Saudi Arabia is facing an economic reckoning, as numerous companies struggle to survive amidst what critics call reckless and unsustainable policies under Crown Prince Mohammed bin Salman. Once stable and profitable businesses are now grappling with debt, downsizing, and disinvestment, reflecting a deteriorating economic landscape.
These challenges, compounded by the Crown Prince’s ambitious mega-projects and a sharp decline in foreign direct investment (FDI), have left many questioning the viability of the kingdom’s economic trajectory.
Major Corporations in Turmoil
Several flagship companies that once symbolized Saudi Arabia’s economic prowess are now at risk:
Dawajen Al-Watania:
The largest poultry producer in the Middle East, Dawajen Al-Watania, is planning to sell assets valued at $532 million. Established in 1977 by the influential Al-Rajhi family, the company has been unable to withstand financial pressures, largely attributed to the kingdom’s shifting economic priorities. The planned sale signals a broader crisis in the private sector, where companies are struggling to adapt to the Crown Prince’s policies.
Al-Mousa Health Company:
One of Saudi Arabia’s leading healthcare providers, Al-Mousa faces debt totaling 1.2 billion riyals. To manage its financial woes, the company plans to issue 13.29 million shares in an IPO, aiming to use the proceeds to cover up to 60% of its liabilities. This comes at a time when the kingdom’s healthcare sector is already under strain, with widespread privatization and funding cuts.
Nice One Beauty:
Founded in 2016, this rising e-commerce beauty platform now seeks to raise 1.2 billion riyals by selling 30% of its shares. Like other startups in Saudi Arabia, the company has faced difficulties navigating an increasingly unpredictable market.
Economic Stagnation and Investor Flight
The broader economic picture in Saudi Arabia reveals systemic issues that extend beyond individual corporations.
FDI Collapse: In 2022, foreign direct investment dropped by an alarming 85%, plummeting from 51.9 billion riyals in Q2 2021 to just 7.9 billion riyals in Q2 2022. Analysts attribute this dramatic decline to international skepticism about the kingdom’s legal system, governance, and the feasibility of its mega-projects.
Failed Investment Campaigns: Efforts to attract investors to sectors such as mining have largely failed. A $170 billion proposal targeting Australian investors fell flat, reflecting the growing reluctance of foreign entities to engage with the kingdom.
Mega-Project Drain: Ambitious initiatives like The Line and Neom require unprecedented funding levels, with some estimates placing the costs at trillions of dollars. These projects are seen as speculative and detached from the kingdom’s immediate economic needs.
Reckless Spending Amidst Economic Struggles
Critics argue that the Crown Prince’s focus on vanity projects and speculative investments is draining resources that could otherwise bolster the economy. Examples include:
Video Game Ventures: Investments in gaming and e-sports, seen as an attempt to align with global trends, have yet to yield tangible benefits for the kingdom.
Zombie City: A $10 billion project to build a zombie-themed entertainment hub in Riyadh has drawn sharp criticism for its frivolity, especially as citizens struggle with rising living costs.
Healthcare Privatization: The Crown Prince has begun selling off public healthcare facilities to foreign investors, raising concerns about access and affordability for ordinary Saudis.
The Human Cost
While corporations collapse and foreign investments dwindle, Saudi citizens bear the brunt of these economic policies. Poverty and unemployment are rising, with reports indicating that over 13,000 families in Riyadh rely on charitable organizations to meet basic needs. Public dissatisfaction is growing as citizens grapple with inflation, wage stagnation, and reduced access to public services.
The struggles of Saudi corporations and the exodus of foreign investors reflect a deeper economic malaise in the kingdom. As Crown Prince Mohammed bin Salman continues to pursue high-risk, high-cost initiatives, the gap between ambition and reality widens. Without significant reforms and a shift toward sustainable economic policies, Saudi Arabia risks a prolonged period of instability and decline.
