The education sector in Saudi Arabia is one of the main pillars in the Kingdom’s approach to diversify its economy and achieve sustainable and comprehensive development.
To foster the education sector, Saudi Arabia has launched numerous strategies and initiatives to improve the quality of education and provide a favorable and attractive educational environment for investment. It has also dedicated 16.2% of total government spending in 2023 to improve the educational infrastructure, develop curricula, and train teachers. This, in turn, has boosted investment in the sector.
Investment in Education
According to the Economic and Investment Monitor, issued by the Saudi Ministry of Investment, the education sector in Saudi Arabia has become an attractive destination for investors.
This has been a result of the sector’s positive performance in several indicators, including the high proportion of youth in the demographic composition, the high average annual household spending in Saudi Arabia, and the increasing demand for education in the private sector.
Promising Indicators
Several indicators have signaled a significant improvement in investment in the education sector. These include the surge in foreign direct investment (FDI) by 335% (SAR 191mn) in 2022, compared to 222% in 2021(SAR 181mn). Hence, the FDI stock in education reached SAR 917mn in 2022.
Meanwhile, the total operating revenues in education reached SAR 23.8bn, accounting for a 2.2% growth compared to 2022. The total operating expenses amounted to SAR 10.6bn, representing a 2.8% growth.
Investment Licenses
The Saudi Ministry of Investment (MISA) issued 41 education licenses in the second quarter of 2024, accounting for an 86% growth YoY. In 2023, MISA issued a total of 114 licenses, a 49% growth compared to 2022.
In a remarkable milestone, five international universities have obtained foreign investor licenses to establish branches in Saudi Arabia. These universities have high rankings in the QS World University Ranking, and will offer bachelor’s and master’s programs in areas of key priority to Vision 2030. These universities are: the Royal College of Surgeons in Ireland (RCSI), the University of Strathclyde, the University of Wollongong, IE University, and Arizona State University.
Promoting Investment
Saudi Arabia facilitates and supports investment in the education sector by offering many incentives. These include supporting capital expenditures such as land and buildings or land leasing to offset the high cost of real estate for private sector operators. The Kingdom also exempts international schools from Saudization and reduces the Saudization percentage in Saudi schools.
Furthermore, it offers financial subsidies to support the costs of teacher salaries, especially the highly-qualified foreign staff. It also provides other regulatory exemptions, such as accelerating the visa approval process for foreign staff.
These efforts align with the Saudi Vision 2030 goal of empowering the private and non-profit sectors and increasing their participation to improve the financial efficiency of the education sector. This goal has also been one of the key priorities of the Human Capability Development Program, which aims to enhance the technical and professional skills and promote creativity and innovation across all age groups and educational levels.
Investment Opportunities in Education
The report highlights over 70 investment opportunities in the education sector in Saudi Arabia, according to InvestSaudi platform’s data. These opportunities involve several fields, including 22 investment opportunities in K-12 education; 17 opportunities in Early Years Education; and 11 opportunities in Higher Education.
They also include 17 investment opportunities in Training; 4 opportunities in Educational Technology; and 2 opportunities in Ancillary Services for Education.
Human Capability Program
Under Vision 2030, Saudi Arabia recognizes the significance of the education sector in the community building process and economic and social advancement. Therefore, it has given special attention and priority to this sector.
The Human Capability Program aims to develop the citizens’ capabilities, hone their knowledge and skills, and achieve a comprehensive transformation in the education system. As part of the program, education is based on three main pillars:
- Developing a flexible and solid educational foundation for all.
- Preparing for the future labor market locally and globally.
- Providing lifelong learning opportunities.
The Human Capability Program has identified education-related performance indicators to be met by 2025, including the access of 40% Saudi children to kindergarten; placing 6 Saudi universities among the world’s top 200 universities; achieving the 45th rank in the World Bank’s Human Capital Index (HCI); and increasing job localization by 40% in high-skills positions.
Enhancing Education Sector
The Saudi Ministry of Education has launched several initiatives to boost the education sector. The key initiatives include the Initiative to support scientific research and development in universities; the Saudi Digital Library Initiative; the Pioneering Initiative; Initiative of vocational guidance in schools; University Startup Initiative; and the Job Opportunity for Every Graduate Initiative.
These efforts have yielded positive results, as the education sector has made remarkable achievements, in line with Vision 2030 objectives. These accomplishments include expanding early childhood enrollment to more than 400,000 students (35%) in 2023; developing academic curricula; and attracting foreign investments with a total of 13 educational companies investing in private and public education.
In addition, these initiatives have resulted in encouraging international universities to establish branches in Saudi Arabia; and reinforcing the Kingdom’s position in global competitiveness by improving Saudi universities’ international rankings, including in the Shanghai Ranking and QS Ranking.
Moreover, Saudi students have shined in regional and international competitions, such as ISEF and ITEX, achieving 105 awards and medals in various fields.
