Saudi Arabia’s newly planned urban area Neom has announced the launching of its strategic investment arm, the Neom Investment Fund (NIF).
The new investment fund will support the buildout and development of Neom’s 14 priority sectors in a move to create new jobs and set up the base for Saudi Arabia’s next financial hub.
The inauguration, which took place on Tuesday, came alongside promises to invest in companies including Pony.ai, Regent, Boom Technology, BlueNalu and Animoca Brands.
Neom is a 26,500 km2 new urban area planned by the Kingdom of Saudi Arabia, which will serve as a financial and global trade hub for businesses in the country. The city will operate on 100% clean energy, using wind, solar and hydrogen power.
Majid Mufti, CEO of Neom Investment Fund, said: “The NIF strategy is designed to align Neom’s development objectives with those of innovators and institutional investors, de-risking opportunities for them to participate in creating core global growth businesses and a thriving economy in Neom.
“To date, NIF has invested in several technology companies within the 14 priority sectors of Neom that will accelerate technologies critical to the Neom project and have a major impact on the future of living and sustainability,” Mufti continued. “Replicated over time, this approach will position Neom as a model for sustainable economic development.”
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However, critics say Neom is just another attempt by the government in Riyadh to use greenwashing as a method to distract the world from Saudi Arabia’s failed efforts to stick to international climate goals.
The Saudi authorities have promised that the city will be a role model for green energy. However, independent scientific project Climate Action Tracker reports that Riyadh’s current climate policies are insufficient, meaning they are inconsistent with the 1.5°C temperature limit set to be achieved by 2030.
Above all, the new city will have to compete against other Saudi cities, including Riyadh and Jeddah, the latter of which is considered the commercial centre of the country and has long been viewed as a favourite destination for investors.
Asked whether Neom is a viable project, Glenn Barklie, chief economist at Investment Monitor, says Neom “could (and should) focus more on the sectors where other Saudi cities are not as strong.”
“The Saudi’s are pouring money into this project to make it a reality. Investors are already seeing Saudi Arabia as a relatively new investment destination due to its recent opening up of its economy,” Barklie explained. “Neom will provide a ‘future city’ today. The challenge is to put all these things in place. But there will certainly be interest from investors and the wider business community.”
Meanwhile, Neom’s CEO Nadhmi Al-Nasr welcomed the launch of NIF, saying the city is meant to address global challenges related to livability, conservation and business.
“As Neom’s strategic investment subsidiary, NIF will play a critical role in converting Neom’s vision to reality. NIF will enable Neom to sustain its contribution to realizing the ambitions of the Kingdom over the long term, cementing its position as a key driver of economic diversification and job creation,” Al-Nasr concluded.