BrazilSamer Abdallah (KPMG) on government innovation in Saudi Arabia
In a new report, KPMG explores the state of government-led innovation in Saudi Arabia, finding that the government is investing significantly not only to remain at the forefront of its own innovation agenda, but also to foster an environment that is conducive to innovation across sectors and domains. Lead author Samer Abdallah outlines some of the notable successes identified by the report.
Saudi Arabia has launched many innovation initiatives based on Vision 2030 and the National Transformation Program. The country has established several innovation hubs, such as the King Abdullah University of Science and Technology and the Prince Mohammed bin Salman bin Abdulaziz University for Digital Sciences and Technology.
The Kingdom has dedicated a large part of its innovation efforts inwards and focused on digital government as a critical initiative.
The Digital Government Authority (DGA) works to support government entities in their digital transformation to provide digital government services. Saudi Arabia climbed the ranks to the 31st position in the United Nations’ ranking of its 193 member states’ digital government programs, an improvement from 52nd in 2018.
DGA showcases Saudi Arabia’s innovation efforts, which are geared towards improving the experience and lives of citizens, enhancing the adoption of emerging technologies, and identifying the needed regulatory change to support ongoing innovation.
Through DGA’s Innovation and Emerging Technology Center, government agencies have access to a wide range of services. The center works on vetting technologies and use cases, matching them with specific challenges and opportunities, conceptualizing business models, and testing and implementing solutions. For example, the center has been collaborating with various entities to determine how drones can be effectively used to speed blood-sample transfer among hospitals.
Government innovation is often geared towards improving standards of living and job creation and Saudi Arabia’s National Transformation Program has identified innovation powered by research and development as a vital enabler of its long-term socioeconomic goals.
Research & Development
The government has established a Research Development and Innovation Authority (RDIA) responsible for identifying innovation opportunities and developing policies to support them. The RDIA is invested in research and development and stimulates a culture of innovation within the economic fabric.
A new program for the research, development, and innovation (RDI) sector aims to inject an additional SAR60 billion (US$16 billion) into the nation’s GDP by 2040. The initiative will create job opportunities in science and technology, and facilitate the Kingdom’s quest to become the Arab world’s largest economy.
Saudi Arabia also aims to attract US$20 billion in investments in data and artificial intelligence. This strategy will transform the workforce through training a pool of 20,000 artificial intelligence and data specialists.
Workforce Localization
Saudi Arabia has also sought to align its workforce localization efforts with its Vision 2030 goals and to go to great lengths to protect and strengthen the local workforce. A wave of Saudization measures has already been introduced and implemented in the last couple of years, with Saudization ratios coming into effect in many new industries and professions (including the consulting industry).
Companies falling foul of the requirements might find their business activities suspended, including the issuance of work visas. Beyond the local workforce, Saudi Arabia has also implemented expat-friendly initiatives through updates to the Kafalah immigration sponsorship system.
Entrepreneurship
The Kingdom’s government has sought to foster an environment conducive to entrepreneurship.
One example of such initiatives is the establishment of Small and Medium Enterprises General Authority (Monsha‘at) in 2016. Monsha’at aims to regulate, support, develop, and sponsor the SME sector in the Kingdom to increase their contribution to GDP from 20 to 30 percent by 2030.
Monsha‘at develops and supports programs that foster a culture of self-employment, entrepreneurship, and innovation and organizes direct and indirect lending programs for SMEs and fast-growing unicorns.
Related: KPMG partners with Monsha‘at for Tech Innovator in Saudi Arabia.
The path to progress
Saudi Arabia is investing heavily in building an innovation ecosystem to bring digital transformation to its operations and create a culture of innovation for its citizens.
Despite this push, the Kingdom’s Global Innovation Index (GII) ranking is 66th among the 132 economies featured in the global benchmark. There is certainly no shortage of funding or political will to create a culture of innovation in the Kingdom, but there is still a gap between government investment and its impact on innovation.
In its path to progress, government officials should realize that innovation is a journey, not a destination, and should therefore be seen as an ongoing process. It should be integrated into the way government bodies work daily, and they must invest in internal innovation literacy to foster innovation in the country.
Innovation is not only about developing new products and services but about creating new ways of doing things. It should be seen as an opportunity to improve the way government bodies work.
Governments must also create an environment that is conducive to innovation. This includes investing in research and development, establishing supportive policies, and creating a culture of innovation within the government itself. Only by taking these steps will government bodies be able to effectively innovate and make a positive impact on society.
What role does the government play as innovator?
Governments may play many roles in the innovation ecosystem.
Innovation policy maker
The government can play the role of an innovation policy maker by developing the infrastructure of a knowledge economy and regulatory framework. This will support the innovation ecosystem across the public and private sectors. That way, a country can help define an innovation agenda across different sectors, creating the legal framework for protecting innovation and designing policy programs to support it.
An example would be setting up intellectual property rights and innovation regulations or establishing visa policies that facilitate hiring highly skilled immigrants in specialty occupations.
Innovation capability builder
The government can also play the role of an innovation capability builder by investing in human capital and building the necessary capabilities to spur innovation. It can achieve that by establishing and rolling out government innovation programs such as digital upskilling programs targeting civil servants.
Innovation capital provider
The government can be an innovation capital provider in terms of providing human, physical, technological, and financial capital to create a suitable environment for innovation. In this role, the government operates to provide innovation input, such as investment in ICT infrastructure and technologies, investment in human capital, or subsidies for innovation programs. This can directly affect innovation outputs.
Innovation promoter
The government can play the role of innovation promoter, leveraging public relations, marketing campaigns, and events and conferences to promote innovation initiatives and culture within the local, regional, and international communities.
Innovator
The government can be the innovators in terms of owning the process and/or outcome of innovation or acting as an adopter/procurer of innovations. This can be achieved by focusing on knowledge creation, patents, scientific and technical publications, and knowledge diffusion through thought leadership.
