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Desert mirages to digital realities
How AI will revolutionize the Kingdom’s government
Rasheed Eltayeb
Jad Hajj
Dany Karam
Jad Baroudi
Over the past decade, artificial intelligence (AI) has evolved to become a transformational force. Our research estimates AI will contribute as much as US$15.7 trillion to the global economy by 2030, more than the combined current GDP of China and India. Of that total, the Middle East is set to contribute $320 billion—with Saudi Arabia alone accounting for $135 billion.
The opportunities are significant for the government of the Kingdom of Saudi Arabia. The use of AI will help public-sector leaders address critical challenges such as food security, streamline public services, tailor educational programs to the evolving needs of their population, optimize urban planning for sustainable growth, and foster innovation in renewable energy sectors, including water resource management.
The incorporation of AI into government operations could have sweeping benefits. Three opportunities stand out:
The incorporation of AI into government operations could have sweeping benefits. Three opportunities stand out:
To realize the full potential of AI, the Kingdom’s government should seek to develop and maintain a robust AI ecosystem. It could accelerate this ecosystem by providing incentives to boost investment in core areas and pursuing strategic partnerships with global cloud providers and leading chipmakers.
To build and scale national AI champions, the center of government, in collaboration with regulators, can deploy incentives to boost investments in core areas. These incentives could include tax breaks for AI-related businesses, R&D investments, grants or low-interest loans for AI research projects, and government-backed venture capital funds to invest in local and regional AI startups with support from the Kingdom’s SWF.
Hyperscale cloud providers continue to expand their footprint in the region, particularly in Saudi Arabia. Microsoft intends to inaugurate a data center in KSA, and Google recently announced the launch of Google Cloud Platform in KSA. Since the majority of cutting-edge AI platforms and services today are cloud-based, forging strategic partnerships with hyperscalers is imperative if the Kingdom is to ensure that its AI ecosystem has sufficient access to best-in-class technology at scale and with affordable prices.
The chip design and manufacturing market—which is dominated by a few players (Nvidia, TSMC, and Samsung)—is highly competitive. Industry leaders have extensive R&D capabilities and benefit from economies of scale, creating significant barriers to entry for newcomers. The SWF could explore investment opportunities with these established leaders, as such partnerships would not only bolster its financial assets but also ensure it could influence the direction of the AI computing sector.
The AI-driven transformation of government represents a foundational pillar to support KSA’s future and could be integral to achieving Vision 2030’s ambitious economic diversification objectives. By making comprehensive investments in AI technologies and nurturing an innovation-driven culture, the Kingdom has the potential to unlock unprecedented growth and development. These advancements will not merely maintain KSA’s standing, but help it leapfrog and outpace potential regional and global competitors. Therefore, KSA must wholeheartedly embrace AI and make strategic, coordinated investments in its adoption and advancement.
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