Getting Away From Oil: Saudi Arabia’s 2030 Plan Raises More Questions For Nigeria

Amidst the crash in global oil price, Saudi Arabia is trying its best to ensure it does not get caught in oil calamity ever again.

The country is looking at making oil extremely insignificant in its economy. To get this done, Saudi Arabia has a plan. The Sunni nation has just drafted its 2030 plan. A strategy aimed ensuring that its economy is stable for the long term through aggressive diversification.

As opposed to the resistance from Nigeria’s conservative society and the persistent pussyfooting of its leadership, Saudi Arabia is taking tough choices. The country is doing away with its old way of running its economy. For a country with ultra-conservative Sunni Islamic values, Saudi is the haven for various subsidies.

In summary, the plan is summarised as:

“The Saudi Aramco Strategic Transformation program: We believe that Saudi Aramco has the ability to lead the world in other sectors besides oil, and it has worked on a sweeping transformative program that will position it as a leader in more than one sector.

The Public Investment Fund Restructuring program: Having worked on restructuring the fund, we are now refining its investment capabilities and enabling the fund to manage a broader portfolio of current and new assets. We aim to transform it into the largest sovereign wealth fund in the world and will announce a comprehensive plan to achieve this goal.

The Human Capital program: Because human capital is a crucial factor in the success of any substantial project, we aim to launch a thorough program for nurturing our human talent. This program will measure, assess and analyze the efficiency of our civil service. It will also support our government agencies with staff, studies, consultations, and strategic partnerships related to human capital.

The National Transformation program: In a new approach, our government agencies have been working through numerous workshops to examine their role in implementing the initiatives necessary for delivering on national priorities. We are identifying opportunities for partnering with the private sector, as well as innovative administrative and funding approaches. We are detailing specific initiatives that have clear performance indicators.

The Strategic Partnerships program: We are working with our economic partners around the world to build new strategic partnerships for the twenty-first century, in harmony with our national Vision, so that we can be a trade hub connecting three continents and enhance our exports.

The Privatization program: We are in the process of determining additional sectors suitable for privatization. Our goal is to create a comprehensive privatization program. We will make use of international best practices, transfer knowledge and achieve our goals in a balanced and scientific manner.

The program for Strengthening Public Sector Governance: We will work on restructuring our government agencies continuously and with flexibility. We will eliminate redundant roles, unify efforts, streamline procedures and define responsibilities. We shall also enable our agencies to deliver on their mandate, to be accountable, to ensure business continuity and to show adaptability in the face of new challenges. Under the Council of Economic and Development Affairs, we will establish a strategic management office to focus on coordinating all government programs and ensuring their careful alignment with the national Vision. The office will also prevent gaps, duplication or contradiction between agencies’ policies and programs, and ensure that all components of the Vision are detailed in proper sectoral strategies. We will also establish a Decision Support Center at the Royal Court to support decision-making through analytical and evidence-based information and reports.”

It very glaring to Saudi’s policy makers that for the country to achieve its 2030 plan that will wean it from an over-dependence on oil, many subsidies on food, gas and welfare have to either get cut or reduced and redirected to save cost.

While not kidding with the plan, Saudi Arabia will also be borrowing about 200 billion through treasury bills and sovereign debts to be able to direct such borrowing in diversifying its energy and power needs into alternative and renewable sources, upgrade critical infrastructure that can bring in private investment. The country’s debt to GDP ratio will then shoot up to 30%.

To further raise funds and spread its risk exposure to its Aramco Oil, Saudi Arabia plans to float 5% of the shareholding of the company in the market. This is expected to bring some cash and allow private participation in the company. Nigeria has rumoured this plan but it is very much unlikely that such plan will happen any time soon.

Where is Nigeria’s plan to get itself out of the oil trap?