06 Jul 2022
There is a significant shift in attitude towards personal finance management in the Kingdom of Saudi Arabia, largely driven by a young demographic. The next generation are keen to save, invest and better manage their finances and now they have greater means and access to an array of saving and investment products. In fact, one of the goals of the financial sector development program, part of the Kingdom’s socio-economic Vision 2030 strategy, is to promote and enable financial planning. While the public sector has a key role to play to ensure the right policies, reforms and support measures are in place to enable the realization of the goal, the onus is on the private sector to also help bridge the gap between financial demand – which stems from knowledge and awareness – and financial supply – which is driven from product innovation and development.
At SEDCO Holding, we have been championing financial education through our dedicated financial literacy program, Riyali, since 2012.
The Riyali Financial Literacy program (which loosely translates to “my money”) aims to enhance the financial awareness of the community, develop their skills, and provide them with the knowledge and tools that will enable them to take control of their financial situation and make sound financial and investment decisions. What started off as a CSR initiative by the Saudi-based family-owned Shariah investment powerhouse, evolved into a nationally recognized and fast-growing financial literacy program endorsed by the Ministry of Education.
With the unwavering support of SEDCO Holding’s shareholders, hard work and dedication of the Riyali team coupled with the Ministry enabling critical access to public schools, Riyali’s reach, and impact has been tremendous. To date, the financial literacy program has amassed over 1.8 million beneficiaries and the courses are available across almost all regions in the Kingdom targeting all age groups, from first grade children to young adults. As part of our efforts to measure the impact of the program, we surveyed 25,000 program participants to gain insights into how the financial literacy program impacted their financial knowledge, attitudes, and behaviors. The results of the survey revealed that most participants gained greater confidence in managing their personal finances and significantly increased their financial knowledge after taking the course. Additionally, most participants were able to apply what they learnt to help improve their financial situation; 68% of those surveyed said they started investing or considering it, 81% started to set personal budgets and 86% started to save after taking the courses.
We are already starting to see how enhanced financial literacy among the Saudi population is changing investment and spending habits. For instance, the latest data from the Capital Market Authority (the Saudi capital market regulator) shows that assets under management (AUMs) in mutual funds are growing and retail investor activity in the Saudi stock market has also risen. There is also a significant increase in the number of female investors; the number of investment portfolio accounts held by females has increased from about 1 million in Q3 2019 to 1.5 million in Q3 2021. The October 2021 statistics from SAMA (Saudi Central Bank) also points to increased level of activity related to development of the SME sector with micro facilities provided to micro, small and medium enterprises increasing at a healthy pace since 2018.  The data also indicates increased activity related to home ownership investment, with the total number of new residential mortgage contracts climbing significantly over the last few years. A final economic indicator that is suggestive of shifting attitudes towards spending and personal debt management, is reduced dependency on consumer loans and credit cards, with the total value of consumer and credit card loans declining over the last three years. While several other factors are at play – such as sector reforms and policy changes – influencing the performance of those economic indicators, we can deduce that on balance the Saudi population is gearing increasingly towards becoming more saving and investment oriented and savvy.
Riyali aspires to continue expanding its reach, positively influencing members of society, and helping empower youth in Saudi make decisions that set them on the right course towards financial resilience and well-being. But we believe that for Riyali to unlock greater potential the time is right to spin it off into its own independent foundation and become a conduit through which the G20 nation can achieve its goals of promoting and enabling financial planning and support the world in achieving some of the SDG’s.