Dates, Coffee and Camels—Saudi Arabia’s Sovereign-Wealth Fund Bets Big at Home

livemint.com:

Public Investment Fund is accelerating spending at home, often on obscure startups and projects that it plans to own and operate. Last month, PIF said it would start selling milk from camels and dates grown in the region around the holy city of Medina. Before that, it launched a halal meats exporter and a company aiming to make Saudi coffee globally popular.

The bets are all part of Crown Prince Mohammed bin Salman’s push to diversify the country’s economy away from oil by creating jobs for Saudi nationals, boosting domestic consumption and attracting foreign investment. But with unrivaled resources and political clout, PIF’s top-down decision making and investments are raising questions about whether this could squeeze out the private sector from the economy and expand the government’s role—the opposite of what Mohammed set out to do. The challenge for the fund is to harness its growing global reputation to channel investor interest into the Saudi market without crowding out private business, said Robert Mogielnicki, resident scholar at the Arab Gulf States Institute, a Washington, D.C., think tank.

“Is the pie big enough for the PIF to come in, get visibility and then share the wealth as well?" he said. “That’s going to be the tricky balance." Flush with cash after a bumper year for oil prices, the Saudi government is using PIF to double down on domestic investments, fueled by ad hoc capital injections from the government, dividends from its companies and the transfer of assets from the state. It is also borrowing tens of billions of dollars to finance bigger projects.