ISMR June 2022 - Page 34

Reform and competitiveness
Saudi Arabia aims to enhance the competitiveness of its industrial sector as part of its economic diversification strategy . It wishes to become a global leader in smart manufacturing and advanced technologies , building on the international momentum of the sector since the beginning of the COVID-19 crisis . The sector ’ s size is projected to reach around US $ 52 billion by 2026 , growing from US $ 15 billion in 2020 . Additive manufacturing is expected to add a minimum of US $ 4.95- billion to the KSA economy within three years .
“ The Middle East and North Africa ( MENA ) is a diverse region , affected by economic and political transformations , but with a potential for more and better growth . It benefits from a privileged geographic location with access to large markets ; a young and increasingly educated population ; and comparative advantages in several sectors such as manufacturing , renewable energies and tourism ,” commented the OECD .
The Burj Khalifa building in Dubai , UAE ( Shutterstock . com ).
Saudi Arabia aims to enhance the competitiveness of its industrial sector as part of its economic diversification strategy
“ In response to the COVID-19 pandemic , MENA economies are implementing reforms to build a resilient and more inclusive economic model to improve growth , governance structures , diversification , employment , private sector development and integrity . The MENA- OECD Initiative on Governance and Competitiveness for Development , initiated and led by the region , supports these reforms through an inclusive and co-ordinated approach , innovative policy dialogue , links between key stakeholders , peer learning and capacity building ,” it added .
Countries will need to start addressing deep-seated transformation challenges such as persistent unemployment , inequality and climate change . Capitalising on lessons learned during the pandemic and leveraging digitalisation will help prepare the economies for the future and improve the efficiency of social safety nets , health and education , which are so critical to reducing poverty and inequality .
Economic diversification
The Middle East and North Africa ( MENA ) region is characterised by an excessive reliance on raw materials exports for foreign exchange earnings , as well as a dependence on foreign markets as a source of industrial and food produce . These dependencies have given rise to two main challenges : growth volatility and high unemployment levels , especially among the young . The economic and social effects of recent crises signify the magnitude of the challenges facing the region and
Oran in Algeria ( Shutterstock . com ).
the need to diversify away from commodity-based sectors , and thereby promote private sector development .
“ Economic diversification is the pursuit to transform an economy that relies on a single commodity as its main source of income into one with multiple sources of income across primary , secondary , and tertiary sectors . It seeks to accelerate productivity and create employment opportunities . The main objective here is to achieve sustainable economic growth by building resilience to the fluctuations in economic conditions , given the volatility of commodity prices in the international market . Therefore , it is imperative for both developed and developing countries to design policies that induce greater economic diversification ,” commented analyst G-20 Insights .
“ Successful sustainable development in the MENA region may be achieved through the diversification of energy systems — such as by adopting renewable energy — if the adverse effect of each energy system is adequately small and well within the tolerance limits of the environment ,” it added .
Opportunities abound in the Middle East for renewables with possible renewable energy capacity addition of more than 57.0 GW , said analyst Frost & Sullivan . Solar PV could generate US $ 182 billion investment in Middle East renewables by 2025 . The pressure to lower greenhouse gas ( GHG ) emissions is compelling the Middle East — the United Arab Emirates , Saudi Arabia , Qatar , Oman , Kuwait , Bahrain , Iran , Iraq , Jordan , and Lebanon — to embrace renewable energy .
The sectors that have traditionally used fossil fuel-based energy in the region are responsible for GHG emissions . They are expected to turn to solar energy during the next few years , which presents immense growth prospects for market participants .
The GCC region ’ s total distributed energy market ( which encompasses distributed solar photovoltaic ( PV ), distributed wind power , hybrid systems , diesel gensets and gas gensets ) was estimated by analyst F & S to have garnered a revenue of US $ 602 million by the end of 2021 ( strong double-digit growth at a CAGR of 25.4 %). The UAE and Saudi Arabia are expected to lead the market for distributed energy , with Oman set to emerge as the fastest-growing market in the region . n
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