To some people, Saudi Arabia are the current Football World Champions. It's a light-hearted theory based on the national team Al-Suqour Al-Khodhur (the Saudi Green Falcons) beating Argentina 2-1 in a thrilling Group C pool game in Qatar on 22nd November 2022. In reality, there's a long way to go yet - but at least we now know which direction we're heading.
The Kingdom of Saudi Arabia (KSA) will be the national host for the FIFA World Cup in 2034. Parallels might be drawn with South Africa hosting the 1995 Rugby World Cup, when the whole nation became unified and opportunities for its citizens were unprecedented. Indeed, after a successful delivery of a 2034 World Cup, it wouldn't be too far-fetched to suggest the objectives of Vision2030 might be complete. Of course, any self-respecting strategist would tell you the arc of ambition doesn't stop there, and Vision 2040/50/60 are still on the table. But as we think about the state of play, it's clear that the FIFA World Cup presents a golden opportunity.
Saudi Arabia is a forward-thinking, sports-focused nation. The inaugural esports annual event, for example, will be held during the summer months this year. The sovereign wealth fund that owns Savvy Games Group announced it will invest 142 billion Riyals ($37.8 billion) in initiatives that target Saudi as a global hub for gaming. That includes setting up 250 local gaming firms, creating 39,000 jobs, and raising a projected sector contribution to national GDP of 50 billion riyals by 2030. Football and esports world cups are embedded into the objectives of the Crown Prince’s vision for a Vibrant Society, a Thriving Economy, and an Ambitious Nation. We can testify to the fact these verticals are well established, supported by many businesses as early adopters. Add to that, the prospect of Saudi being the fastest-growing economy in the G20, and the new norm becomes exciting.
It's been estimated that over the last three FIFA World Cups, the Qataris spent $200 billion in 2022 with a revenue of $6.5 billion; the Russians spent $14 billion in 2018 with a revenue of $5.2 billion; and the Brazilians put in almost $12 billion in 2014 with a revenue of $4.8 billion. So, with a $1 trillion economy in Saudi that's well-established and well-formed to present 'open goals' of opportunity, what can investors and businesses expect?
Employment
According to the Saudi General Authority for Statistics (GASTAT), job targets for Vision 2030 have begun to bear fruit. The overall unemployment rate fell 0.9 % points to 5.1 % in the first quarter of 2023 compared to the same period a year previous. The Vision 2030 proposal is to reduce the overall unemployment rate from 11.6 % in 2016 to 7 % in 2030.
Job creation from a World Cup will play a leading role for Saudi nationals, of which over 60 % are under 35. Workforce participation by the female population will be a significant factor and there was a year on year rise in participation by 2.4% in the first quarter of 2023 to 36%. The construction industry is already creating many new job opportunities. This is mostly due to the momentum generated by giga-projects such as NEOM, Diriyah, Qiddiya, Roshn and Red Sea Global. The FIFA World Cup will add to the demand for skilled professionals, including project managers, engineers, architects, and skilled labour. Offshore businesses and investors will have a key role to play in the training and development of the workforce, to say nothing of their own direct contribution from corporate or individual skill sets.
Supply Chain
According to estimates, there are currently over 5,200 projects across Saudi Arabia with a combined worth of $819 billion underway. This represents 35% of all active Gulf Cooperation Council (GCC) project values. The events in 2034 should significantly enhance those numbers and the supply chain must develop to meet the demand for new stadiums. Under Vision 2030, there's an ambition for visible technological advancement and a greenification of the logistics sector, as well as a localization of manufacturing under the In-Kingdom Total Value Add program (also known as IKTVA).
The international community will have a huge role to play. California’s Lucid and Australia’s EV Metals Group Plc are good examples of organisations that have already exploited opportunities to manufacture cars and goods that can further reduce Saudi’s carbon footprint. A World Cup in Saudi will put the supply chain under pressure, but that is when local and international businesses rise to the challenge.
Tourism
Tourism makes up 2 to 3 % of Saudi Arabia’s GDP, but the FIFA World Cup could increase tourism’s contribution to 10%. Even without the football, KSA is seeing extraordinary growth in tourisem, with many foreign visitors seeking a unique travel experience all year round.
Away from Riyadh, there's an exciting proposition for football fans between games. According to consultancy Knight Frank, Saudi Arabia’s hotel industry is poised for further expansion, targeting a total of 310,000 hotel rooms by 2030, with an estimated investment of $110 billion. This was even before a blueprint has been approved for the location of the games. In addition, the Saudi Aviation Strategy announced a new carrier - Riyadh Air. Sitting alongside Saudia and Flynas, this will make good use of the new King Salman International Airport. Easy access and high quality domestic travel to exciting destinations makes the Kingdom an incredibly attractive proposition to legions of travelling supporters.
Legacy and Transformation Agenda
Saudi thinks in generational terms, rather than governmental tenures. The Sport For All office is a good example, as it was given a mandate in 2019 to lead on the Ministry of Sport community sports initiatives under the 2030 Quality of Life program. Its aim is to raise physical activity levels in Saudi Arabia to 40% by 2030. A football World Cup will no doubt inspire an entire generation of Saudis to raise their activity levels, as long as the infrastructure is in place. In turn, this should help address the national strategy on diabetes and obesity. Foreign consultancies and suppliers are already playing their part in delivery, and more opportunities are manifesting weekly.
From health and wellbeing to clean energy and a digitised economy, education, and social housing, to transport and government infrastructure, there appears to be no part of Saudi society that won't be touched by the arrival of teams and fans in 2034. In the same way an Expo or an Olympics may have its detractors for large capital outlay, the FIFA World Cup will also have naysayers. However, the ambition of Saudi leadership should never be underestimated. This is a region that has 36 million people, eager to take advantage of continued opportunities.
The potential socio-economic halo effect could far surpass any negative concerns, and successfully launch Saudi into the middle third of the 21st Century. That said, many businesses and investors are already alive to the opportunity of the Saudi market today.
Questions?
Imagine what you could achieve in the Kingdom, if your business starts strategizing to day for the FIFA World Cup in 2034. Contact us if you'd like to know more. We're very happy to talk through any of the topics touched on in this Insight, and all aspects of market entry and compliance in the Kingdom.