How PIF is spurring a ‘once-in-a-generation’ opportunity for Saudi private sector businesses

The private sector is widely considered as the backbone of an advanced economy, given its ability to promote growth and job creation, provide vital goods and services, and solve key domestic and global challenges.

As such, empowering businesses of all sizes is a key element of PIF’s strategy, in line with the Vision 2030 reform roadmap, which aims to increase the private sector’s contribution to Saudi GDP from 40% to 65% by the end of the decade.

To this end, PIF is investing to diversify the Saudi economy away from fossil fuels and into strategic sectors and future industries. “These sectors need a regulatory framework in which to operate. They need to hire talent and they need supply chains,” Jerry Todd, Head of the Fund’s National Development Division (NDD), told PIF Global Insights. “We work with our investment teams and our portfolio companies to help put this enabling environment in place.”

Since 2017, PIF has established 87 companies – many of which have become regional and global champions – and generated 560,000+ high-quality direct and indirect jobs. Each of these companies plays a pivotal role in developing opportunities across diversified sectors – spurring growth for private sector businesses. This is driving the long-term transformation of the domestic economy and helping to drive the global economy.

“We work across PIF’s portfolio of companies to activate ecosystems, increase local content and capture synergies,” Todd said. “Engaging the private sector – as investors, as suppliers, as operators – is fundamental to everything that we’re trying to do.” Indeed, PIF contracts with the private sector amounted to SAR 184 billion in 2022.

ACWA Power, a leading global power generation and desalinated water producer in which PIF owns a stake, provides a prime example of how the Fund’s portfolio companies are working with domestic suppliers to increase local content – products and services sourced from within Saudi Arabia.

The company needs solar trackers to position panels at its renewable energy facilities, and was previously using a foreign supplier. However, the demand in Saudi Arabia was so high that the company set up local manufacturing operations. “They’ve tripled their capacity in Saudi Arabia – and they not only serve ACWA Power, but they actually export to other countries,” said Todd.

PIF launched three initiatives to enable the private sector growth. The first is “MUSAHAMA”, PIF’s Local Content Growth Program, which aims to increase the share of local content spend across PIF’s domestic portfolio to 60% by the end of 2025. As part of this program, each PIF company will have a customized Local Content Policy that embeds local content considerations in their design decisions and procurement policies. The second initiative is the Supplier Development Program, which supports the development and upskilling of local suppliers. The third is the Private Sector Hub, a dedicated portal that serves as a direct channel to share supplier and investment opportunities with the private sector.

By joining forces with private businesses, PIF aims to ensure that the private sector becomes the main driving force in a thriving economy. “We will reduce our reliance on imports, as a country, becoming more resilient, and importantly, this will drive meaningful job creation within the local economy,” said Todd. “This represents a once-in-a-generation growth opportunity for private businesses.”

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