Looking to the Future: Saudi Arabia and Vision 2030

Posted in: International development, Public services, Welfare and social security

Majid Bin Ayed Al-Ayed is Head of Research and Studies at the National Center for Performance Measurement (ADAA) in Saudi Arabia. He is currently studying for his Professional Doctorate in Policy Research and Practice with the IPR.

Vision 2030 is the blueprint for Saudi Arabia’s ambitious economic transformation and it rests on three pillars: A Vibrant Society, A Thriving Economy and an Ambitious Nation. According to the Saudi Deputy Crown Prince, Mohamed bin Salman Bin Abdul Aziz Al Saud, who unveiled the eighty-four-page document that lays out the plan in April 2016, it constitutes a roadmap for the kingdom’s development and the attainment of its economic objectives over next 15 years. Moreover, the Vision, according to its website, is built on the country’s ‘intrinsic strengths’: Saudi Arabia’s position as the heart of the Arab and Islamic Worlds; its geographic location, which can make it a hub connecting three continents; and the kingdom’s potential as an investment powerhouse.

This bold plan includes strategic objectives, which cascade down to Saudi Arabia’s public sector entities and vision realisation programmes (see Figure I below), twelve of which have been unveiled recently. With all these ambitious programs and targets, which aim to overcome Saudi Arabia’s oil dependency with a well-diversified, dynamic and modern economy, the challenges ahead for Saudi Arabia are daunting. The challenges are multi-dimensional, as the country’s political leaders need to contend with the short-term gargantuan challenges, such as the required structural adjustments that are needed to establish the country’s new socioeconomic paradigm, in addition to establishing a recognisable linkage with the long-term objectives that the people can relate to and have a vested interest in meeting.

Figure I: Vision Realisation Programmes

One of the underpinnings of this far-reaching transformational program is the National Transformation Program (NTP) which sets out specific obligations that the government ministries and other public sector entities must achieve by 2020. On the other hand, the other NTP related commitments include strengthening financial governance, increasing non-oil revenues and improving spending on programs and projects. In addition, this road map also includes setting a general direction for policy goals, and objectives. Accordingly, certain public sector entities underwent a restructuring process to align them with the requirements of Vision and the NTP.

The Uncertainty of Vision 2030

As a member of the Saudi Export Development Authority’s team I participated in the earliest NTP workshops, and in my current position as the Director of Research and Studies at the National Center for Performance Measurement (ADAA) I am a witness to the challenges and the opportunities that have presented themselves. I therefore write based on first-hand experience.

I also watched and listened to HRH Mohammed bin Salman’s April 2016 interview and press conference, during which he unveiled Vision 2030. Prince Mohammad presented a vision that excites, based on a set of lucid facts and challenges that we in Saudi Arabia need to address and overcome. However, we need to temper our excitement with realism; this is just the beginning of a long and winding road. During the NTP, participating government ministries and public sector entities were tasked with carrying out detailed studies and meeting targets, in addition to coordinating with other government entities. Undoubtedly, Saudi Arabia always suffered from poor implementation, when it came to turning plans into tangible results. However, with the launch of Vision 2030 and its accompanying executive programs, government entities are slowly breaking their silo mentality.

The main contention or challenge with Saudi Arabia’s Vision 2030 is the uncertainty surrounding its launch and potential for success. This stems from its stated objectives, which can only be described as ambitious, given the scope and magnitude of the undertaking – not to mention the relatively short time horizon (fifteen years) that has been set to achieve the stated objectives. Moreover, there is a dearth of information about the detailed plans that will help realise the intended macroeconomic and socio-political transformation. In addition, the seemingly slow response from the various governmental and quasi-governmental entities in announcing their detailed plans and programmes has added to this uncertainty.

On the other hand, it needs to be noted that, when contrasting institutional development between the advanced post-industrial states and the less-developed countries, the historical and geo-political dimension is important. Advanced states and by extension their institutions evolved from a long historical trajectory that saw a near absence of hegemonic relationship and control – in contrast to what we witness today in the less-developed states. Moreover, the lack of modern technology and communication during that period allowed those early developing states to advance and falter in relative isolation from other countries. In contrast, today’s globalised economic and political structure, coupled with, inter alia, the less-developed states’ internal challenges, has made it virtually impossible for them to develop without any socio-cultural or socio-political pressure.

Enacting and implementing wide-ranging policy reforms poses a serious dilemma, especially if the changes include monumental structural and macroeconomic changes. On the one hand, the various stakeholders must respond to the signals generated by the reform for the new policies to be successful. On the other hand, rational behaviour on the part of the private sector has led to the withholding of investment until much of the residual uncertainty regarding the eventual success of the reform is eliminated. Even moderate amounts of policy uncertainty can act as a hefty tax on investment, and otherwise sensible reforms may prove damaging if they induce doubts as to their permanence.

Since the discovery of oil and the Saudi government’s launching of its Five Year Development Plans (September 1970), the country’s economic growth and transformation has been the purview of the state, with little input from the private sector. Now, the Vision is calling upon the private sector to partake in this massive transformation. Economic growth and diversification will no longer be state-led, and one of its intended outcomes is the dismantling of a social contract between the state and the people that is close to fifty years old; a social contract that became institutionalised with the passing and implementation of the country’s First Development Plan.

The above is not a simple economic adjustment or structural reform program that may be painful to certain sections of society. It is a gargantuan undertaking, which requires not only [public] institutional and organisational capacity, but also deftness and communication skills in order to manage expectations. The multiple stakeholders have overlapping needs, priorities, expectations and outlooks. The questions stem from the uncertainty due to a lack of details as to how the policy changes will affect people’s lives.

On the face of it, this is an economic restructuring program and an institutional [re]building exercise. In reality, what is being asked of the Saudi populace is a complete rewriting of the country’s social contract; the largesse, the welfare and subsidisation programmes are going to be gradually reduced in scope and targeted at those who need them. In exchange, the country will be run based on a new model: creating opportunity, greater private sector participation and a comprehensive government privatisation program.

This will mean a less ubiquitous government presence. However, the challenges associated with this transformation are immense, and the realignment will be an arduous and formidable process fraught with numerous challenges. Finding and employing the necessary talent to convert Vision 2030 into plans, programmes and initiatives will require patience and perseverance. Implementation will carry with it the seeds of accrued knowledge, accomplishment and laborious hardship. However, harvesting the fruits of our toil will, undoubtedly, transform the lives of the people of Saudi Arabia.

This post is based on Majid's recent paper Institutional Capacity Constraints, Limitations and the Challenges of Implementing Saudi Vision 2030, which you can read in full on his personal blog.

Posted in: International development, Public services, Welfare and social security


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