The Kingdom’s steady, deliberate approach to developing its technology and entrepreneurship ecosystems

  • The Kingdom views technology as an enabler that can improve public service delivery, generate employment opportunities, and support economic diversification
  • A longer term digital agenda to sustain momentum will require a high degree of interdependence among the actors in the technology ecosystem

Tahseen Consulting's COO Wes Schwalje spoke with Alicia Buller at Computer Weekly to discuss how and why Saudi Arabia is charging forwards with it digital transformation ahead of the nation's Vision 2030 objectives. You can read the full article here

What will be the main challenges of readying Saudi’s tech infrastructure for the 2030 transformation?

Technology is really the keystone of Vision 2030. The Kingdom views technology as an enabler that can improve public service delivery, improve education, generate employment opportunities for youth, and grow the economy in emerging sectors that can support economic diversification. Meeting these very high aspirations will require exceptional execution at a time where there are multiple competing priorities – so the biggest challenge will be in execution.

Saudi Arabia has achieved near universal internet and mobile penetration rates.

Its surging smart phone penetration rates bode well for the digital economy, and its leadership in 5G will empower megacities like Neom and lead to a head start in rapidly developing fourth industrial revolution technologies such as artificial intelligence, robotics, autonomous vehicles, energy storage, and quantum computing.

E-government initiatives and a progressive, cooperative approach to building the regulatory foundations of the digital economy in cooperation with the private sector have also been key to digital transformation.

For example, the Kingdom’s Cloud First Policy, progress it is making on personal data protection laws, and regulations to support the fintech ecosystem are solidifying gains from significant infrastructural improvements that have been made as part of the 2030 push. The recent decree to establish the Authority for Data and Artificial Intelligence and the joint digital currency with the United Arab Emirates are good examples.

Saudi Arabia will have to create access to top tech talent if it is to become a successful, advanced economy by 2030. How can the government ensure it has a ready supply of talent to run and take part in the kingdom’s transformational tech initiatives?

Right now, the Kingdom is losing a significant portion of it top tier tech talent to Silicon Valley and other tech ecosystems around the world.

So its challenge is twofold: building leadership in emerging fourth industrial revolution tech fields, like artificial intelligence, for example, to attract Saudi tech talent home; and developing homegrown tech talent to feed the investments in emerging tech sectors it is making at home as well as its sovereign investments in global technology companies which are increasing eyeing the GCC as markets.

Only through doubling down on its investments in developing the entrepreneurship ecosystem through initiatives such as Monshaat, promoting the growth of private sector access to finance and venture capital, and improving the business enabling environment will this become be achievable.

Another effective near term strategy would be to incentivize global tech companies to open headquarters in the Kingdom to promote repatriation of Saudi tech talent as well as provide a convincing career track to Saudi youth investing in acquiring technology skills. In particular, there are interesting models low upfront costs technology skills development institutions, like 42 and Lambda School, that are using income share agreements  to rapidly build workforce tech skills. A Saudi coding school which would might leverage an income share agreement model could be a very shrewd policy approach to shifting the significant costs of upskilling a technology workforce partially onto the emerging tech ecosystem.

What does Saudi have in its favor for becoming a tech leader? And what factors go against it?

Saudi Arabia has made significant gains in modernizing and adopting very progressive technology policies that other Arab countries have been reluctant and slow to consider. For example, many people don’t realize that Saudi Arabia was the first government in the Arab region to implement progressive ridesharing regulations. Due to its federal system, the Kingdom has the potential to move faster than some of its neighbors which often times struggle with regulatory and institutional competition at various levels of government.

The Saudis are being very shrewd about identifying emerging opportunities leveraging disruptive technologies that can offer large-scale national economic opportunity generation while also contributing to national development.

The Kingdom is one of the only Arab countries with a population big enough to sustain a sizable talent ecosystem to feed the region’s growing digital economy. This is likely to lead to closer cooperation between Saudi Arabia and the United Arab Emirates to integrate their technology development and entrepreneurship ecosystems – a move we are already starting to see with co-investments in the Vision Fund, a joint digital currency, coordination on data privacy laws, and cross-market access.

That United Arab Emirates has a head start over the Kingdom in establishing itself as a technology leader. However, the Kingdom’s steady, deliberate approach to developing its technology and entrepreneurship ecosystems could close this gap fast. In closing this gap, the sheer size of the task requires an unprecedented level of joined-up execution that is happening as a backdrop to one of the most significant socio-cultural shifts ever seen. 

A key risk is that not all ecosystem players required for success are on the same page.

A timely example would be efforts under the Cloud Computing Regulatory Framework to introduce data sovereignty and infrastructure onshoring requirements behind the scenes while at the same time also discussing the adoption of a world-class personal data protection framework – dialogues such as these need to be coordinated with implementation focused on the longer term. The Kingdom’s personal data protection framework could really boost the region’s digital economy by providing a regulatory precedent for other MENA countries to look towards if conflicts over safety and security can be reconciled with longer term aspirations.

Saudi Arabia’s leadership has made noises about becoming the Middle East’s ‘Silicon Valley’ - in your view, is this possible?

Technology companies are an increasingly important source of competitiveness, employment generation, and wealth across the region. Saudi Arabia has a very strong chance of becoming the MENA’s Silicon Valley. Human capital is one aspect of Silicon Valley’s secret sauce, and the other is creating and attracting world class high skill technology companies.

Vision 2030 and its significant investments in upgrading human capital has provided a catalyst.

However, a longer term digital agenda that sustains this momentum to create a self-sustaining ecosystem on par with Silicon Valley will require a high degree of interdependence among the actors in the technology ecosystem. In achieving this interdependence is where many of the would-be Silicon Valley 2.0s have paled in comparison to the original.