Kingdom Come

Following its decision to commit $45 billion into SoftBank’s Vision Fund, why has Saudi Arabia’s government felt the need to make such a huge investment in technology? Why is this investment being directed externally, and does it actually satisfy the country’s aims of delivering its Vision 2030 goals?

It seems that Saudi Arabia’s pledge to make technology a key pillar of Vision 2030 was far from hollow. The country’s Public Investment Fund (PIF) – the world’s largest sovereign wealth fund – has committed a whopping $45 billion investment into Softbank’s recently launched $93 billion Vision Fund, which has become the world’s largest technology investment vehicle.

In some ways, the move asks more questions than it answers. A key pillar of Saudi Arabia’s Vision 2030 – launched in April 2016 by Crown Prince Mohammad bin Salman – was to slash public spending in the wake of a $100 billion deficit in 2015. Nonetheless, it now finds itself pouring almost half that sum into an international technology fund.

Back on home soil, meanwhile, it has almost been forgotten that telecoms giant STC has pledged to set up a self-financed $500 million venture capital fund to invest in homegrown tech start-ups. Last December, STC also committed to purchasing a 10 percent stake – worth $100 million – in car booking firm Careem.

As part of its wide-ranging economic diversification plan, Saudi Arabia is trying to promote SMEs, and to expand its industrial base. Developing “a sophisticated” digital infrastructure has also been identified as a critical area in supporting this growth. Among the government’s other main technology-related aims were partnering with the private sector to develop IT infrastructure, and supporting local investments in technology.

In spite of its status as the region’s largest market, the Kingdom has often played second fiddle to the UAE when it comes to technology, both in terms of how it has been prioritised at a government level, as well as the world’s blue chip tech firms’ preference to establish regional headquarters in Dubai.