Education Transformation: A Catalyst for Economic Breakthrough in the GCC

A picture taken on March 9, 2020, shows the closed entrance of a private school in the Saudi capital Riyadh. (AFP)
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Updated 08 September 2024
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Education Transformation: A Catalyst for Economic Breakthrough in the GCC

RIYADH: Education quality needs to be improved across the Gulf if the region is to truly unlock its economic potential, experts have told Arab News.

Leading figures from the World Bank and regional consultancy firms, together with a range of recent reports and studies, argue that it is not just access to schooling that needs to increase, but the standard of education.

A report from the World Bank in May highlighted that according to its Human Capital Index, a child born today in the Gulf Cooperation Council region is expected to reach only 62 percent of their full potential productivity, mainly held back by low education quality

Speaking to Arab News, Safaa El-Tayeb El-Kogali, World Bank country director for the GCC: “Improving the quality of education is critical for fostering long-term economic growth and prosperity in the GCC.”

GCC countries are currently undergoing a significant transformation, driven by the need to diversify their economies in response to rapid technological advancements and escalating regional and global challenges. 

This dynamic environment necessitates economies that are diversified and resilient, where knowledge and skills play a critical role, and El-Kogali said: “Quality education is critical for GCC countries in reaching their ambitious development goals.”

In recent years, governments across the region have made notable strides in expanding access to schooling and improving student learning outcomes. However, foundational literacy and numeracy skills still elude many students in the region, posing a major obstacle to human capital development and global competitiveness.

El-Kogali highlighted the importance of early investments in quality learning, saying: “Realizing the full potential of human capital in GCC countries requires smart and early investments in the quality of learning that children receive.”

Building solid foundational skills from an early age is crucial as they form the cornerstone of future learning and skills acquisition. Without this, children risk falling behind, becoming disengaged from school, and failing to acquire the advanced skills demanded by today’s labor market.

Effective teaching is pivotal in enhancing learning outcomes at all levels, making it essential to provide educators with the right knowledge and support mechanisms. 

“Education contributes to long-term development and prosperity by improving people’s well-being and labor market prospects, leading to better employment opportunities and higher wages,” added El-Kogali.

Education also boosts individual productivity, propelling economic growth and building resilient economies that can adapt to a constantly changing environment.

The potential of education to spur economic growth is only achieved when it is of good quality and improves relevant skills and knowledge. 

Increasing access to education is vital, but it is ultimately the skills people develop through high-quality education that determine its contribution to economic growth.

In a study conducted by El Mostafa Bentour for the Arab Monetary Fund in 2020, the contribution of human capital to GDP growth in 12 Arab countries was compared to Asian and OECD developed countries. 

It found that Arab countries fell short, especially when compared to OECD economies, where a 1 percentage point increase in human capital leads to a 0.9 percentage point increase in GDP. 

In contrast, the Arab world sees only a 0.5 percentage point increase, while Asian countries see a 0.6 percentage point increase.

A 2008 research paper published in Journal of Economic Literature also found that a 100-point improvement in standardized test scores is associated with a GDP increase of up to 2 percentage points. 

Academics Gabriel Heller-Sahlgren and Henrik Jordahl further extended this analysis to 2016, revealing a 1.3 percentage point increase in GDP per capita for each 100-point improvement in test scores. 

The role of private education

The GCC K-12 private education market is experiencing significant growth, driven by population increases, rising income levels, government initiatives, and a growing expatriate population. 

Increased awareness of the importance of primary education and the need for high-quality options are key drivers of this growth.

Mansoor Ahmed, executive director for healthcare and education at Colliers in the MENA region, told Arab News: “Government initiatives such as Saudi Vision 2030 aim to enhance the quality and accessibility of education.” 

Despite these positive trends, the market faces challenges such as high construction costs and the affordability of tuition fees, which limit accessibility for lower-income families. 

However, opportunities for growth abound through technological advancements, partnerships with international institutions, and the development of specialized education programs in areas such as science, technology, engineering, and mathematics as well as artistic endeavors. 

Mansoor Ahmed, executive director for healthcare and education at Colliers in the MENA region, told Arab News: “The GCC K-12 private education market presents a lucrative opportunity for investors, educators, and stakeholders aiming to capitalize on the region’s growing demand for high-quality education.”

Saudi Arabia’s educational landscape

Among the GCC nations, Saudi Arabia stands out due to its size and demographic trends. The Kingdom, with a population of 32.2 million in 2022, has a higher proportion of nationals compared to expatriates. This demographic reality suggests that K-12 education operators should focus primarily on Saudi nationals to attract sustainable demand, a Colliers report told.

Despite vast resources and investments, Saudi Arabia has the lowest total student penetration rates in the region for private sector K-12 education, with only 15 percent attending such institutions.

Saudi Arabia’s private education sector holds significant potential for growth, particularly by targeting the Kingdom’s nationals. The growing population and young demographics underscore the need for additional schools, with projections indicating that the school-going population will increase from 7.5 million to almost 9.4 million by 2030.

Opportunities are particularly on offer in second-tier cities such as Makkah, Madinah, and Al-Ahsa, as well as Abha, and Taif. 

These cities currently lack high-quality private schools but are undergoing major expansion plans, creating increased demand for K-12 education. 

The rise in white-collar expatriate populations and the opening of international branded schools in main cities are expected to drive the growth for private education.

Affordability remains a crucial factor, with average tuition fees in the GCC region and Saudi Arabia ranging from $10,000 to $30,000 per annum.

According to Ahmed: “The sweet spot for international private schools would range between $15,000 to $20,000 per annum.”

The transformation of education in the GCC is paramount for unlocking the region’s economic potential.

By focusing on quality education, the region can build a skilled workforce capable of driving long-term economic growth and prosperity. 

This strategic investment in human capital is essential for the region to navigate the challenges of a rapidly changing global economy and to achieve its ambitious development goals.


Citi gets license for regional headquarters in Saudi Arabia, memo shows

Updated 22 November 2024
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Citi gets license for regional headquarters in Saudi Arabia, memo shows

  • Wall Street giant received the approval from the Ministry of Investment Saudi Arabia

RIYADH: US bank Citigroup has received approval to establish its regional headquarters in Saudi Arabia’s Riyadh, according to an internal memo seen by Reuters on Friday.
The Wall Street giant received the approval from the Ministry of Investment Saudi Arabia (MISA), according to the memo.
“This marks a significant leap forward for our franchise in Saudi Arabia and we look forward to our continued growth in the kingdom,” Citi Saudi Arabia CEO Fahad Aldeweesh said in the memo.
Bloomberg News reported the development earlier in the day.
Wall Street titan Goldman Sachs also received a license in May to set up its regional headquarters in Saudi Arabia’s Riyadh.


Saudi Arabia joins global hydrogen fuel partnership

Updated 22 November 2024
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Saudi Arabia joins global hydrogen fuel partnership

RIYADH: Saudi Arabia has joined a key international alliance designed to enhance cooperation around the development and deployment of hydrogen and fuel cell technologies.

The International Partnership for the Hydrogen and Fuel Cell Economy works to deliver a balanced and effective global transition to cleaner and more efficient energy systems.

The Kingdom’s Ministry of Energy announced Saudi Arabia had signed up to the organization, with a press release saying the move represents a new step that confirms the “pioneering role” that the Kingdom is playing in international efforts aimed at enhancing sustainability and “innovating advanced solutions” in the fields of clean power.

Saudi Arabia has pledged to achieve zero neutrality in terms of carbon emissions by 2060, as well as becoming one of the world’s most important producers and exporters of clean hydrogen.

The press release added: “The Kingdom’s accession to this partnership confirms its firm vision regarding the role of international cooperation and its importance in achieving a more sustainable energy future.”

The IPHE was originally launched in 2003 by the US, and has two active working groups covering Education & Outreach, and Regulations, Codes, Standards, & Safety.


COP29 enters final hours amid key negotiations on climate finance and carbon markets

Updated 22 November 2024
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COP29 enters final hours amid key negotiations on climate finance and carbon markets

BAKU: As COP29 nears its conclusion, negotiators are working intensively to finalize agreements that could significantly advance global climate action. 

Hosted in Baku, Azerbaijan, the conference has focused on critical issues such as climate finance, adaptation strategies, and the operationalization of carbon markets under the 2015 Paris Agreement. 

Although decisions remain in draft form, the discussions signal progress on aligning global efforts with the urgent need to combat the climate crisis.

Saudi Arabia has emerged as a key player, leveraging its growing diplomatic influence and domestic climate initiatives to shape the outcomes.

Push for equitable climate finance

One of the most pressing topics at COP29 has been the New Collective Quantified Goal on climate finance. 

Negotiators are seeking to establish a framework that mobilizes $1.3 trillion annually by 2035 to support developing nations in addressing climate change. 

This new goal reflects the escalating financial demands of both mitigation and adaptation efforts, with developing countries requiring $215 billion to 387 billion annually for adaptation alone through 2030.

Saudi Arabia has been a vocal advocate for equitable financing mechanisms, emphasizing the need for practical pathways to unlock funds for countries that bear the brunt of climate impacts yet have limited resources. 

The Kingdom has supported calls for reforming global financial institutions to reduce barriers such as high borrowing costs and restrictive conditions. This aligns with Saudi Arabia’s broader position that climate finance must be accessible and targeted to the most vulnerable nations.

Domestically, Saudi Arabia has backed its advocacy with action. The Kingdom has committed significant investments to its Saudi Green Initiative, which includes billions of dollars for renewable energy projects, reforestation, and environmental restoration. 

These initiatives underscore Saudi Arabia’s dual focus on addressing domestic climate challenges and contributing to global solutions, according to the draft resolution. 

“Through initiatives like the Saudi Green Initiative, the Kingdom has committed to reducing regional emissions by more than 10 percent and leading the planting of 50 billion trees across the Middle East to combat desertification and foster environmental sustainability,” the document stated.

Speeches came to an end as negotiations at COP29 in Baku reached their final hours. AN Photo/Abdulrahman Bin Shulhub

Carbon Markets: A Saudi priority

Discussions on Article 6 of the Paris Agreement, which governs international carbon trading, have been another focal point of COP29. 

Saudi Arabia has taken a prominent role in shaping the rules for carbon markets, advocating for frameworks that promote transparency and equitable participation.

Under Article 6.2, which covers bilateral cooperation, and Article 6.4, which establishes a centralized mechanism for trading carbon credits, Saudi negotiators emphasized the importance of avoiding double-counting emissions reductions and ensuring environmental integrity. 

These safeguards are essential for building trust in the carbon market as a tool for accelerating emissions reductions.

In the draft resolution on financing released by the UN Framework Convention on Climate Change it is outlined that “Saudi Arabia emphasizes the importance of transparency and equitable participation in Article 6 mechanisms, ensuring that developing nations can benefit from international carbon trading frameworks.”

The Kingdom’s engagement in these discussions reflects its broader ambition to become a regional hub for carbon trading. The Kingdom is advancing projects in carbon capture, utilization, and storage, positioning itself as a leader in leveraging market-based solutions to achieve climate goals. 

These efforts align with the Saudi Green Initiative’s targets for emissions reductions and renewable energy expansion.

A commitment to adaptation

While mitigation often dominates global climate discussions, COP29 has seen renewed attention to adaptation – an area where Saudi Arabia has also contributed actively.

Negotiators are working to refine the Global Goal on Adaptation by developing measurable indicators to track progress.

These metrics aim to ensure that adaptation efforts are effective and responsive to the needs of vulnerable communities.

“Saudi Arabia continues its focus on promoting energy efficiency, a critical pillar of its sustainability agenda, as highlighted by top officials during COP29 discussions,” reads the draft resolution.​

The Kingdom has supported these efforts, emphasizing the importance of integrating local knowledge and traditional practices into adaptation strategies. The Kingdom’s approach aligns with its domestic priorities, which include enhancing resilience to desertification and water scarcity, challenges exacerbated by its arid climate, the document added.

Inclusivity and collaboration

Inclusivity has been a central theme at COP29, and Saudi Arabia has demonstrated its commitment to ensuring diverse voices are part of the climate conversation. The Kingdom supported the draft Baku Workplan, which aims to elevate indigenous peoples and local communities in climate governance.

Domestically, Saudi Arabia has prioritized inclusivity through education and workforce development programs that prepare youth and women for leadership roles in green industries. 

These initiatives are part of broader reforms under Vision 2030, which aims to diversify the economy while ensuring equitable opportunities for all citizens.

COP29 began on Nov. 11. AN Photo/Abdulrahman Bin Shulhub

Regional leadership

Saudi Arabia’s influence extends beyond its national borders. Through the Middle East Green Initiative, the Kingdom is fostering regional cooperation to combat climate change.

The initiative includes ambitious goals to plant 50 billion trees across the Middle East and reduce regional emissions by more than 10 percent.

At COP29, these efforts were presented as examples of how regional action can amplify global progress.

By working closely with other Gulf Cooperation Council countries, Saudi Arabia is also driving investments in renewable energy projects that enhance energy security and sustainability. 

These partnerships underscore the Kingdom’s role as a regional leader in climate action, capable of catalyzing collective efforts to address shared challenges.

Challenges and opportunities ahead

As COP29 approaches its conclusion, much remains to be finalized. The draft decisions on climate finance, carbon markets, and adaptation reflect significant progress but also underscore the complexity of reaching consensus among diverse stakeholders.

Saudi Arabia’s contributions to these discussions demonstrate its ability to balance domestic priorities with international leadership. By advocating for equitable solutions, advancing regional cooperation, and showcasing its own climate successes, the Kingdom has positioned itself as a key player in shaping the global response to climate change.

The conference has marked an important step forward in the global fight against climate change. The agreements under discussion – particularly those on finance and carbon markets – highlight the growing recognition that collective action is essential to achieving the Paris Agreement’s goals.

Saudi Arabia’s active participation in these negotiations underscores its evolving role as a climate leader. 


Saudi cement sales up 5% to 12.84m tonnes amid sustainability drive

Updated 22 November 2024
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Saudi cement sales up 5% to 12.84m tonnes amid sustainability drive

RIYADH: Cement sales in Saudi Arabia saw an annual increase of 4.93 percent in the third quarter of 2024, reaching 12.84 million tonnes, according to recent data.

Figures released by Al-Yamama Cement showed that 96.18 percent of these sales were domestic, with only 3.82 percent being exported.  

The data covers 17 Saudi cement companies, with Al-Yamama Cement holding the largest share of domestic sales at 12.47 percent, amounting to 1.54 million tonnes, despite experiencing a 27.18 percent decline during the period.

With the successful acquisition of Hail Cement Company by Qassim Cement Company, QCC now leads the market with the highest share among its peers at 13.37 percent, or 1.65 million tonnes, moving Al-Yamama Cement to second place.

Saudi Cement, Southern Cement and Yanbu Cement held 8.96 percent, 8.49 percent and 8.18 percent shares of the domestic market respectively.

The highest growth in domestic sales was recorded by Umm Al-Qura Cement, which saw a 69 percent increase to 372,000 tonnes during this period, despite holding a relatively small 3 percent market share.

City Cement’s local sales rose by 52.69 percent annually to 739,000 tonnes, while Tabuk Cement experienced a 27.3 percent increase, reaching 429,000 tonnes.  

In terms of cement exports, Saudi Cement dominated with 80.45 percent of total shipments, amounting to 395,000 tonnes this quarter.  This figure represents a 13.18 percent increase compared to the same quarter last year.   

Najran Cement accounted for 11 percent of exports for the quarter, totaling 54,000 tonnes, marking a 24 percent decline. Eastern Cement with 8.55 percent share saw a 133 percent rise in exports, reaching 42,000 tonnes. 

Saudi Arabia also exported 1.08 million tonnes of clinker during this period, marking a 41 percent decline compared to the same period last year.

Clinker, a crucial intermediate product in cement production, is commonly exported due to its cost-effectiveness. It is more economical to ship it to other countries for final processing into cement than to produce the finished product and then export.

According to a report by AlJazira Capital, the total utilization rate of the cement sector in Saudi Arabia stood at 72.8 percent in September. 

This figure represents the proportion of the cement production capacity that is actively being used to meet demand.

A utilization rate of 72.8 percent indicates that, on average, the cement industry in Saudi Arabia is using just over two-thirds of its available production capacity.

Saudi Arabia is a prominent player in the global cement industry, ranking among the top 10 producers worldwide. The Kingdom’s production capacity has been bolstered by significant investments to meet both domestic demand and export opportunities.

Key factors driving Saudi Arabia’s cement industry include its robust infrastructure development, housing projects, and initiatives under Vision 2030, which aim to diversify the economy and reduce reliance on oil revenues.

Saudi Arabia’s path to decarbonization

In October, Saudi Arabia’s cement sector took a significant leap towards decarbonization with the announcement of a joint venture between the UK’s Next Generation SCM and Nizak Mining Co., a subsidiary of City Cement.

The collaboration is focused on producing supplementary cementitious materials locally, utilizing an innovative, energy-efficient technology.

This new method requires only one-sixth of the fuel compared to conventional cement production and operates at lower temperatures, significantly reducing operational costs and carbon emissions.

The technology already demonstrates a 99 percent reduction in emissions, producing just 8 kg of CO2 per tonne of calcined clay, compared to the global average of 600 kg per tonne.

The joint venture is part of the Kingdom’s broader decarbonization strategy, which is aligned with Vision 2030 and the Saudi Green Initiative.

As part of these proposals, the Kingdom has set an ambitious goal of cutting carbon emissions by 278 million tonnes annually by 2030.

This venture, which will have its first production plant in Riyadh, is expected to produce up to 700,000 tonnes of low-carbon supplementary cementitious materials in its second year of operations, starting in 2025.

The project is also crucial for the domestic production of low-carbon concrete, as traditional SCM alternatives, like fly ash and slag, are not readily available in Saudi Arabia.

The venture will not only help Saudi Arabia meet its sustainability targets but also strengthen its position as a regional hub for low-carbon materials, generating both economic and environmental benefits.

Speaking in October, Majed Al-Osailan, CEO of City Cement, emphasized the long-term impact of the project, stating that it will create jobs, improve access to sustainable building materials, and create export opportunities for the Kingdom.

According to a study by the Boston Consulting Group in September, Saudi Arabia stands to gain a significant competitive advantage in the global cement industry as the sector moves toward decarbonization through carbon capture and storage.

The competitive dynamics of the industry are shifting due to the high costs associated with CCS, which is essential for achieving net-zero emissions by 2050.

One of the primary factors influencing future competitiveness is a plant’s proximity to CO2 storage sites.

Cement plants located within 200 km of CCS hubs could see abatement costs reduced by half compared to those located farther away.

This geographical advantage will be crucial in determining cost competitiveness on a global scale.

Saudi Arabia, with its lower energy costs, is well-positioned to capitalize on this advantage according to the study. The Middle East, in general, benefits from cheaper energy, which could give Saudi plants a $20 per tonne cost advantage in CCS over the global median.

This would allow Saudi Arabia to emerge as a key export hub in the global cement market. 

Plants in the Kingdom that can minimize their CCS abatement costs will be internationally competitive, particularly as global trade dynamics shift and demand grows for low-carbon cement.

Moreover, Saudi Arabia’s energy infrastructure and strategic location near key shipping routes bolster its potential as a regional and global supplier of cement.

With substantial investments in CCS technology and renewables, the Kingdom could not only meet domestic demand but also serve international markets more efficiently, securing its position in the evolving global cement trade.

As the cost of CCS implementation rises, the global competitive landscape will be reshaped, with plants closer to CO2 storage hubs and renewable energy sources becoming more attractive.

Saudi Arabia’s competitive edge, therefore, lies in its ability to leverage its energy resources and strategic location, potentially making it a leader in the export of low-carbon cement solutions.


Oil Updates – crude heads for weekly gains as Ukraine war intensifies

Updated 22 November 2024
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Oil Updates – crude heads for weekly gains as Ukraine war intensifies

LONDON: Oil prices inched lower on Friday, but were on track for a weekly rise of nearly 4 percent, as an intensifying war in Ukraine returned a geopolitical risk premium to oil markets.

Brent crude futures fell 65 cents, or 0.88 percent, to $73.58 a barrel by 4:12 p.m. Saudi time. US West Texas Intermediate crude futures fell by 66 cents, or 0.94 percent, to $69.44 per barrel.

Pressuring prices on Friday, eurozone business activity took a surprisingly sharp turn for the worse this month as the bloc’s dominant services industry contracted and manufacturing sank deeper into recession.

Kazakhstan’s largest oilfield, Tengiz, is scheduled to return to full production in early December, Russian news agency Interfax reported on Friday, while elsewhere Kazakhstan’s energy ministry said it plans to produce 90 million tonnes of oil in 2025, up from 88 million tonnes in 2024.

Both contracts are set for gains of nearly 4 percent this week, as Moscow steps up its Ukraine offensive after Britain and the United States allowed Kyiv to strike deeper into Russia with their missiles.

“The Russia-Ukraine escalation has raised geopolitical tensions beyond levels seen during the year-long conflict between Israel and Iran-backed militants,” Saxo Bank analyst Ole Hansen said on Friday.

He added that rising refinery margins and an incoming cold snap had also supported distillate refinery profit margins, and wider oil prices, this week.

The Kremlin said on Friday that a strike on Ukraine using a newly developed hypersonic ballistic missile was a message to the West that Moscow will respond harshly to any “reckless” Western actions in support of Ukraine.

Ukraine has used drones to target Russian oil infrastructure, for instance in June, when it used long-range attack drones to strike four Russian refineries.

“What the market fears is accidental destruction in any part of oil, gas and refining that not only causes long-term damage but accelerates a war spiral,” said PVM analyst John Evans.

Also supporting prices this week, China announced policy measures on Thursday to boost trade, including support for energy product imports, amid worries over US President-elect Donald Trump’s threats to impose tariffs.

China’s crude oil imports are set to rebound in November, according to analysts, traders and ship tracking data.