The Saudi Council of Economic and Development Affairs (CEDA) approved the Financial Sector Development Program 2020, which is one of the main programs to achieve goals of the Saudi Vision 2030.
The program’s objectives include creating a diversified and effective financial services sector to support the development of the national economy, diversifying its sources of income, and stimulate savings, finance, and investment by addressing the sector’s challenges.
It is underpinned by three main pillars: enabling financial institutions to support private sector growth, ensuring the formation of an advanced capital market and promoting and empowering financial planning.
These pillars are aligned with the ambitious strategic objectives of Saudi Vision 2030 for diversifying the economy, growing investments to new sectors, supporting emerging sectors and attracting foreign investments.
The new program offers a range of initiatives that have been designed based on thorough studies of the program’s requirements and best international practices.
Collectively, the initiatives will offer a diverse suite of products and services that facilitate access to a highly-digitized inclusive financial system that maintains the Kingdom’s financial stability.
Through its first pillar, the program will work on a number of Vision 2030-related initiatives, such as enabling new types of players to enter the market, incentivizing the financial sector to finance small and medium-sized enterprises (SMEs) and driving toward a cashless society.
These initiatives involve a number of measures, including revising and enhancing existing laws and regulations, incentivizing merchants and citizens to adopt e-payment solutions, ensuring enforcement of mandatory vehicle and health insurance and facilitating mergers and acquisitions within the insurance sector to increase its scale and solvency.
While the second pillar will allow the program to make the Saudi financial market more attractive to local and international investors through a number of initiatives that will see more diversified investment products and developed legislation.
The program will also encourage the privatization of some state-owned services and entities, further deepening the equity market and increasing market capitalization meanwhile improving service quality and spending efficiency.
The program’s initiatives also involve the development of several regulatory aspects related to the debt facilities market to deepen the debt market.
The third pillar, however, focuses on boosting the demand and supply-sides of savings to bolster the Kingdom’s savings ecosystem.
This involves creating incentives to offer a diverse range of lucrative and safe savings products and, at the same time, increasing awareness and promoting financial literacy and planning.
This, in turn, is expected to encourage banks to diversify their savings offerings to reach a wider customer base.
A number of the planned savings products will be backed by the government and designed to help citizens achieve certain long-term goals, such as their children’s future expenses, supplementary retirement income, and affordable home ownership.
