Oxford Business Group - South Africa Report 2012 - Part 2

7/31/2019 Oxford Business Group - South Africa Report 2012 - Part 2

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13

Country ProfileYoung and rapidly growing population of 27.1m

Central role in Islam as home to the Holy CitiesOil reserves comprise around one-fourth of global total

At 2.15m sq km, the worlds ninth-largest country


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COUNTRY PROFILE

At 2.15m sq km, Saudi Arabia is the worlds ninth-largest country

The Al Saud family, which reigns over Saudi Arabia, has

held intermittent control over the Arabian Peninsula

since the mid-1700s. It was around this time that the

head of the family, Muhammad ibn Saud, joined forces

with Muhammad ibn Abd Al Wahhab, a religious

reformer, leading to the rise of the Wahhabi move-

ment in Arabia. By the middle of the 19th century, the

Al Saud family had gained control of the majority of

modern-day Saudi Arabia, but was faced with the lin-

gering threat of Ottoman forces stationed throughout

the region. The Ottoman army managed to regain con-

trol of substantial portions of the country in 1891,

when rising tensions ultimately led Al Saud family to seek

refuge in Kuwait. The tables started to turn back in ear-

ly 1902 when, on January 15th, a young member of the

royal family, Abdulaziz Al Saud, successfully staged a

series of night raids and took Riyadh. Thus began the

recapture of the familys former territory and the uni-

fication of the peninsulas diverse tribes. Three decades

later, on September 23, 1932, the modern Kingdom of

Saudi Arabia was created by Abdulaziz Al Saud.

A NEW ERA: Through political negotiations, Abdulaz-

iz Al Saud became the first king of the young country,

the third Saudi state. In 1933 he signed an oil explo-ration agreement with the Standard Oil Company of Cal-

ifornia, launching a new chapter in the history of the

nation and marking the beginning of economic suc-

cess and large-scale development for years to come.

Opening the energy sector transformed Saudi Arabia

into one of the worlds most important oil exporters.

Having been blessed with 25% of the worlds proven

oil reserves, according to the Ministry of Petroleum

and Mineral Resources, the country has used its natu-

ral assets to swiftly transform itself into a leading region-

al economy with global reach. With a GDP in 2010 of

more than $435bn according to the Saudi ArabianMonetary Agency, the Kingdom is now the largest econ-

omy in the region, a member of the increasingly influ-

ential G20, the dominant player in OPEC, a recognised

contributor to global market stabilisation through its

swing-producer status in oil and a prudent manager of

its currency reserves in the financial sector.

HOLY CITIES: The Kingdoms central role in the inter-

national Muslim community as the host of the two Holy

Cities of Makkah and Medina is paramount to the coun-

trys identity. Makkah was the birthplace of Islam 14

centuries ago, and every year the Kingdom welcomes

millions of pilgrims from every corner of the globe who

travel to the city to carry out their spiritual duties of

Hajj and Umrah the pilgrimages to Makkah. Islam is

a key part of the countrys identity abroad as well, as

millions of Muslims around the world face towards

Makkah every day during their prayers.

GROWTH: Saudi Arabias population has expanded rap-

idly, in step with the economys quick expansion over

the years. The growing population has increased the

need for the government to diversify the economy and

to create more employment opportunities for future

generations. By looking for alternative options for devel-

opment, the government is preparing for a future when

oil export earnings might not contribute as much to

GDP as they have in the past.

GOVERNMENT: Saudi Arabia is a monarchy governed

by the direct descendants of King Abdulaziz Al Saud.The nations current monarch, King Abdullah bin Abdu-

laziz Al Saud, ascended to the throne in 2005 after his

brother, King Fahd, passed away. King Abdullah was

granted regency and has been overseeing the opera-

tions of government since 1995, when the late King

Fahd suffered a stroke.

The Kingdoms political system was first codified by

King Fahd in 1992 with the Basic Law of Saudi Arabia,

which outlined the responsibilities of the government

and defined the relationship between the ruler, Saudi

citizens, and the various ministries and governing coun-

cil bodies. The king is advised by the Council of Minis-ters and the Shura Council. The Council of Ministers,

the highest governance body, has the primary legisla-

tive role, a four-year term limitation and by-laws that

govern its interaction with other consultative bodies.

14

Balancing actStriving to maintain long-standing traditions while modernising

www.oxfordbusinessgroup.com/country/Saudi Arabia


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COUNTRY PROFILE

The Shura Council, also called the National Consulta-

tive Council, is a mixture of elected and appointed cit-

izens representing a cross-section of the Saudi public.

Initially, the king appointed 100% of the Shura Coun-

cil; currently, however, the organisation is composed

of both elected and appointed representatives.

The Council of Ministers recently increased the Shu-

ra Councils responsibilities by including it in the nation-al budgeting process, granting it the ability to advise

on the allocation of public spending and question min-

isters on budgetary use. King Abdullah expanded the

Shura Councils powers to allow it to propose and draft

laws and regulations. The body also has the ability to

object to, or approve, the passage of a law. In 1993 the

council was reformed to make it more efficient and rep-

resentative of society at large. Primarily, this meant

expansion the organisation grew to 90 members in

1997, 120 members in 2001 and 150 members in 2005.

In September 2011, King Abdullah announced that

women will have the right to join the council startingin the next term. The king has final approval rights on

all new legislation, after an extensive deliberative and

consultative process in which the Shura Council, the

Council of Ministers and numerous experts engage.

In 1993 King Fahd enacted legislation that detailed

the local administration of Saudi Arabias 13 provinces.

In addition to a governor, each province has a council

made up of representatives of the local government

and 10 prominent community members who are

appointed on a four-year, renewable basis.

King Abdullah also passed a succession law to ensure

that the process by which Saudi Arabias monarch was

chosen was based on a specific law, rather than sim-

ply using the general guidelines codified in the coun-

trys Basic Law. This has resulted in increased stability

in terms of succession in the Kingdom. In October 2011,

the Crown Prince, Prince Sultan bin Abdulaziz Al Saud,

who also served as minister of defence and aviation

and deputy prime minister, passed away at the age of

85. Prince Naif bin Abdulaziz, minister of the interior

since 2009, was appointed as the new Crown Prince.

POPULATION: The most recent census in Saudi Ara-

bia was carried out in 2010 by the Central Department

of Statistics and Information (CDSI). According to results

from the survey, the Kingdoms population was estimat-ed at 27.1m. Of this number, around 70% were Saudi

nationals and 30% were foreigners a split between

local and expatriates that has remained relatively sta-

ble in recent years. The average annual population

growth rate between 2006 and 2010 is currently esti-

mated at 3.2% by the CDSI. Saudi Arabias demograph-

ics and its historically high growth rates have had a direct

impact on the countrys long-term development strat-

egy. Providing adequate and affordable housing, health

care and education at all levels for the expanding pop-

ulation remains a government priority.

Saudi is among the fastest-growing societies glob-ally. The UN estimates the population could double by

2050. The high growth rate in recent years can be

attributed primarily to remarkable improvements in liv-

ing, health and social conditions over the past 25 years.

The main population centres are the capital, Riyadh, and

the western city of Jeddah, which is the countrys com-

mercial centre. Over the past decade the Kingdoms cities

and towns have been transformed by steadily increas-

ing internal migration from rural areas.

The Kingdoms ongoing reliance on expatriate labour

is a concern, as in the long run locals need to be trained

with the skills to replace foreign workers. Continued eco-

nomic expansion, large-scale government spending on

infrastructure and the private sectors steadily increas-

ing participation in the economy have contributed to

the recruitment of a large non-Saudi workforce around

8.4m of the Kingdoms total population in 2010, accord-

ing to the CDSI. A substantial majority of the foreign

labourers currently active in the Kingdom come from

South-east Asia. In May 2011, the Ministry of Labour

announced a new employment regime entitled Nitaqat.

Private sector companies are categorised under one

of four zones based on the type of business of the

company and the percentage of Saudi nationals

employed. The programme aims to increase Saudiisa-

tion rates via various incentives and penalties based on

the companies Nitaqat categorisation.

RELIGION: Islam is the state religion, with a large major-ity of Muslims belonging to the Sunni sect and a minor-

ity of Shia followers. Religion plays an essential role in

the Kingdom. Sunni Islam is divided into four schools:

the Hanbali, Hanafi, Shafi and Maliki schools. Histori-

cally Saudi Arabia has strictly adhered to the Hanbali

school of Islam, though in early 2009 King Abdullah

changed the make-up of the influential Grand Ulema

Commission, a leading body of religious scholars, to

reflect all Sunni sects, rather than just Hanbali. The

government considers all Saudis to be Muslim; public

prayer, charity (a requirement in Islamic culture) and ful-

ly abiding by sharia law are mandatory for all Saudis.Nonetheless, the significant influx of expatriates in

recent years has brought some Christians and follow-

ers of various other religions to the Kingdom. Still, Islam

touches every feature of life in Saudi Arabia; the kings

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THE REPORT Saudi Arabia 2012

With a young and growing population, providing adequate education, housing and health care is a priority


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COUNTRY PROFILE

formal title is Custodian of the Two Holy Mosques. As

the spiritual home of Islam, the country attracts over

2.5m Muslims for the Hajj each year, and 7m pilgrims

visit throughout the year to perform the Umrah, which

can be undertaken at any time.

EDUCATION: Free and universal education is available

to all citizens. Local institutions are segregated by gen-

der at primary, secondary and tertiary levels. The oneexception to this is the King Abdullah University of Sci-

ence and Technology (KAUST), which opened in 2009.

KAUST, a graduate-level, research-focused institution,

will eventually house 800 students.

The first boys school opened in 1954 and the first

girls school two years later. The Saudi curriculum com-

prises kindergarten, six years of primary school, three

years of intermediate and an additional three years of

high school. The government has increased spending

on education in recent years to fulfil the countrys eco-

nomic, religious and social objectives. Private sector par-

ticipation in the education sector is on the rise as well.Education has had a positive impact on develop-

ment. A few generations ago Saudi Arabia had a liter-

acy rate of 20%, whereas today it has been able to push

that figure to 84.7% for males and 70.8% for females.

Around 58% of students enrolled in higher education

institutions are women. Bringing the education system

in line with the needs of the private sector is seen as

essential, as the government moves ahead with a far-

reaching Saudiisation programme. The national budg-

et for 2011 included SR150bn ($40.0bn) for education

and training, a 9% increase from the previous year.

LANGUAGE: The official language of Saudi Arabia is

Arabic and the spoken dialect is commonly called Gulf

Arabic. However, English is generally spoken in larger

cities and by the majority of businesspeople.

GEOGRAPHY & CLIMATE: At 2.15m sq km, Saudi Ara-

bia is the worlds ninth-largest country, and the biggeston the Arabian Peninsula, accounting for 80% of its ter-

ritory. Half of the nation is desert . The country borders

Iraq and Jordan to the north; Kuwait, Qatar and the UAE

to the east; and Yemen and Oman to the south. The

Red Sea stretches alongside Saudi Arabias 1760-km

western coastline, from an entry point north of Yemen

in the south to the Gulf of Aqaba in the north.

Saudi Arabias climate varies depending on the region.

The Red Sea coast has comfortable temperatures

throughout most of the year, with a hot and humid sum-

mer. All coastal areas are generally cooler and more

humid than the central regions, which tend to have aharsh and dry climate, with temperatures often surpass-

ing 40C. Winters are generally mild and short.

NATURAL RESOURCES:Saudi Arabia remains arguably

the most important oil producer in the world, with

approximately one-fourth of global conventional

reserves. The country contains around 260bn barrels

of known oil reserves some 2.5bn of which are situ-

ated in the Saudi-Kuwaiti neutral zone, otherwise known

as the Divided Zone. Saudi Arabias development has

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COUNTRY PROFILE

been greatly enhanced by its tremendous oil wealth.

The Kingdoms crude deposits are made up of light and

extra-light grades of oil, which account for two-thirds

of the reserves, with the remainder consisting of medi-

um or heavy grades. The government has a carefully

managed swing-producer policy, and is committed to

maintaining global oil supply and pricing stability. All

facets of the oil industry are managed by Saudi Aram-co, the Kingdoms state-owned national oil company

and the worlds largest oil firm. Although Saudi Arabia

has over 100 oil and gas fields, over half of its reserves

are found in just eight fields. Ghawar, the worlds largest

oil field, is estimated to have reserves of 70bn barrels

and produces half of the countrys output.

The Kingdom has managed to accumulate large cash

reserves due to years of high oil prices. This has allowed

it to continue its economic diversification programme

and industrial development even during recessionary

years. Recently, the mining sector has increasingly been

viewed as an area of future growth.Due to large reserves of gold, silver, zinc, copper and

industrial minerals, especially in the western moun-

tains and the north-eastern regions of the country,

mining is expected to become the third industrial pil-

lar of the economy, after energy and petrochemicals.

Legislative changes have made the sector more attrac-

tive for both national and international players in the

mining sector in recent years. The majority state-owned

Saudi Arabian Mining Company, also known as Maaden,

was formed in 1997 to develop mineral resources in

the Kingdom. Maaden and American aluminium pro-

ducer Alcoa signed an agreement in 2009 to construct

an integrated aluminium complex at Ras Al Khair. The

$10.8bn development is expected to include a smelter,

aluminium refinery, bauxite mine and rolling mill.

CULTURE: Saudi Arabias cultural and social norms

derive from and are very closely related to the King-

doms deep connection with Islam. Its conservative

nature means that a number of strict social codes, such

as segregation of the sexes, must be adhered to at all

times. Unmarried or unrelated men and women are

strongly discouraged from mixing.

The majority of Saudis wear traditional dress. For

men this consists of a thobe, a brilliant-white garment

that covers the entire body. Male headwear consistsof an aqal, which is a black ring that sits atop the head

and holds the head scarf, the ghuttera, a red and white

cloth, in place. Women cover themselves in public with

the abaya. Although it is common for Saudis from all

backgrounds to wear traditional garb, it is becoming

increasingly routine to see youths dressed in Western-

style clothes, especially in cities and other urban areas.

While women are not permitted to drive or ride a bicy-

cle on public roads, their role in the economy has grown

substantially over the past decade. They have proper-

ty rights and legal status, which has resulted in women

owning a significant percentage of assets. They alsohave considerable influence in Saudi households, which

has made them important consumers in the economy.

Women often look after and invest their own money.

The Arabian Peninsula has been a centre for interna-

tional commerce since long before the Islamic era.

Located along the principal trading route between East

and West, the area benefitted from passing caravans,

as traders carried spices, silks and other exotic mer-

chandise through the desert for hundreds of years.

This mercantile spirit lives on today.

DESERT RETREAT: Taking a trip to the desert is a com-

mon pastime for Saudi families, where they sit, talk and

drink tea with friends and family members. The desert,

which is considered by many to be a necessary retreat

from the pressures of modern-day living, plays an impor-

tant role in Saudi life and identity. Saudis are also under-

standably very proud of their long Bedouin ancestry.

The king is often presented holding a falcon, which was

used by the Bedouin for hunting and is an emblem of

nobility. Similarly, horse and camel breeding are still

considered pursuits for true gentlemen.

The ubiquitous Arab hospitality is also a remnant of

life in the desert. Traditionally, visitors were given food,

drink and a bed for the night, away from harsh condi-

tions. Many Saudi artists have found inspiration in the

Kingdoms long history as well. Much work in recent years

has focused on rich abstract designs, reminiscent of

desert landscapes. This has resulted in an array of stun-ning Arabic architecture, textiles and jewellery.

LANGUAGE:Language, in both its written and spoken

forms, is also an important cultural art form. There is a

rich history of calligraphy as an art in the Kingdom,

particularly as it has related to the decoration of impor-

tant documents over the years. The spoken word, mean-

while, receives the greatest honour in Saudi Arabia,

and poems and stories are often passed down from gen-

eration to generation within families.

As the Kingdom moves forward economically and its

citizens enjoy the benefits of growth and globalisa-

tion, Saudis are finding themselves performing a diffi-cult cultural balancing act, as they try to manage the

simple lifestyles of their Bedouin ancestors alongside

the expectations of modernity. This is a challenge but

many Saudis view it as an opportunity for the future.

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The climate varies significantly by region, ranging from cooler coastal areas to hot, dry deserts


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COUNTRY PROFILE VIEWPOINT

King Abdullah bin Abdulaziz Al Saud

While the world around us has undergone many

changes, our country continues to develop and enjoys

security and stability in the light of national unity. This

clearly reflects the relationship and cohesion between

the leaders of this country and its loyal and noble peo-

ple. We live in a changing world, but we are deter-

mined with Gods help to continue the development

process and the liberalisation of the economy, while

abiding by balanced policies for a bright future.

The continuation of the national dialogue as an

approach to deal with all issues and broaden the par-

ticipation among all segments of Saudi society is

important for strengthening national unity and

addressing local issues. Creating a channel of respon-

sible expression that is based on the objectives of the

King Abdulaziz Centre for National Dialogue can pro-

vide the proper environment for dialogue.

In addition to the importance of national securi-

ty, water security is no less important, and it is one

of the strategic objectives of the Kingdom. It is sup-

ported through the expansion of saltwater desalina-

tion plants and dams to supplement underground

water resources. In the interest of reducing the cost

of water production methods, the state has adopt-ed the National Initiative for Water Desalination Using

Solar Energy, which will be implemented in three

phases over a period of nine years.

To preserve this national resource, which forms

the backbone of life and is the essence of growth,

the state has promulgated many laws and regulations

dealing with the exploitation of water resources.

Additionally, the government has established centres

of advanced research that employ the latest scien-

tific techniques, which has made our country a leader

in the field of water desalination.

Our state has always sought to improve the livingconditions and welfare of its citizens, starting with

secure treatment and care for them, in the belief

that human health is a measure of the progress of

people and advancement. This has been shown very

clearly by the continued establishment and expan-

sion of integrated hospitals in cities, as well as the

building of health centres in villages.

We have issued an order to allocate SR16bn

($4.3bn) for the implementation and expansion of a

number of medical cities. With Gods help and guid-

ance, we will continue in the same direction towards

improving the health services sector, whether by

focusing on the building of new projects, or by improv-

ing the environment of existing health facilities and

increasing the funds allocated to them.

The Ninth Development Plan, will be with Gods

help a helping hand for us to achieve prosperity

and growth, especially as it has provided for social

stability and will ensure the protection of human

rights and promotion of national unity. It also empha-

sises raising the quality of life for citizens, continued

diversification of the economy, balanced and sus-

tainable development of all regions of the Kingdom,

activating the role of the private sector, and sup-

porting small and medium-sized enterprises.

Based on the governments keenness to continue

the development in all fields, it has established the

Ministry of Housing. The government has also sup-ported the industrial, agricultural and real estate

development funds, as well as provided financial facil-

ities and soft loans to citizens to contribute effec-

tively to development. Priority has also been given

to the social security system, which now benefits

more people. Lastly, there is an emphasis on creat-

ing employment opportunities for citizens through

the Saudiisation programme and the establishment

of training centres in all regions of the Kingdom.

I always stress that the citizen is the basis of the

development and its target at the same time. Edu-

cation is one of the pillars of development, so thestate has targeted increasing the number of educa-

tional and cultural institutions and raised spending

for building schools and universities in all regions of

the Kingdom. We are heading towards a knowledge

18

Investing in the futureKing Abdullah bin Abdulaziz Al Saud, Custodian of the Two Holy

Mosques, on the Kingdoms development programme



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economy, and it is important to invest in future gen-

erations through training, education and rehabilita-

tion. The educational budget represents the largest

allocation of government spending.

For the sake of expanding the knowledge of our

sons and our daughters, the students, we have extend-

ed foreign scholarship programmes to additional

countries. For our sons and daughters who are study-

ing at their own expense, they will be able to take

advantage of our scholarship programme once they

have met its requirements. We believe in creating an

atmosphere for our students to dedicate themselves

to expanding their knowledge, so that they can

become qualified professionals and technicians.

The enhancement of the status of women can only

be achieved through a vision that believes in the

interaction of all society members for the purpose

of development. Improving the capabilities of women

and removing the obstacles facing them would allow

them to increase their participation in society and

become a productive factor in economic activities.

Our aspirations are limitless in terms of lifting our

country to the ranks of developed nations in the field

of communications and service sectors. Therefore,the construction and upgrading of infrastructure,

including the countrys communications network,

airports, ports and roads, is in accordance with the

objectives of our development plans. These projects

will enhance opportunities for investors to actively

participate in the growth of the country.

Although the world is undergoing an economic cri-

sis, the balanced financial and economic policies of

our state, as well as its rules and mechanisms for

financial transactions and investment, have spared

us the negative effects of the international crisis,

and even strengthened the Kingdoms positionamong other countries in terms of attracting glob-

al investors. We are determined to invest in large-

scale projects such that the Kingdom can continue to

avoid any impact from the global economic slowdown.

We have continued to pursue a petroleum policy

based on the interests of present and future gener-

ations, and the efficient exploitation of the wealth

that God has granted us, harnessing it for econom-

ic and social development. The Kingdom has also

continued to adopt policies that improve market sta-

bility, taking into account the common interests of

producers and consumers and the safety of the glob-

al economy, including the less-wealthy economies of

developing countries. Considering the worlds

dependence on fossil fuels, especially oil, to meet the

energy demand for global prosperity and growth in

the coming decades, the Kingdom also encourages

scientific research in renewable energy and improv-

ing the use of fossil fuels. In recognition of this rela-

tionship we have established the King Abdullah City

for Atomic and Renewable Energy for the develop-

ment of nuclear and renewable energy to comple-

ment our oil and gas resources.

The Kingdom also helps ensure peace and securi-

ty in the Middle East and the rest of the world, with

a leading role in achieving stability and prosperity for

the region. We stress the right of everyone to use of

nuclear energy in accordance with the supervisionand control of the International Atomic Energy Agency,

and we support the various steps and actions to make

the Middle East free of weapons of mass destruction

as stipulated in the resolutions of the UN.

The call for dialogue among civilisations, cultures

and religions is the best way to resolve internation-

al disputes and issues by peaceful means. This dia-

logue will spare the whole world, God willing, the

tragedy of conflicts between civilisations and religions,

and make us work towards a peaceful coexistence. I

call for the world to understand the importance of

dialogue, and take it as a key instrument for bring-ing different nations closer and improving relations

between governments and their citizens.

Excerpted from public remarks made to the Shura

Council on August 25, 2011.

19



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COUNTRY PROFILE INTERVIEW

HRH Prince Faisal bin Bandar bin Abdulaziz Al Saud, Governor,

In what ways does the Qassim region plan to increase

its contribution to Saudi Arabias economy?

PRINCE FAISAL: Our vision is to build a diverse econ-

omy that enhances cooperation among the agriculture,

industry and manufacturing sectors to make the most

of the industrial base in the region. It will be essential

to increase the participation of the regions private

sector and enhance its role in the economy. One way

of doing that is focusing on the development of indus-

tries that depend on domestic resources. We can also

incentivise downstream industries that manufacture and

export local natural resources.

The Qassim Investment Strategy Project, established

in 2008, has been designed with the objective of link-

ing the regions development strategy with external

opportunities. It also involves a major collaborative

effort across the region. Qassim will benefit from its

traditional strength in agriculture and also promote

other industries of interest, particularly minerals, con-

struction materials and assembly line production.

What is being done to attract more business to the

region and encourage skilled workers to stay there?

PRINCE FAISAL: The region is committed to acceler-ating the pace of economic transformation and pro-

moting a friendly business environment where com-

panies and entrepreneurs can flourish and innovate.

The objective here is to attract investment in high-val-

ue industries, which will bring and retain Saudi skilled

workers. To achieve this goal, we will support econom-

ic development by engaging the private sector in capac-

ity and quality enhancement.

In order to maintain a young, skilled Saudi workforce,

the regions educational programmes are being aligned

with local employment opportunities. Studies that

match the current needs for local industries are beingencouraged. We are also developing a regional work-

force attraction programme to target workers with

necessary skills. In this way we will be able to initiate

recruitment and training programmes in collaboration

with Qassim's educational institutions based on demand

for certain skills. To create a better environment for work-

ers, we are developing residential and commercial real

estate projects to serve people who settle here.

How can Qassim diversify its economic base and

increase its share in the Kingdoms GDP?

PRINCE FAISAL: Economic diversification has been

the top objective of the regions development plan and

remains a major target for sustainable economic growth.

The programmes of the Qassim Investment Strategy will

create opportunities for entrepreneurs to interact with

successful business leaders and facilitate the growth

and success of local businesses by enhancing the avail-

ability and quality of available support services. More-

over, the region will encourage local investment inflow

by increasing investor confidence and creating an envi-

ronment friendly to business development.

As for marketing, Qassims communication strategy

will highlight the advantages of living in the region with

the aim of attracting investors and skilled workers.

Through these plans Qassim intends to attract invest-

ment and human capital to diversify its economy.

How will the region maintain sustainable agricul-

tural growth in the long term?

PRINCE FAISAL: To maintain and promote the sustain-

ability of the agriculture sector in the Kingdom, King

Abdullah reformed the Agricultural Development Fund

(ADF) in January 2009. The fund aims to ensure sus-

tainable development by providing accessible credit and

focusing on research and developing investments for

the long-term sustainability of the agricultural sector.

A collaborative approach on water use must be tak-

en, as water is critical to the economic success of the

whole region. Industries will be encouraged to beinvolved in improving quality and efficiency. Qassim will

secure its position as a regional trade centre for agri-

culture. The government will support farmers to pro-

mote and maintain growth of the agriculture sector.

21


A regional strategyOBG talks to HRH Prince Faisal bin Bandar bin Abdulaziz Al Saud,

Governor, Qassim region


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Osama Al Bar, Mayor of Makkah

What residential projects address Makkahs growth?

AL BAR:The municipality has planned the development

of three different areas in and around Makkah to meet

the demand and particular requirements of the city. The

Umm Al Joud project, north-west of Makkah in the

Haram area, measures 670,000 sq metres and consists

of 4000 housing units. This project is intended to alle-

viate the housing demands of Makkahs residents and

is being partly subsidised by the municipality. The first

phase of 2500 units is already being marketed, for

which we have received 23,000 applications. Second-

ly, on the border of the Haram area, to the west of the

city, we are planning the Makkah Gate development,

which will be 86 sq km. This area will allow a more bal-

anced growth, with the construction of schools, hos-

pitals and public services planned. Lastly, the munici-

pality has granted 4.3 sq km of land to the Ministry of

Housing, which has been allocated in line with King

Abdullahs decree to build 500,000 housing units.

How is private sector input being encouraged?

AL BAR: Our target is to conduct these projects in

partnership with the private sector to see more effi-

cient development. To increase private sector partici-pation, the new development strategy aims to create

attractive conditions for key government projects and

public service facilities that will catch the attention of

contractors and developers. To make the projects eco-

nomically attractive, the municipality offers land at an

attractive value, ensuring a high yield for the investors

and minimising investment risks. In exchange, we expect

the private sector to bring a skilled workforce, knowl-

edge and financial capacity to carry out these projects.

To ensure reasonable prices for buyers while also

maintaining companies profit margins, units sold to the

public will be subsidised by the government. Neverthe-less, projects should be sustainable and generate rea-

sonable turnover. Private sector firms will be able

to access information about projects and apply for

them using a prequalification system we are developing.

How can transport systems facilitate the transit of

visitors while minimising the impact on residents?

AL BAR: Transport is a critical factor within Makkahs

development plans. Our target is to efficiently manage

the high visitor numbers during the Hajj period and mit-

igate the impact on the citys mobility. The municipal-

ity is working to design an efficient transport system

within the city and also to coordinate with intercity

plans. Responding to the unique necessities of Makkah

as a pilgrimage destination, the municipality is partic-

ipating in the development of railway infrastructure

that will connect all the Hajj ritual areas, thereby reduc-

ing traffic and facilitating the movement of pilgrims

between the different sites during their journey.

Connected to the rail links, a 182-km, 88-station

metro system is also planned, connecting all the sacred

sites, and extending to residential areas outside the cen-

tre. The metro will allow visitors to perform their pil-

grimage without the use of private transport. The tech-

nical study for this project is being finalised and should

be put out to tender in 2012. To minimise risk for the

private sector, the municipality will establish partner-

ships with developers to provide support in any pub-

lic-private partnership projects.

What new opportunities does the city present as

an Islamic tourism destination?

AL BAR: We intend to enhance the citys tourism fea-

tures and offer a wider range of activities. To carry out

this plan, Diafa, a new local tourism organisation, has

recently been founded by the municipality. Its focus will

be mainly to encourage religious tourism in the region,

restore historical and religious areas and create new

facilities. In line with this plan, we are studying the con-

struction of an Islamic Civilisation Centre, which would

allow visitors to learn about Islamic culture. Being in theboundaries of the Haram area, the museum would be

open for non-Muslims as well, so it can attract tourists

without access to other locations inside the city. Also,

Makkah Gate will offer support services for pilgrims.

22

Meeting demandsOBG talks to Osama Al Bar, Mayor of Makkah



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For the West, images of women in Saudi Arabia have

mostly been of a marginal individual, without free will

or freedom. This image has captured outsiders for most

of the last century, despite dramatic changes for Sau-

di women. These changes have become evident to

many people who visit the Kingdom. It is true that 50

years ago women occupied a completely different part

of society. However, women in Saudi Arabia today lead

a life quite different from their ancestors. It is safe to

say we are witnessing the beginning of a golden age

for women in the Kingdom.

Historians always mention 1960 as an important

year for Saudi women, since that year a royal decree

established the first governmental school for girls.

Although the schools opened for female students then

were elementary schools, they were the springboard

for Saudi womens renaissance. These elementary

schools gave way to more institutions delivering high-

er level education, allowing women to climb towards

success with fast, steady steps.

Visitors to the Kingdom will be astonished by the

development of womens education. According to 2009

statistics, illiteracy rates have dropped among Saudi

women to 18% and the percentage of females amongundergraduate students has risen to 58%.

Today, the Saudi woman is admirably active in almost

every academic specialisation, and in many occupation-

al capacities. The Kingdom is proud to be home to many

distinguished women who have occupied senior posi-

tions and received prestigious awards from the United

Nations and international research centres. Saudi

women are not only recognised in research and aca-

demia alone; several Saudi women are distinguished in

social and charity work. In fact, one could say human-

itarian work in the Kingdom was established mainly by

Saudi women. Many non-governmental organisationsoffer substantial aid to fight domestic violence, drugs

and poverty. Additionally, these NGOs contribute

to care for children who are ill or have special needs,

as well as working to provide for orphans and others.

Social life for Saudi women is unique in its own right.

It is a priority to acquire a better education, serve and

contribute to the nations development, while also

maintaining great regard for traditional values. Abid-

ing by authentic identity continues to be characteris-

tic of Saudi women, but this does not equate to her

marginalisation, as the West interprets it.

In fact, in an address to the Shura Council, King Abdul-

lah bin Abdulaziz Al Saud reasserted that he would not

accept marginalisation of women. In an empowering

move, the King declared women had the right to mem-

bership in the Shura Council, as well as the right to vote

and to run for municipal council elections. This is a

major step for women in Saudi Arabia. The support and

solidarity for women shown by King Abdullah and oth-

er members of the royal family will be remembered as

an act of social justice. Another form of the Kings sup-

port is giving Saudi women an equal chance to receive

scholarships for the worlds distinguished universities.

For the first time, the Saudi woman has the opportu-

nity to occupy high office in the government.

The establishment of Princess Nora bint Abdulrah-

man University, a single-sex institution, is another sign

of support. The King suggested the university shouldbe named after an influential female figure in Saudi his-

tory. Although new, the university has 15 colleges and

an advanced hospital to train students in health care.

The university complex has modern sports centres and

student housing. The school is already working to rev-

olutionise its educational system and academic pro-

grammes, fulfilling its mission to provide a variety of

high-quality educational opportunities for women.

This certainly does not mean that women in Saudi

Arabia are without challenges, or that they are satis-

fied with their achievement so far. Like all women, Sau-

di women should not shrink from obstacles but pushto overcome them, helping work towards a better future.

Saudi women are determined to continue to work qui-

etly and resiliently to help provide a life of good, love

and peace for themselves, their society and the world.

25


Constant progressHuda bint Mohammed Al Ameel, Rector, Princess Nora bint

Abdulrahman University, on women in Saudi Arabia


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Jan OSullivan, Irish Minister of State

How has Irelands economic relationship with Sau-

di Arabia developed in recent years? What policies

are being created to enhance bilateral relations?

OSULLIVAN:Relations between Ireland and Saudi Ara-

bia have been very warm for a long time and econom-

ic relations have been particularly strong in recent

years. Trade between the two nations increased by 25%

in 2010, which is quite significant. The number of part-

nerships is also increasing, usually between small Irish

companies with specific expertise and larger Saudi

firms that are expanding. Saudi Arabia remains a pri-

ority market for our trade policy and for this reason we

have created a joint economic division and a market

plan coordinated from our embassy there.

Such relationships work to our mutual benefit: in

Ireland, we have developed certain sectors, and with

slower growth we have spare capacity that can be used

abroad. The largest potential seems to exist in partner-

ships in the health and education sectors.

What can be done to encourage international com-

panies to invest in the Kingdom?

OSULLIVAN: Saudi Arabia is a highly attractive desti-

nation, with huge potential for growth. Its develop-ment opportunities continue to attract new business-

es that can meet the economys needs. Moreover, local

companies are open to establishing partnerships with

foreign investors. This enables Saudi firms and the

international market to cooperate locally.

What is necessary now is to promote these oppor-

tunities. The Kingdom has sound fundamentals that

guarantee continued economic growth, and govern-

ment plans are targeting the development of the econ-

omy. By making investors more aware of these quali-

ties, the Kingdom will gain more attention.

What can be learned from the global economic cri-

sis and how should future downturns be addressed?

OSULLIVAN: During the crisis, conditions have been

very different for Europe and the GCC region, and par-

ticularly for Saudi Arabia. One of the main problems for

Europe, the banking crisis, has not affected the King-

dom thanks to its reduced exposure. It should remain

unaffected as the banking sector remains protected.

The rapid growth taking place in some sectors, such

as the real estate market, could cause problems. How-

ever, the demographic fundamentals of the country

mean it will not become a problem as long as housing

prices continue to reflect the real market value.

Prospects in the GCC are promising and the best

advice would be to keep planning ahead and not rely-

ing only on current growth. Diversifying, investing in new

sources of energy and developing new sectors will be

the key to success in the long term.

How can small and medium-sized enterprises (SMEs)

address challenges in developing economies? How

can their growth be encouraged in Saudi Arabia?

OSULLIVAN:SMEs are of tremendous importance in

the reduction of unemployment. New expanding com-

panies are particularly eager to bring innovation and

create new ideas and opportunities, helping to devel-

op new ideas from within the population as well as to

promote new areas of growth. SMEs are the engine ofthe local economies, particularly given that they are

usually run by local people.

To encourage the development of SMEs in Saudi Ara-

bia, we must start with education plans that are ori-

ented to practical use, driven by technology and inno-

vation. Universities can promote studies that promote

job creation and give young people a crucial role as a

source of growth in their community.

On the other hand, it is equally important to encour-

age research and development in the private sector.

Entrepreneurship has to be incentivised. Additionally,

the creation of incubation centres in universities is alsonecessary. This enhances the relationship between

educational institutions and the private sector and aids

in creating connections that promote the inclusion of

the youth population as part of the economic system.

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A prospering partnershipOBG talks to Jan OSullivan, Irish Minister of State, Department of

Foreign Affairs & Trade with responsibility for trade and development



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Oxford Business Group - South Africa Report 2012 - Part 2

Documents

Transcript of Oxford Business Group - South Africa Report 2012 - Part 2