Smart cities to drive diversification in Saudi Arabia
Mita Srinivasan
10X Technology

Smart cities to drive diversification in Saudi Arabia

Globally, the smart city market will grow over $2.46 trillion in 2025, it's spending on technology expected to grow at a CAGR of 22.7 percent, reaching $327 billion by 2025

Frost & Sullivan's recent analysis finds that the coming decade will see widespread uptake of smart city solutions, especially in medium-sized cities and cities in developing nations. The smart city market will grow over $2.46 trillion in 2025, presenting significant opportunities for solution providers operating within the smart city space.

Saudi Crown Prince Mohammed Bin Salman envisions creating the world's most liveable city that can attract the world's greatest minds and best talents by 2030. Saudi Arabia needs smart cities to serve as an economic engine for the Kingdom. Being primarily an oil-reliant economy today, the Kingdom is increasingly looking to diversify, and a smart city is a step in that direction. For instance, the Kingdom is looking at raising the share of non-oil exports in non-oil GDP from 16 to 50 percent by 2030. The Kingdom expects smart cities to add hundreds of thousands of jobs by 2030; smart cities are expected to drive diversification and will contribute significantly to the domestic GDP by 2030.

The Kingdom has already allocated $500 billion to invest across 285 municipalities to implement smart cities. The Kingdom has already initiated efforts towards transforming the first five cities, including Makkah, Riyadh, Jeddah, Al-Madinah, and Al-Ahsa. The Kingdom has a clear vision and has taken a holistic approach focusing on key dimensions such as governance, mobility, economy, environment, people, and living to achieve its aspirations.

The development of new economic sectors combined with the rise in demand for sustainable and eco-friendly cities supported by green initiatives globally and improving living conditions for its citizens/residents are the main drivers for developing smart cities in Saudi Arabia. Today, we find several evidence of smart initiatives leading to a sustainable environment and enabling more citizen involvement in co-creating city services, which will not benefit the current generation but will also help create a sustainable environment for future generations.

According to Frost & Sullivan, the main challenges facing smart cities in the world include:

  • Lack of Investment: There is a lack of investment and proper policies to cover the high initial establishment cost of new IoT technologies like AI (Artificial Intelligence), crowd analytics, robotics. Government spending on ICT is insufficient to endure the infrastructural as well as implementation cost of these technologies.

  • Lack of robust security system and lack of skill to handle cyber-attacks: With the rise of cyber-attacks, it is necessary for digitalized services to have a strong and secure system to survive cyber-attacks. This puts an extra cost burden on the city administration while implementing digital services.

  • Lack of proper collaboration between citizens, public establishments, state and local government and private enterprises leads to a fragmented smart city ecosystem, which could impede several smart initiatives and projects in the pipeline.

According to Frost & Sullivan's Techvision Team, Saudi Arabia should ensure a fair balance in strengthening both the economic and social fabric of its communities to achieve the stated objective of building a better future for their country.

Smart cities' spending on technology in the next six years is expected to grow at a CAGR of 22.7 percent, reaching $327 billion by 2025 from $96 billion in 2019. Technologies like artificial intelligence and big data will be in high demand to combat the pandemic, with growing opportunities for crowd analytics, open data dashboard, and online city services.