Saudi Arabia’s economy is the largest in the Arab world and the 16th largest globally. The country is a member of the G20 and is known for having one of the most sophisticated economies, being a founding member of OPEC.
It is estimated that Saudi Arabia possesses around 17% of the world’s proven oil reserves. Approximately 50% of the country’s gross domestic product and 70% of its export profits are generated by its petroleum and natural gas industries.
However, what many people are unaware of is that Saudi Arabia has many other sources of income as well. In this article, we will discuss 10 ways Saudi Arabia generates revenue. Stick around until the end, as our final statistics are staggering.
10. Agriculture
Since the inception of Saudi Arabia’s monarchy, one of its primary responsibilities has been overseeing the financial affairs of the country’s indigenous tribes.
The majority of the population consisted of nomadic herders who sustained themselves by tending to their herds of camels, sheep, and goats. Agriculture was strictly regulated and operated independently, without assistance from external sources.
As part of its objectives for growth, the government has facilitated the eligibility of agricultural companies for subsidies and other crucial benefits. This aligns with the government’s economic development goals for the kingdom.
However, due to the fact that agriculture occupies less than 2% of its land, there is limited space for expansion. Consequently, agriculture contributes a small portion to Saudi Arabia’s GDP and employs only a negligible fraction of the country’s total labor force.
9. Transportation
Given that the majority of highways in Saudi Arabia are paved, most residents have access to travel by vehicle. Taxis are commonly found in urban areas, as well as in many other densely populated locations.
The route from Al-Taif to Mecca is notable for its breathtaking descent along the western escarpment. Additionally, there is a train service available from Riyadh to Al-Dammam, passing through Al-Hofuf.
In 1986, a causeway was built to link the kingdom with the island nation of Bahrain.
8. Tourism
Starting in the 1960s, a significant influx of individuals with foreign citizenship began entering the country, often accompanied by members of their immediate family.
This led to an increase in the number of organizations catering to their needs. In the mid-20th century, the Saudi Arabian government initiated structured tourism marketing campaigns to attract visitors.
However, tourism’s contribution to the economy, outside of religious pilgrimages, remains a small fraction of the total. Foreign nationals have long been a substantial part of the kingdom’s labor force, now constituting over 75% of it.
Many of these workers are unskilled or semi-skilled laborers from South Asia and the Middle East, representing various ethnic backgrounds. Highly skilled positions have often been filled by Westerners, particularly Americans, who also frequently partake in tourist activities.
The significant population growth in Saudi Arabia during the latter half of the 20th century can be attributed to an increase in native Saudis joining the labor force, particularly in rural areas.
In the 1990s, the government implemented a program known as Saudi-ization, which aimed to reduce reliance on foreign labor by companies.
Additionally, the government earns revenue from returns on investments, tariffs, licensing fees, and consumption taxes. Muslims are required to pay zakat, a form of charity intended to support the less fortunate in society, as mandated by Islamic law.
In 2018, a 5% value-added tax was introduced on the majority of products and services, and in July 2020, this tax was increased to 15% to offset losses from the decline in oil prices. This tax resulted from joint legislation adopted by several Gulf states.
7. Services
The latter half of the 20th century witnessed a significant expansion in the service sector, driven by increased revenue from the sale of petroleum products and substantial growth in government expenditure.
Nearly 60% of the labor force is employed in occupations directly or indirectly related to the service industry. These jobs are found in various sectors including the public sector, military, hospitality, wholesale and retail trade, and tourism.
The majority of employed individuals are part of these sectors, which collectively contribute to over a quarter of the total gross domestic output.
Due to the high influx of visitors to Mecca and Medina each year, the hotel industries in these cities and their surroundings have historically enjoyed exceptional levels of success.
6. Trade.
The majority of Saudi Arabia’s exports comprise petroleum and petroleum-derived products. On the other hand, imports mainly consist of various food items and animals, machinery, transportation equipment, as well as chemicals and their derivatives.
While the United States, China, and Japan are crucial trading partners, the United Arab Emirates is rapidly emerging as one of the most significant import providers.
5. Manufacturing
Since 1976, when the government established the Saudi Basic Industries Corporation (Sabic) to diversify the economy, manufacturing has made significant strides.
This initiative has led to substantial economic growth and contributed to the overall development of the nation. The primary aim of this program was to enhance the production capacity of businesses in the petroleum sector.
Since its inception, Sabic has manufactured a wide range of products, including metal and cement components, as well as plastic and aluminum goods.
Other industries, such as baked goods, printing, and furniture manufacturing, though smaller in scale, also contribute to the manufacturing sector.
4. Finance.
The Saudi Arabian Monetary Agency, commonly referred to as SAMA, was established in 1952 and currently serves as the kingdom’s primary financial and monetary regulator.
Its responsibilities include regulating commercial and development banks, as well as other financial institutions. Additionally, the central bank manages the country’s foreign reserves and assets.
Banks charge fees for deposit-taking and loan issuance, despite the widespread belief that banks and other financial institutions are prohibited from earning interest.
Despite the government’s continuous efforts to promote private sector growth, government economic activities still heavily influence business dynamics and the amount of money in circulation.
This remains the case despite ongoing government support for private sector expansion. The Kingdom of Saudi Arabia hosts a diverse range of commercial banks, with most being established by Saudi citizens or foreign enterprises.
3. Gold.
According to the Saudi Press Agency, Saudi Arabia possesses extensive gold resources buried underground, estimated to weigh a total of 323.7 tons.
Currently, the Kingdom of Saudi Arabia is home to approximately six gold and silver bullion manufacturers, with a combined investment value of around $1.86 billion.
The Mahd Al-Dhahab mine, meaning “the cradle of gold,” was the first gold mine discovered in Saudi Arabia. Dating back to around 3000 BCE, people in Arabia began digging holes in the earth in search of gold.
The subsequent period of gold mining activity can be traced back to the time of Islamic Abbasid rule in the region, spanning from 750 to 1258 A.D. Gold holds significant cultural importance in Saudi Arabia.
It is customary for prospective husbands to present gold dowries to their future brides as part of the wedding ritual. Even after marriage, Saudi women appreciate receiving gold gifts, especially during major life milestones such as birthdays, pregnancy announcements, and wedding anniversaries.
2. Real Estate.
According to the housing ministry, real estate ranks as the second-largest contributor to Saudi Arabia’s GDP and is interconnected with the growth of over 120 other economic sectors.
In 2021, real estate revenues exceeded $103 billion. During the first half of the year, the volume of work completed in the building and construction industries increased by 14% compared to the previous year.
Additionally, studies project a rise in demand for subsidized home loan contracts by approximately 500,000 over the next five years.
1. Oil
As previously mentioned, Saudi Arabia derives 50% of its revenue from oil. The state-owned company Saudi Aramco is responsible for producing both crude oil and natural gas.
With approximately 270 billion barrels in crude oil reserves, Saudi Aramco boasts the second-largest reserves globally. It also holds the highest daily oil output among all oil-producing companies.
On May 11, 2022, Saudi Aramco’s market valuation surpassed that of Apple, making it the most valuable company in the world. The roots of Saudi Aramco trace back to the oil shortages of the First World War, marking the company’s inception.
