Financial Literacy in Saudi Arabia: Evolution and Impact
In the Kingdom of Saudi Arabia, as in other emerging markets, financial literacy is a critical component for economic empowerment and stability because it equips all classes of investors with the knowledge and skills necessary to make informed financial decisions. So, it is encouraging to see that, over the last decade, financial literacy within the Kingdom has evolved significantly thanks to the efforts of Saudi Arabia’s Vision 2030.
Vision 2030 was founded on three pillars that draw on the Kingdom’s intrinsic strengths: A vibrant society, a thriving economy, and an ambitious nation. At the forefront of the thriving economy that Vision 2030 seeks to promote are multiple different initiatives, all of which not only showcase but further emphasise the importance of a financially literate society.
Saudi Arabia is undertaking this host of initiatives to advance prosperity and grow the economy. The Kingdom continues to create innumerable opportunities for small businesses and the broader workforce with the goal of gradually lowering the unemployment rate. The Kingdom is also leveraging its unique geographic position to establish itself as a global hub, helping to further diversify the economy and strengthen its location as an investment destination.
Yet, without an increased emphasis on the importance of financial literacy, the impact of all of these developments would be less understood by the public. Only by learning to take control of their own finances can Saudis appreciate what it means for their livelihoods and their society.
The establishment of the Financial Literacy Entity (FLE) under the Financial Sector Development Program (FSDP) was a critical step in Vision 2030’s pursuit of significantly raising the financial literacy rate among adults. The FLE seeks to unify and scale existing financial literacy efforts, aiming to increase the level of adult financial literacy and ensure that citizens are equipped with essential financial knowledge.
The Saudi Exchange is playing its part in these efforts too, continuing to leverage digital platforms to further enhance its outreach efforts. Online resources and social media campaigns have been employed to raise awareness about the importance of financial literacy, and as a primary element of the Saudi Exchange’s own commitment to providing new products and services, the Exchange launched Invest Wisely – an information platform designed to cater to the needs of those interested in investment, regardless of their experience levels.
All of these efforts have not gone unnoticed. According to a 2023 report from the Saudi Central Bank, financial literacy among adults in Saudi Arabia has improved, with recent estimates indicating that approximately 38% of adults possessed a basic understanding of financial concepts as of 2023, up from 30% in 2021.1
Efforts by the Saudi Arabian government to increase financial literacy
Beginning in the autumn of 2023, Saudi Arabia’s Ministry of Education mandated the inclusion of a “Financial Knowledge” course in school curricula. The course’s primary goal is to enhance students' comprehension and awareness of financial literacy and its mechanisms. Students are introduced to the concepts of the labor market, where they learn about the important sources of income and the basic ideas of money management. This decision marked a significant step towards integrating financial education into the national education system.2
The Capital Market Authority (CMA) has meanwhile run numerous awareness programs such as Thameen and Smart Investor, targeting adults and young people, respectively, to enhance understanding of the Saudi capital market. During Global Money Week 2023, the CMA collaborated with 136 financial institutions to conduct workshops and educational campaigns, directly reaching over 22,921 children and young people and 51,080 adults across the Kingdom.3
Role of the Saudi Exchange in promoting financial literacy and investor education
Together, the Capital Markets Authority (CMA) and the Saudi Exchange are actively involved in increasing investor participation in the Saudi capital market through various initiatives and programs aimed at enhancing financial literacy, improving market accessibility, and attracting both domestic and foreign investors.
Initiatives like the Invest Wisely financial literacy program are designed to arm existing and future investors with the knowledge and skills necessary to become successful market participants. Through this initiative, investors of all kinds now have access to investment workshops, learning materials, and a cutting-edge simulation platform where participants can create virtual portfolios and trade on the Saudi Exchange. The Saudi Exchange has also been committed to organising free educational webinars, in addition to providing investment competitions for all investors to practice and learn about their understanding of the market.4
The Saudi Exchange collaborates with banks, asset managers and numerous other key stakeholders to hold member workshops and one-on-one sessions to ensure companies fully understand product and service development. Additionally, the Exchange provides stakeholders with comprehensive kits containing detailed information, including letters to customers, social media posts and web banners.
By doing all of this, the Saudi Exchange ensures that the wider market ecosystem is well-prepared and knowledgeable about the constant ongoing changes in the investment community.
The journey towards enhanced financial literacy in Saudi Arabia
Strengthening financial literacy in Saudi Arabia is ongoing, but significant strides have already been made. The financial literacy rate in the Kingdom has increased at least 8% since 2021, according to the Saudi Central Bank, highlighting both progress and the need for further improvement to reach the 60% target set out by Vision 2030.5
The Saudi Exchange has prioritised increasing investor participation and the promotion of financial literacy through ongoing educational initiatives because empowering citizens with the knowledge and skills to manage their finances effectively is not just an economic imperative, but a crucial step towards achieving the goals of Vision 2030.
[3] https://globalmoneyweek.org/countries/82-saudi-arabia.html
[4] https://www.saudiexchange.sa/wps/portal/saudiexchange/trading/invest-wisely/compete
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The views, thoughts and opinions contained in this Focus article belong solely to the author and do not necessarily reflect the WFE’s policy position on the issue, or the WFE’s views or opinions.