Saudi Arabia set to spread the wealth

King Abdullah unveiled a raft of projects set to stimulate economic and social development as he took a long awaited tour of the northern regions of the kingdom last week - the first to the area since his accession to the throne in August 2005.

The tour started in the northern border region and took in the Al-Jouf and Tabuk regions. He was accompanied by Crown Prince Sultan, other senior princes and a number of ministers, clearly underscoring the importance being placed on the trip.

Since the establishment of the kingdom in 1932, much of the emphasis in terms of development has been on the urban centres such as Riyadh and Jeddah. The consequence has been that outlying regions have not received the same amount of attention. In turn, this has lead to a sharp rise in migration from rural areas to urban ones and the infrastructure in the main cities and towns is struggling to cope while more remote areas have stagnated.

Throughout the 1980s and 1990s, the Saudi population grew enormously with 75% currently under the age of 14. Rates continue to cause concern at 2.6% per annum and the United Nations warns that the population could double by 2050. Creating jobs and homes for what Saudis term their 'youth bubble' is therefore a primary concern for the government, but urban planners have been quick to point out that the main hubs cannot be expected to meet the demands.

There is a more immediate concern. By not developing such areas, they become more susceptible to extremism and what the government terms 'deviant' ideologies. With terrorism an ongoing threat - the security forces arrested 127 suspected militants in late April - it is an area of particular importance.

The government's strategy to tackle this is to try to ensure that rural areas receive adequate financing so that an effective economy can be developed to make people want to stay. King Abdullah has been at the forefront of this drive.

In addition to a number of foreign tours, visiting key international partners such as oil importing Asian countries soon after he came to the throne, the king has also been on a tour of his own realm, focussing on the relatively underdeveloped and less prosperous areas to the north and south.

The continued emphasis during these domestic trips is on equality of opportunity and the importance of unity in the kingdom. On the first day of his tour last week in the town of Arar, the king said, "We don't have certain regions considered as first-class and others as second-class. We are all equal before God and before the nation."

These royal meet-the-people visits also provide a tangible forum in which ordinary people can meet the king - access to leaders is a traditional right for Arabs and also reflects the humility of the monarch, thereby enhancing his legitimacy.

Education, health and infrastructure remain the primary focus of the government's initiatives in the outlying areas. In the northern border region alone, a new university complex costing $133 million is to be established, including various science and women's facilities. A number of hospitals and health centres were also inaugurated at a total cost of around $135 million. These include maternity and psychiatric facilities - areas which are currently underserved.

At the same time, the king also unveiled a wide range of infrastructure projects from electricity and water to road upgrades. No doubt mindful of the need for job creation, the king endorsed plans for a mega-economic city in Tabuk too, mirroring the Jizan project he unveiled on his tour of the southern regions back in November 2006.

To date, the kingdom has embarked on six such cities, which are aimed at providing attractive environments for commerce and industry, funded by the private sector. The Saudi Arabian General Investment Authority (SAGIA) is spearheading these and its governor, Amr al-Dabbagh, told Oxford Business Group, "The economic cities projects are all part of King Abdullah and the government's drive to create opportunity throughout the kingdom. That is why they are spread throughout the kingdom, particularly focussing on traditionally less affluent areas."

During his visit to Tabuk and Al-Jouf, the king also made significant promises, again mostly in infrastructure, health and education. The projects in Al-Jouf alone are valued at $4 billion.

The Saudi press reported that the much talked about Saudi-Egyptian Causeway would soon be underway too - the $3 billion project will provide a highly lucrative channel for business and tourism between the two countries. Further details have yet to be unveiled.

Jason J. Nash is Head of Research at the Oxford Business Group
(www.oxfordbusinessgroup.com)