes in the volume of industrial output and is calculated based on the industrial production survey.
According to the report, the sub-index for electricity, gas, steam, and air conditioning supply activity recorded a 4.9 percent annual decrease in September, while the sub-index for water supply, sewerage, and waste management activities increased by 2.5 percent during the same period.
The authority revealed that the index for oil activities decreased by 2.5 percent in September compared to the same month the previous year.
On a positive note, the index for non-oil activities increased by 5 percent year on year in September, supported by growth in all non-oil economic activities except for electricity, gas, steam, and air conditioning supply.
Compared to August, Saudi Arabia’s IPI decreased by 1.2 percent.
The Kingdom’s sub-index for mining and quarrying activity decreased by 0.2 percent in September compared to the previous month, while manufacturing activities saw a decline of 2.6 percent.
Month-on-month, the index for oil activities decreased by 1.6 percent, and the index for non-oil activities declined by 0.3 percent.
Saudi startup boom creates ‘entrepreneurial bridge’ with Egypt
Updated 10 November 2024
Nour El-Shaeri
RIYADH: Saudi Arabia’s thriving startup ecosystem has created an entrepreneurial bridge with neighboring countries, attracting a growing number of founders to the nation.
This trend is particularly pronounced among Egyptian tech entrepreneurs, drawn by market potential, government initiatives, and abundant funding opportunities.
The Saudi market, characterized by its large size and high consumer purchasing power, presents lucrative opportunities for tech startups.
Additionally, Vision 2030 and various entrepreneurship support programs have fostered a stimulating environment for innovation.
“Saudi Arabia’s government initiatives and funding opportunities are major attractors for Egyptian tech entrepreneurs,” Motaz Abuonq, CEO and founder of Value Makers Studio, told Arab News.
VMS is a Saudi-based venture studio that supports Egyptian and regional startups with funding opportunities and consulting to boost their entry into the Kingdom.
The entrepreneurial bridge
Abuonq explained that Egyptian entrepreneurs benefit from Saudi Arabia’s advanced infrastructure, simplified regulations, and substantial financial backing from entities such as Saudi Venture Capital Co. These resources provide a robust foundation for startup growth.
“The regulatory environment is being streamlined to attract foreign investment, making it easier for businesses to establish and operate,” Abuonq added.
Motaz Abuonq, CEO and founder of Value Makers Studio. (Supplied)
Extensive funding opportunities are available from both private and public sectors, with many investors leaning toward innovative tech solutions, he added.
Saudi entrepreneurs find Egypt appealing due to its skilled workforce, cost efficiency, and strategic location, Abuonq explained.
Egypt’s position as a gateway to African and Middle Eastern markets and its thriving entrepreneurial community in Cairo enhances its attractiveness.
“Egypt offers a large pool of educated tech professionals and relatively lower operating costs, which are significant advantages for Saudi startups,” noted Abuonq.
Mohammed Al-Zubi, founder and managing partner of Saudi-based VC Nama Ventures, echoed Abuonq’s sentiment about Egypt’s large talent.
In an interview with Arab News, Al-Zubi explains that Nama is interested in investing in Egyptian startups due to the size of the market and the vast talent pool.
Mohammed Al-Zubi, founder and managing partner of Saudi-based VC Nama Ventures. (Supplied)
“Egypt is the biggest country in the Arab world in terms of population, and Egyptians are leaders in terms of tech talent and their price per value factor,” he said.
Abuonq further explained that the advanced entrepreneurial community in Cairo, with numerous incubators and accelerators, supports startups and fosters a collaborative environment.
“Cultural and historical ties, including a shared language and similar customs, further ease business operations and collaboration between the two countries,” he added.
Abuonq explained that despite many similarities, the two nations also share differences.
“Saudi Arabia’s decision-making process tends to be more conservative and time-consuming due to multiple approval layers, while Egypt’s regulatory environment, although stable, includes bureaucratic challenges,” Abuonq stated.
“Saudi Arabia is reforming its business laws to attract foreign investment, but navigating these changes can be complex,” he added.
Conversely, Egypt’s regulatory environment may be more stable, but it will also face bureaucratic hurdles.
Intellectual property protection is another differentiator, with Saudi Arabia enhancing its laws under Vision 2030, providing better safeguards for technological innovations compared to Egypt, Abuonq explained.
Nama Ventures has successfully navigated the cultural and regulatory differences between the two countries, facilitating seamless investments in Egyptian startups.
“In terms of Nama, we have been able to seamlessly invest in Egyptian startups just as we do with Saudi startups, in terms of investing using standard investment instruments at the holding level and then having these holding companies own the operating companies in Egypt almost 100 percent,” Al-Zubi said.
Glowing case studies
Success stories exemplify the potential for cross-border entrepreneurship.
“Egyptian startup EYouth has become a notable educational partner for Saudi institutions, while Saudi companies like Mrsool and Foodics have successfully penetrated the Egyptian market, capturing significant market shares and becoming well-known brands,” Abuonq said.
These examples highlight the unique opportunities each market offers. In Saudi Arabia, large projects such as NEOM and Red Sea Global create avenues for AI, renewable energy, and smart city solutions, he added.
Egypt, with its youthful population and numerous innovation hubs, is a fertile ground for new technologies.
“A large segment of young people in Egypt are ready to adopt new technologies, and numerous innovation centers and business incubators support startup growth,” Abuonq said.
Success stories, such as Egyptian last-mile company ShipBlu, demonstrate the potential for cross-border entrepreneurship. Al-Zubi highlighted ShipBlu as an example of a great bet by Nama Ventures, attributing its success to the complementary nature of its leadership team.
Several startups have announced plans to expand to the Saudi market this year with the latest being Egypt’s e-commerce marketplace Kemitt.
In February, Egyptian fintech Khazna also announced its plans to enter the Saudi market through a partnership with Khwarizmi Ventures.
Two months later, Egyptian group-buying startup Waffarha secured a seven-figure seed round from VMS, enabling it to initiate its plans to expand to the Saudi market.
Egypt’s artificial intelligence firm Intella has also seen significant growth in the Kingdom, enough to relocate its headquarters to Saudi Arabia.
In an interview with Arab News last year, Nour Taher, CEO of Intella, said that the Kingdom is becoming a hub for tech companies.
“Saudi Arabia is currently our largest market with 70 percent of our business coming from there. We have just taken the decision to relocate our HQ there to better serve our existing clients and further expand our business. We are also inspired and aligned with Saudi Arabia’s Vision 2030,” she said.
Crossing the bridge
To address expansion challenges, thorough market research, regulatory compliance, and cultural adaptation are essential.
Abuonq emphasized the importance of building partnerships and hiring local consultants to navigate regulations.
“Understanding local consumer behavior and adapting business strategies to align with cultural differences are crucial for success,” he advised.
Building partnerships with local companies can facilitate market entry while hiring local legal and business consultants can help navigate regulations and ensure compliance with the law, he explained.
Enhancing partnerships between the Saudi and Egyptian tech ecosystems requires strategic initiatives such as bilateral trade agreements, transnational incubators, and joint ventures, as well as cultural exchange programs and joint innovation platforms.
“Governments and organizations should facilitate cross-border operations and create platforms for startups to collaborate and share technological advancements,” Abuonq suggested.
He added that joint ventures and partnerships between companies from both countries can leverage strengths and market insights, and cultural exchange programs can promote understanding and collaboration among entrepreneurs and tech professionals.
In his experience assisting Egyptian tech entrepreneurs in Saudi Arabia, Abuonq identified regulatory navigation, market adaptation, and cultural sensitivity as primary challenges.
Helping startups understand and comply with complex and evolving regulations in Saudi Arabia is crucial, as is assisting them in adapting their products and services to meet local market needs and consumer behavior.
“Ensuring startups are culturally sensitive and adaptable in their business practices is another significant challenge,” he noted.
For Al-Zubi, fostering stronger partnerships between the Saudi and Egyptian tech sector involves enhancing exposure to each country’s entrepreneurial landscape.
“Any effort that strengthens exposure to each ecosystem’s startups is a positive effort in our opinion,” he stated, aligning with the strategic initiatives suggested by Abuonq.
Addressing the challenges and opportunities in assisting Egyptian startups expanding into Saudi Arabia, Al-Zubi emphasized the importance of a strong foundation.
“I would highly encourage Egyptian startups to scale to Saudi from a position of strength, not weakness,” he advised.
He further stressed the need for these startups to demonstrate success in their native market and ensure that their business models are functioning in a healthy fashion before considering expansion into Saudi Arabia. “It should be a market expansion strategy and not a migration play,” Al-Zubi added.
