Saudi Arabia’s PIF unveils three initiatives to boost private sector growth

Saudi Arabia’s Public Investment Fund (PIF) has unveiled three new initiatives aimed at supporting and augmenting growth in the kingdom’s private sector.

Private sector initiatives

The local content growth programme, musahama, aims to increase the share of local content spending in PIF’s domestic portfolio to 60 per cent by the end of 2025. Under the initiative, each PIF company will embed local content considerations in their design decisions and procurement policies.

PIF said its suppliers development strategy is geared towards supporting the development and upskilling of local suppliers and vendors to meet the growing requirements of the fund portfolio companies. The wealth fund will hold vendor boot camps this year for the contracting sector to help tier 2 and tier 3 contractors prepare their companies to qualify as vendors.

The last initiative, the private sector hub, offers a dedicated platform to share supplier and investment opportunities with the private sector. The hub is now live and contains more than 100 opportunities and will be continuously enhanced and updated.

“Both of these programmes will ensure that PIF and its portfolio companies embed local content considerations in our activities and operations which will contribute directly towards developing local industries and building long-term supplier and vendor partnerships, thereby strengthening local capabilities, enhancing the competitiveness of local players, improving supply chain resilience, and stimulating innovation in the Saudi economy,” said Jerry Todd, head of the National Development Division at PIF.

The three new initiatives align with the fund’s aim to increase its contribution to local content to 60 per cent by 2025, support the private sector in increasing its contribution to GDP by up to 65 per cent by 2030, create job opportunities, localise technology and drive the transfer of technology and knowledge in Saudi Arabia.

At the inaugural #PIF_PrivateSectorForum, #PIF announced a suite of new initiatives dedicated to supporting and enabling the Saudi private sector and boosting local content growth.

— Public Investment Fund (@PIF_en) March 14, 2023

PIF launched the initiatives at its inaugural two-day private sector forum that kicked off in Riyadh today. The forum is being attended by PIF executives, ministers, senior government officials and representatives from 50 PIF portfolio companies as well as more than 4,000 private sector participants.

The International Monetary Fund said last November that PIF should continue to focus on high returns and greater private sector involvement, including as it continues to implement “giga projects”.

Driving sustainable growth

Meanwhile, PIF is central to Saudi Arabia’s economic reform initiative as it looks to wean off its heavy reliance on oil revenues under Vision 2030. The kingdom has undergone a breakneck transformation over the years as the wealth fund is snapping up sports teams and electric carmakers and funding new cities in a bid to amass as much as $3tn in assets by 2030.

Read: Saudi Arabia’s 2022 GDP grows 8.7 per cent, boosted by higher oil prices

In other news, the wealth fund unveiled Riyadh Air, Saudi Arabia’s new national airline, earlier this week. Riyadh Air, which is wholly owned by the fund is expected to add $20bn to the Gulf state’s non-oil GDP growth and create more than 200,000 jobs both directly and indirectly. The new airline placed an order for 39 Boeing 787 Dreamliners, with options for 33 more, as it seeks to serve more than 100 destinations around the world by 2030.

Read: Riyadh Air starts to build fleet, orders Boeing 787-9 Dreamliners

The wealth fund owns stakes in tech companies including ride-hailing firm Uber Technologies, soccer teams including English Premier League’s Newcastle United, electric carmakers Lucid and Ceer and is funding a host of new cities in the desert such as the $500bn futuristic NEOM City and the Red Sea Development Company’s mega tourism project.