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Public-private partnerships (PPPs) are driving Saudi Arabia’s economic growth due to the fact they allow major development projects to continue without increased state spending.

Alternative finance sources offer lucrative prospects in the Saudi market, where the government sector has traditionally funded infrastructure and public projects.

Construction companies working in the kingdom, such as Riyadh-headquartered BEC Arabia, are taking advantage of this trend. “BEC Arabia is targeting large-scale PPP projects, given their enormous potential,” said Hussein Hamdy, technical director and board member of BEC Arabia at a Red Sea Global event organised by MEED in September.

PPP surge

There has been an increase in the number and value of  PPP contract awards across the Middle East and North Africa region in 2023, according to data from regional projects tracker MEED Projects. Saudi Arabia is one of the most important markets in the region for PPP deals in 2023, with $11.6bn-worth of contracts awarded so far.

These numbers highlight the promising trajectory of PPP projects in Saudi Arabia.“Aligned with the strategic objectives of Vision 2030, the kingdom’s government is working towards elevating the private sector’s contribution from 40 per cent of GDP to 65 per cent by 2030.

“PPPs are a good way to achieve this as they not only help address immediate infrastructural needs, but also pave the way for sustained growth and development.”

Economic growth

Saudi Arabia has launched several initiatives to attract local and international investors and encourage government and private sector collaboration.

As well as 65 per cent of GDP coming from the private sector, Saudi Arabia’s Vision 2030 has set a target to increase the contribution of non-oil exports from 16 to 50 per cent. 

Two schemes that will help achieve this vision are the Shareek programme launched in 2022 and Saudi Arabia’s Privatisation & PPP (P&PPP) pipeline of 200 projects across 17 sectors announced earlier this year.

The Shareek programme will help unlock SR5tn in domestic private sector investments by 2030.

“Foreign direct investment (FDI) serves as a bridge between the public and private sectors, attracting external capital that can fuel strategic initiatives,” said Hamdy.

“Shareek aims to encourage government and private sector collaboration through FDIs, aiming to reach $1.3tn by 2030.”

By establishing policies that welcome and incentivise FDI, the Saudi government is doubling down on its commitment to create a business-friendly environment.

Such endeavours stimulate economic activity and promote job creation, technology transfer and the exchange of best practices.

“BEC Arabia will continue its integration policy by adding new services from different phases of the supply chain, either through acquisitions of existing businesses or by building them in-house, resulting in additional operational benefits and synergies,” said Hamdy.

“We have successfully delivered 120 projects with a total value of SR9.4bn so far. The company’s portfolio comprises SR4.3bn-worth of ongoing projects, highlighting our dedication to contributing to the growth and development of various sectors.

“As a trusted partner, BEC Arabia will continue to play a pivotal role in shaping projects that make a lasting impact on communities and the broader landscape of Saudi Arabia,” he added.