A memorandum of understanding (MoU) has been confirmed for Saudi investment in Oman’s infrastructure sector, with Saudi Fund for Development (SFD) agreeing to finance an SR1.2 billion ($319.8 million) infrastructure project for the Al Dhahirah Special Economic Zone in the sultanate.
The agreement was confirmed on the sidelines of the Saudi-Omani Investment Forum being held in Riyadh on 1 to 4 February 2023.
MoU details
The MoU was signed in the presence of Minister of Investment, Eng. Khalid Al-Falih, and the Omani Minister of Commerce, Industry and Investment Promotion, Qais bin Mohammed Al-Yousef.
SFD CEO Sultan Al-Murshid signed the agreement with the Omani Ministry of Finance, represented by Zahir bin Marhoon Al-Abri, on behalf of the sultanate’s Minister of Finance.
Riyadh said the agreement is in implementation of the directives of Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud and Crown Prince and Prime Minister HRH Prince Mohammed bin Salman bin Abdulaziz Al Saud.
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The memorandum is aimed at expanding cooperation at multiple levels through the establishment of an economic zone in Al Dhahirah Governorate.
The project is expected to promote sustainable economic growth and help to increase trade exchanges and create quality industries.
Saudi state news agency SPA said the agreement also encourages partnerships among sectors to provide goods and products and reduce the cost of production and export between the two countries.
SFD investment in Oman: reactions
Oman’s Al-Abri commended Saudi Arabia’s efforts through SFD to support development projects and programmes in Oman’s infrastructure sector.
The memorandum will contribute to strengthening bilateral development relations between Saudi Arabia and Oman, he added.
Speaking at the signing ceremony, SFD’s Al-Murshid added: “This MoU strengthens the long-established historical relations and close partnership between the Kingdom of Saudi Arabia and the Sultanate of Oman.
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“These development projects and programmes contribute to achieving the ambitious visions of the two countries, to achieve economic growth and social prosperity, noting the efforts between the two sides to contribute to the achievement of the goals of sustainable development, hoping that this project will be a source of development to reach sustainable growth and prosperity.
What is SFD?
SFD was founded through Royal Decree No. M/48, issued on 1 September 1974, and commenced operations on 1 March 1975.
SFD said in its 2021 Annual Report its assistance as of end-2021 totalled SR69.3 billion. These funds were used for 695 development projects and programmes, of which 408 were in Africa, 265 in Asia and 22 in other regions.
Since its inception in 1975 and as of end-2021, SFD had financed 733 development loans to finance 695 development projects and programmes for 84 developing countries.
Additionally, SFD had signed two financing agreements with International Development Association (IDA). These agreements had a total value of SR905 million.
The fund signed three loan agreements in the fiscal year 2021 with three developing countries at a total value of SR281.2 million.
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These included two development projects and programmes in Africa worth a total value of SR168.75 million, and one development project in Albania at a total value of SR112.5 million.
Conditions to get financial help from Saudi Arabia’s SFD
SFD’s charter includes the basic regulations for providing development loans for financing development projects.
Conditions that must be met to obtain SFD’s loan are:
- The project to be financed in the recipient country shall be proved economically or socially feasible;
- The finance of the entire project for which the loan is provided shall be available;
- The loan shall be disbursed and repaid in Saudi Riyal;
- The loan amount granted to any project shall not exceed 5% of the fund’s capital, and;
- The total loan amounts granted to any country in one time shall not exceed 10% of the fund’s capital.
Saudi investment in Oman: background
SFD has been working for over 45 years to finance and support development projects that emphasise the role of Saudi investment in Oman’s economic growth.
These projects are part of development cooperation between Saudi Arabia and Oman in development fields such as infrastructure, higher and vocational education programmes, and the water and energy sectors.
Saudi investment in Oman is made by other entities as well. In August 2021, the Saudi-Omani Investment Forum was held in Muscat with a focus on the Saudi Vision 2030 and Oman Vision 2040 programmes.
In February 2022, both countries signed a MoU to build partnership and integration to achieve their respective food and water security ambitions.
The memorandum aims to enhance cooperation between the two countries in the fields of integrated water management systems, institutional framework, operations, initiatives and projects related to the food and water security.
