ADNOC to boost production target by 2030

RIYADH: From Formula One to boxing, golf to the FIFA World Cup, Saudi Arabia is rapidly establishing itself as a global sports hub.

But beyond hosting world-class events, the Kingdom’s push is a key pillar of Vision 2030, its economic diversification strategy.

Saudi Arabia has secured hosting rights for major sporting events — including motorsports, tennis, and golf’s LIV Tour — aiming to boost tourism, create business opportunities, and generate revenue from ticket sales, sponsorships, and broadcasting rights.

Peter Daire, senior executive advisor of sports at PwC Middle East, highlighted the Kingdom’s long-term vision for sports as a major economic driver.

“According to our Global Sports Survey 2023, the Middle East sports sector, including Saudi Arabia, is expected to generate substantial economic value, with Saudi’s sports economy predicted to contribute up to $5.9 billion by 2030,” he said.

“This growth is driven by ongoing infrastructure projects and the expansion of world-class facilities across the Kingdom. Additionally, events like Formula E, the Saudi International Golf Tournament, Esports investments, and high-profile football matches in the Saudi Pro League have been a leading factor in attracting global attention and investment, further boosting the tourism and hospitality sectors,” Daire added.

Jurg Kronenberg, management consultant at Bain & Co., noted that Saudi Arabia aims to generate 1.5 percent of its non-oil gross domestic product from sports by 2030, creating over 140,000 jobs.

“Achieving this growth will require both infrastructure investments — such as World Cup stadiums, mass sports facilities — as well as sector activation, through privatization and professionalization of sports, new leagues and competitions, creation of local IP,” he said.

“Sports has a unique potential to be the catalyst of societal and economic change in KSA and to support the development of a vibrant economy,” Kronenberg added.

Daire emphasized that the government has prioritized the private sector’s involvement to foster a vibrant ecosystem for sports business.

“Partnerships with European football clubs and players have helped position Saudi Arabia as a central player in the international sports landscape.

“In addition to this, developing local talent within the Kingdom, and ensuring a long-term legacy of Saudi sport business expertise is of key importance for the sector,” Daire said.

He noted that integrating cutting-edge technologies — such as AI, data analytics, and digital media — into sports management and fan engagement is driving growth across multiple industries.

Mega infrastructure and investments

Kronenberg pointed out that Saudi Arabia’s sports strategy includes landmark projects like the 11 state-of-the-art stadiums planned for FIFA World Cup 2034 and Riyadh’s 135-km Sports Boulevard.

Beyond high-profile venues, large-scale infrastructure projects are being developed to encourage mass sports participation, alongside financial incentives to professionalize clubs.

“In football, a bold privatization initiative is underway, transitioning historically state-owned clubs to private ownership,” Kronenberg said.

“Beyond football, Saudi Arabia is cultivating a diversified sports ecosystem, investing into the professionalization of several existing sports and supporting emerging disciplines,” he added.

Kronenberg said this approach is accelerating economic diversification by creating new revenue streams, investment opportunities, and valuable intellectual property.

Federico Pienovi, chief business officer and CEO for APAC and MENA at Globant, highlighted Saudi Arabia’s strategic investment of over $2 billion into sports infrastructure, events, and global partnerships.

“With major events like the Asian Games and FIFA World Cup 2034 on the horizon, the Saudi government is shaping a multi-billion-dollar sports ecosystem primed for growth,” Pienovi said.

He explained that Saudi Arabia’s giga-projects, including Qiddiya Entertainment City, are fertile ground to combine advanced tech with the passion for sports, making the Kingdom a world-class destination.

Shahid Khan, partner and global head of media, entertainment, sports, and culture at Arthur D. Little, emphasized that signing global stars like Cristiano Ronaldo and Karim Benzema has boosted the Saudi Pro League’s international profile, attracting sponsors and increasing viewership.

“Developing league infrastructure and operations supports the league’s competitive edge and market value. These investments increase tourism, promote national pride, and inspire local talent to pursue professional football careers,” he said.

Khan added that these efforts integrate Saudi Arabia more deeply into the global football ecosystem, generating revenue from broadcasting and sponsorships.

Ivan Shapochkin, a principal at Oliver Wyman’s Dubai office, pointed out that with the global sports industry expected to near $1 trillion by 2030, Saudi Arabia is aligning its sports vision with future-ready strategies.

“By quadrupling its sports economy by 2030, with private sector contributions driving at least 25 percent, Saudi Arabia is reaping direct revenues from ticket sales, media rights, sponsorships, and merchandising.

“Beyond this, sports are invigorating tourism, hospitality, and transport sectors, creating ripple effects across the broader economy,” Shapochkin said.

Given the nascency of the sports ecosystem in Saudi Arabia, the sector provides a particular opportunity for entrepreneurs and investors to help shape the industry and leapfrog others, according to Bain & Co.’s Kronenberg.

“This might include use cases like new ownership models and fan engagement through tokenization, unique voting rights, or new channels and technologies to stream matches,” he said.

Kronenberg said the Kingdom could be the test ground for a whole set of new technologies with a young and tech-savvy population, as well as an ecosystem that encourages a “clean slate” approach to technology deployment.

PwC’s Daire emphasized that Saudi Arabia is embracing digital transformation in sports, incorporating AI, virtual reality, and blockchain to enhance athlete performance and fan experience.

“According to our latest esports report ‘Centre of the Game,’ technology is enabling smarter sports management, real-time data analysis for performance improvement, and immersive fan experiences, from virtual stadium tours to personalized content,” he said.

“This transformation is not only improving operational efficiencies within the sports sector but also generating new revenue streams, such as data-driven sponsorships, and virtual fan engagement platforms,” Daire added.

Sports-tech on the Rise

Shapochkin of Oliver Wyman pointed out that globally, one in three sports fans now consume games on digital platforms, signaling a shift toward personalized, tech-driven engagement.

“The sports-tech market is expected to surpass $40 billion by 2027, driven by innovations like AR/VR (Augmented Reality/Virtual Reality), performance tracking, eSports, and AI-powered analytics.

“Saudi Arabia, with its youthful, tech-savvy population and strategic investments through entities like SAVVY Gaming Group and PIF (Public Investment Fund), is at the forefront of this shift,” he said.

Shapochkin also noted that eSports alone is projected to contribute over $13 billion to the Saudi economy by 2030.

As Saudi Arabia continues hosting major events like the 2029 Asian Winter Games and FIFA World Cup 2034, the adoption of smart venues, Internet of Things applications, and advanced crowd management systems is expected to accelerate.

With sports and technology merging, Saudi Arabia is not just redefining its role in the global sports industry — it is shaping the future of sports business.

RIYADH: E-commerce sales using Mada cards in Saudi Arabia reached SR197.42 billion ($52.64 billion) in 2024, a year-on-year growth of 25.82 percent, according to data from the Kingdom’s central bank.

Figures released by the institution showed that in December, sales totaled SR19.37 billion, representing a 42.06 percent increase compared to the same month in the previous year.

These figures include payments for online shopping, in-app purchases, and e-wallet transactions, but exclude transactions using credit cards such as Visa and MasterCard.

Mada, the Kingdom’s national payment card system, supports both debit and prepaid services within its network. The cards utilize near-field communication technology for contactless payments, enabling secure transactions at both physical retailers and online.

Mohammed Dhedhi, partner in the consumer and retail practice team at Kearney Middle East and Africa, told Arab News: “The growing spending power in Saudi Arabia, driven by factors such as dual-income households and higher overall economic strength, is fueling market growth.”

He added: “Additionally, the proliferation of NFC-capable devices has significantly boosted the penetration of digital payment channels like Mada, further supporting the shift toward a more digital economy.”

In addition to the surge in sales, the number of e-commerce transactions also experienced a significant rise, increasing by 28.86 percent year-on-year to nearly 1.13 billion transactions in 2024.

December saw a 30.47 percent annual increase, reaching 105.73 million transactions.

According to Dhedhi: “Today, local Mada cards account for over 90 percent of cards issued in the country and over 95 percent of the total transactions made. One of the main reasons for Mada’s popularity is because of how convenient it is to use.”

He added that Mada is widely accepted both in-store and online across Saudi Arabia, providing secure transactions as it is operated by Saudi Payments, a subsidiary of the Saudi Central Bank.

The growing adoption of Mada aligns with the government’s push toward a cashless society, promoting the transition from cash to digital payments.

Dhedhi explained that the COVID-19 pandemic significantly accelerated e-commerce penetration in Saudi Arabia, driving faster digital adoption across various sectors.

This growth was further supported by increased investments from both regional and global players looking to expand their operations.

He noted that in 2022, noon.com opened a Customer Fulfillment Center in Riyadh to improve delivery speed and meet the growing demand from consumers.

Saudi Arabia’s growing spending power, supported by factors including dual-income households and a robust economy, continues to drive market expansion.

At the same time, the widespread adoption of NFC-enabled devices has propelled the use of digital payment solutions like Mada.

As a result, the Kingdom is witnessing a rapid shift toward a more digital economy, with seamless and secure transactions becoming an integral part of the evolving e-commerce landscape.

The rise in e-commerce activity aligns with Saudi Arabia’s goal to make digital transactions account for 80 percent of the retail sector by 2030, with 70 percent conducted online by the same year.

According to the International Trade Administration, the Saudi e-commerce market, valued at $5.15 billion in 2023, accounted for 6 percent of the Kingdom’s $92.6 billion retail market.

Dhedhi said: “To improve online shopping experiences, Saudi Arabia’s Ministry of Commerce has introduced reforms focusing on refunds, delivery options, and payment choices.”

He added: “These changes aim to address consumer concerns such as unclear warranties, limited delivery coverage, slow complaint resolutions, and delayed refunds. Retailers are now required to submit performance reports and conduct consumer awareness campaigns.”

According to Dhedhi, Saudi Arabia’s e-commerce market growth will be driven primarily by appliances and electronics, which will account for 23 percent of total growth, with a compound annual growth rate of 8 percent from 2024 to 2028.

The fashion sector is expected to contribute 18 percent, also growing at 8 percent CAGR, while health and beauty will make up 14 percent, expanding at a much faster 16 percent CAGR.

The dominance of electronics and appliances reflects a strong demand for advanced technology and gadgets, particularly among younger, tech-savvy consumers.

In addition, the rising popularity of beauty and home care products aligns with an increasing focus on self-care and wellness across the Kingdom.

Meanwhile, the food and beverage segment is projected to experience the highest growth rate at 25 percent CAGR, although its overall market size remains smaller compared to other leading categories, according to Dhedhi.

“The rise in food and beverage e-commerce reflects a growing demand for convenience. Quick commerce has been growing rapidly, and while it historically took players much longer to achieve profitability, the current focus on dark stores and improved unit economics is accelerating this process,” Dhedhi said.

He also noted that while this shift has accelerated growth in the sector, it has also intensified competition. This dynamic ultimately benefits market players in Saudi Arabia by fostering innovation and enhancing service quality.

According to the International Trade Administration, Saudi Arabia’s digital economy is expanding rapidly, driven by substantial government investments and widespread adoption of emerging technologies.

As of 2023, the Kingdom’s Information and Communications Technology sector was the largest and fastest-growing in the Middle East and North Africa region, valued at $40.94 billion and contributing 4.1 percent of gross domestic product, the report stated.

The Kingdom ranked second among G20 countries on the UN International Telecommunication Union’s ICT Development Index in 2023, highlighting its strong digital infrastructure.

Over the past six years, Saudi Arabia has invested $24.8 billion in this area, leading to a 99 percent internet penetration rate and mobile internet speeds of 215 megabits per second, nearly double the global average.

These advancements place the Kingdom among the top 10 countries globally for mobile internet speed, according to the ITA.

Saudi Arabia was an early adopter of 5G technology, with coverage reaching 77 percent of the country — significantly above the global average — and 94 percent in Riyadh, positioning it among the world’s leading cities for 5G accessibility.

This high-speed internet expansion is fueling growth in e-commerce, telecommunications, and digital services, the ITA added.

The number of e-commerce users is projected to reach 34.5 million by 2025, with penetration rising from 66.7 percent in 2023 to 74.7 percent by 2027, according to the report.

Digital payments are also surging, aligning with Vision 2030’s goal of a cashless society. Electronic payments in retail transactions surpassed 57 percent in 2021, exceeding the 55 percent target set by the Financial Sector Development Program.

This shift is expected to further accelerate e-commerce growth, attracting more investment in digital financial services.

Dhedhi said: “Millennials, who constitute around 50 percent of the population, are key drivers of e-commerce growth due to their digital fluency and tech-savviness.”

He added: “Expats, on the other hand, prioritize the delivery experience more than locals and show a strong preference for international brands or diverse product offerings, contributing to a broader assortment in the offerings.”

Dhedhi said quick commerce players are tapping into the demand for fast delivery, affordable subscriptions, and influencer partnerships to target younger consumers.

By offering low delivery costs, they are setting new convenience standards. Chinese e-commerce giants including Shein and Temu have successfully attracted Gen Z and millennials with trendy, affordable products, despite occasional compromises in product quality, he said.

Urbanization and rising female workforce participation are further fueling the shift to online retail, with families increasingly relying on e-commerce for groceries, fashion, and household items.

Dhedhi noted that these demographic shifts are broadening the customer base, diversifying consumer behavior, and fueling the expansion of Saudi Arabia’s e-commerce sector, which plays a pivotal role in the Kingdom’s economic transformation.