Encouraging Private Sector to Issue Sukuk Increases Savings Rate in Saudi Arabia

Saudi Arabia is working to reach its goal of increasing savings rates from 6% to the global average of 10%. (Reuters)

The Saudi government is intensifying its efforts to help individuals raise the savings rate in the country, by encouraging the private sector to issue new sukuks.
The Financial Sector Development Program, within Vision 2030, aims to raise savings rates among individuals, increase the availability of savings products, enrich financial culture and spread awareness of the importance of saving and its benefits to plan future goals.
According to earlier statements by Minister of Finance Mohammed Al-Jadaan, the government sukuk program comes as part of several initiatives that aim to increase the savings rate, which is one of the pillars of the financial sector development program affiliated with Vision 2030.
The Saudi government is seeking to increase savings rates from 6 percent to the global average of 10 percent.
In this context, new financial technology companies are competing to offer more innovative and less complex savings products, including enabling an individual to open a savings wallet with an amount starting from one thousand riyals ($266), with a return of up to 5 percent annually.
The CEO of a savings platform, Adel Al-Ateeq, told Asharq Al-Awsat that financial technology companies are currently seeking to offer new savings products with guaranteed returns, adding that saving has become necessary to preserve capital and protect it from the impact of inflation and the rise in prices.
Economist Ahmed Al-Shehri highlighted the importance of saving for the individual and the family as a whole, such as securing the financial future and retirement, providing better education opportunities for children, buying a house, in addition to dealing with financial emergencies, and striving for financial independence.
He said that Saudi Arabia was witnessing a major shift in the savings culture in recent years, noting that the government has begun to launch awareness campaigns and educational programs, and to offer new savings programs for individuals.
Al-Shehri recommended setting a budget in which income and various expenses are determined, including necessary expenses, investment, and entertainment, giving the highest priority to basic necessities and needs, in addition to specifying a certain percentage of income for saving. He also stressed the importance of avoiding debts and excessive reliance on credit cards.
The Ministry of Finance and the National Debt Management Center launched the savings product intended for individuals and supported by the government, under the name “Sah”, with a value of one thousand riyals per instrument and a return rate exceeding 5 percent.
The second savings round closed on March 5, having attracted over SAR 959 million in total cumulative savings commitments from 37,000 participants.