Goodbye oil, Saudi Arabia’s future economic growth will come from its mega-cities

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A scale model showing the plans for the eventual size of the King Abdullah Economic City on April 07, 2016 in Jeddah, Saudi Arabia. The King Abdullah Economic City (KAEC) is a massive project to create a port and manufacturing city on the Red Sea

Al Rasheed is overseeing the creation of KAEC, a port and manufacturing city on the Red Sea that, it is hoped, will boost Saudi’s trade relations with the rest of the world. The city was founded in 2006 by King Abdullah bin Abdulaziz Al Saud, the former king of Saudi Arabia, although it is not yet complete.

The ambition behind the new industrial city was for it to play a part in Saudi’s economic transformation beyond a predominantly oil-based economy. With a national population forecast to double to 1.5 billion by 2050, Riyadh officials believe that the Red Sea region has the potential to be a major growth driver for the global economy.

It’s not the only mega-project that Saudi Arabia has in mind. Late in 2017, the Saudi government announced that it was going to build a $500 billion mega-city, with the goal of diversifying its economy to focus less on crude oil. Called NEOM, the city is planned to run on 100 percent renewable energy. It will be funded by the government and private investors.

“Nobody knows how it (NEOM) will look because no-one has ever built anything like this before,” al Rasheed told CNBC, adding that it was a difficult project.

“I’ve been in the business for a decade now with KAEC, and it is hard, it’s hard to attract people, but it is NEOM and it has the kingdom’s and Crown Prince’s backing.”

Goodbye oil

Saudi Arabia has announced recently a raft of economic and societal reforms under the aegis of Crown Prince Mohammed bin Salman as part of the kingdom’s move to diversify itself away from its traditional, but volatile, oil-based economy.