Saudi crown prince turns to ‘state capitalism’ after change in the guard

Saudi Arabia

Saudi crown prince turns to ‘state capitalism’ after change in the guard

As Saudi Arabia enjoyed an unprecedented oil boom in the 1970s, the monarchy turned to a handful of merchant family companies — mostly from its commercial capital Jeddah — to build the nation’s infrastructure.

But almost 50 years and another oil windfall later, many have been sidelined by another cadre of businesses that have one thing in common: the sovereignPublic Investment Fund owns a stake in each.

The growing dominance of the sovereign wealth fund, chaired by Crown Prince Mohammed bin Salman, underscores the extent to which the country’s day-to-day ruler has upended the old order as he asserts his control over the economy and seeks to diversify it away from oil revenues.

“There’s definitely a change in the guard,” said Monica Malik, chief economist at the Abu Dhabi Commercial Bank and author of a book on the Saudi private sector. “Development is being driven by government-led entities, it’s very much more a centralised and public sector-led growth.”

The PIF has almost $1tn worth of megaprojects and infrastructure in the pipeline, including a planned futuristic city in the Saudi desert. Control of the projects is centralised, with the sovereign wealth fund increasingly acting as planner and primary contractor through companies it owns or in