The Kingdom of Saudi Arabia is gearing toward a massive digital transformation. One of the key visions of its 2030 strategic plan is to turn the nation into a global IT hub backed by state-of-the-art technology, infrastructure and tech-empowered citizens.
The country relies heavily on Information technology to drive Saudi closer to its goals of economic diversification, increased employment generation for youth, creation of high-tech industries, and improvement in education and healthcare. To that end, the Ministry of Investment of Saudi Arabia (MISA) has accelerated its digitization efforts by investing heavily in advanced IT infrastructure, launching several funds and rolling out economic reforms to support technology innovation and entrepreneurship in the Kingdom.
With close to 90% internet penetration in the country, two-thirds of its population under the age of 35 and high consumer spending power, Saudi Arabia has all the key ingredients to realize its vision of becoming one of the major players in the global digital and technology landscape.
Many IT businesses and startups from across the world are busy planning their entry in the Saudi tech market to make use of this opportune time. The year 2021 is going to be momentous in terms of growth for multiple upcoming technology sectors that have shown tremendous potential in the region in the recent years.
Being one of the fastest growing digital consumer markets in the world, KSA offers myriad opportunities to tech startups and businesses to create and grow their consumer base and build their brand in the middle-eastern region.
In this post, we analyze the top IT sectors that are on the rise in the Kingdom in terms of growth, market trends and future opportunities.
The Fintech industry has experienced steady growth in Saudi Arabia since 2017. In 2019, it reached a valuation of $20B and is expected to hit $33B by the year 2023. Notwithstanding the effects of COVID, Fintech continued to thrive in the Kingdom owing to infrastructural development, regulations, and increased number of investment rounds in fintech companies.
The launch of Saudi Payments, an electronic national payment system established by Saudi Arabia Monetary Authority (SAMA), proved to be a significant development in the industry. The Digital payments is the largest segment of fintech in the country, expected to reach a transactional value of $17M in 2020.
One of the special benefits of fintech is its interconnectedness with almost every other industry, as all of them need payment models/systems for their existence. E-wallets, lending, investing, automated wealth management, digital commerce, and insurance aggregation are services that will see continued market growth in 2021 catalyzed by people’s preference for contactless financial transactions in the post-COVID world.
In Saudi Arabia, the user penetration in e-commerce is estimated to reach 95.2% by 2025. The market revenue in this segment was estimated to hit $6.3B in 2020. Being one of the largest e-commerce markets in the Middle East and North African (MENA) region, the number of e-commerce users in KSA will touch 19.3 million by 2022.
Fashion is the leading segment of the e-commerce industry in Saudi with valuation projected at $3.08B by 2021, followed by Electronics & Media. The other segments expected to take lead in the near future are goods, groceries, and personal care items. The young population demographic and rapidly growing digital consumer market make the Kingdom one of the most exciting online marketplaces in the world with tremendous growth potential.
As of 2019, Saudi Arabia is the 19th largest gaming market in the world, with the revenue from the video games estimated at $503M in 2020 and $813M by 2025. The nation is emerging as a hub for e-sports and gaming as the Saudi Arabian Federation for Electronic and Intellectual Sports (SAFEIS) and General Sports Authority are keen on making encouraging developments in this sector.
Fee-based video games, full version downloads of games for consoles and PC, mobile games, subscription-based online games, and gaming networks are some of the leading categories of the e-gaming industry in Saudi Arabia.
Covid catapulted the growth of the Edtech industry from being seen as a good-to-have alternative to becoming an absolute essential. Schools and universities turned toward edtech startups to fill the gap in learning created by the pandemic, uncovering a wide range of possibilities for growth and scale.
The edtech market stands at a crucial point of disruption as the primarily-government owned sector is undergoing regulatory and policy changes to encourage online education and learning, inviting private businesses to explore the innovative capabilities of education technology.
Another industry where opportunities for technological innovation were brought to light due to Covid was the healthcare sector. Health-tech companies of the region have shown great potential to meet the pressing demands of the present while creating pathways for defining the future of healthcare in the nation.
According to a PwC report from 2017, 66% of consumers in Saudi Arabia responded affirmatively to replace human clinicians with AI and robots. Healthcare is one of the strategic branches of Vision 2030. NEOM, Saudi Arabia’s exhibit to the world as the smart city of the future, taps into the advanced capabilities of technology, science, and innovation.
There are endless opportunities for startups and businesses in health-tech ranging from stem cells therapy, the human genome project, using AI for remote monitoring, preventive healthcare, telemedicine, and health portals to bridge the supply gaps in providing quality healthcare to the people of the Kingdom.
Technology leads the way
Technology is a primary focus of Vision 2030 and the Kingdom is keen on partnering with private companies to realize its vision of becoming a truly digital economy. While these are a few of the emerging IT sectors in Saudi Arabia, there’s a lot more unexplored opportunities in various other segments including entertainment, media, tourism, hospitality, and more.
If yours is a tech-powered startup/business, you should strongly consider this market when looking to create an international brand for yourself. However, the Saudi market cannot be catered to from a distance. You need to have a local presence, meaning a business entity on the land to win the trust of potential customers, business partners, and employees.