Saudi Arabia puts billions of dollars on the table for its space industry
Saudi Arabia's crown prince and prime minister, Mohammed bin Salman Al Saud, has issued clear directives to his government team to take the necessary legislative and financial measures to give full priority to boosting its still fledgling national space industry.
But that is not all. In line with the Kingdom's Vision 2030 roadmap, the crown prince has also instructed his ministers of finance, Mohamed Aljadaan, and communications and information technology, Abdullah Al-Swaha, to provide all necessary support to the Neo Space Group (NSG), a national space development company recently established by the PIF, the country's Sovereign Wealth Fund.
According to the draft National Space Strategy, the final text of which is due to be published by the end of the year, NSG's raison d'être is to ‘provide state investment and promote private initiatives’, with the aim of encouraging the establishment of space industry and service-related SMEs throughout the country.
The PIF, an institution somewhat comparable to Spain's State Industrial Holding Company (SEPI), but with a larger investment volume, wants NSG to become - as it openly states - the ‘national champion’ of the Saudi space sector. The Riyadh government wants to establish satellite manufacturers from third countries and innovative start-ups in the Arab nation, with the aim of gaining access to important commercial projects on a national and international scale.
Riyadh has identified the space sector as promising
It does not matter whether the companies are from China, Russia, the United States, France, Italy, Germany, India, Korea or any other nation. It is all about boosting the Saudi space industrial fabric to diversify the economy and grow non-oil revenues. Riyadh has done so by creating NSG, the first company created by the PIF to invest billions of dollars in the space industry, a sector identified by the Saudi authorities as ‘one of the most promising from an investment and strategic point of view’.
This is emphasised by PIF's co-director of Direct Investment for the Middle East and North Africa, chemical engineer Omar Al-Madhi, for whom forming the NSG company ‘is a milestone of Saudi Arabia's growing role in the cosmos, highlighting our ambition to be a major commercial player on the global satellite scene’.
NSG's multi-million dollar activities and investments are focused on four business areas: satellite communications, satellite navigation, the Internet of Things (IoT) and Earth observation. The four areas are complemented by a venture capital fund, which will focus on supporting domestic and foreign entrepreneurs betting on space assets.
Two government agencies will escort NSG's new activities and investments. One is the Saudi Space Agency (SSA), which is responsible for scientific, robotic and manned exploration activities in outer space. The other is the Communications, Space and Technology Commission, which regulates terrestrial and satellite telecommunications.
Diversifying its sources of revenue
It is worth remembering that the ultimate aim of the Vision 2030 initiative promoted by Crown Prince and Prime Minister Mohammed bin Salman, now in his early 40s, is to do everything possible to balance the nation's revenue sources in the shortest possible time.
The Kingdom is undergoing a progressive productive reform driven by the crown prince's determination to move away from exclusive reliance on oil exports, bring about a substantial change in the balance of the national economy and provide high-skilled jobs for its young population. Institutions such as the King Abdulaziz City of Science and Technology (KACST) have developed satellites - for example, the 425-kilogram SaudiSat 5A and 5B, which were launched from China in December 2018.
The NSG company was born to attract strategic industries and accelerate the take-off of the space industrial fabric, whose turnover in 2022 was only $400 million. Data from the latest World Bank report forecasts Saudi real GDP growth of 2.5% in 2024 and around 5.9% in 2025, so Riyadh's target for 2030 is to reach $2.2bn turnover, the reason for creating NSG.
However, Saudi Arabia is geographically located in the Arabian Peninsula, an area of great geostrategic importance and framed in a region with a conflict that is sometimes latent and at other times it surfaces, as is the current case. The main ally of the United States in the region, the Riyadh government pays special attention to its national security and defence component, whose industrial sector has also been classified as strategic and, of course, enjoys the Crown Prince's utmost attention and priority.
