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SA24_EC_NDF_PIC_ Stephen P.

SAUDI ARABIA - Economy

Stephen P. Groff

Governor, National Development Fund

Bio

Stephen Groff has been Governor of the National Development Fund since early 2019. He was previously vice president of the Asian Development Bank in Manila. Prior to that he served as deputy director for development cooperation at the Paris-based Organisation for Economic Co-operation and development and as deputy vice president for operations at the Washington-based Millennium Challenge Corporation. He also worked for the US Agency for International Development, the US Refugee Program, and as a US Peace Corps volunteer. He has a PhD from Erasmus University’s School of Social and Behavioural Sciences, a master’s from Harvard University, and a bachelor’s from Yale University.

"To achieve Saudi Arabia’s goals of a vibrant society, thriving economy, and ambitious nation, the Kingdom has embarked on a truly inspirational journey of social and economic transformation."

TBY talks to Stephen P. Groff, Governor of the National Development Fund, about the role of the institution, recent highlights, and challenges to overcome.

Can you elaborate on the fund’s strategy “to become a distinguished international brand in developmental financing” while “empowering the economic transformation in the kingdom of Saudi Arabia”?

To achieve Saudi Arabia’s goals of a vibrant society, thriving economy, and ambitious nation, the Kingdom has embarked on a truly inspirational journey of social and economic transformation. Through a dedicated focus on industrial growth, social opportunities, and cultural progress, we will support the acceleration of Saudi Arabia into the 21st century and beyond. Success is not only defined by prosperity but by more and better employment and the enriched lives for millions of citizens across the Kingdom. In transforming Saudi towards Vision 2030, NDF will inject over 570 billion SR to push the private sector and increase its contribution to GDP from 40% to 65%, raise SME contribution to GDP from 20% to 35%, and triple the contribution of non-oil exports to non-oil GDP from 16% to 50%. Today, NDF oversees a development ecosystem that enables vital sectors and industries to reach their potential. We are proud of the critical role we are playing in building a sustainable and prosperous future for the region’s most important and innovative economy.

What are some of the major highlights that the National Development Fund—and its supervised development funds—have recently achieved?

We have achieved several milestones in the last couple of years. One of which is the restructuring and consolidation of the capital of development funds and banks under a single treasury. This major achievement enables optimization of financial resources and provides enhanced performance across our ecosystem. Additionally, it supports financial sustainability and ultimately provides better access to capital markets and external financing. We have also been working on promoting NDF’s long-term strategy to enable deep integration of shared services within development funds and banks to improve efficiency, enhance productivity, and offer scalability to the ecosystem through building a dedicated Shared Services Centre. Over the last year alone, NDF’s ecosystem along with financing partners approved over SAR 130 bn in development financing and subsidies. This support was provided to beneficiaries from various economic sectors and segments of society with focus on achieving economic, social, and cultural objectives of Saudi Vision 2030 and maximizing developmental impact on the Saudi economy. For instance, the Saudi Industrial Development Fund (SIDF) offered strategic development financing to the CEER company to establish the first Saudi electric car company and empower it to compete in this growing sector. The Social Development Bank has served more than 50,000 individuals and 8,600 small businesses with financing value over SAR 13 bn. The Human Resources Development Fund (HRDF), in partnership with various government and private sector entities, delivered more than SAR 6.5 bn riyals in support for young Saudi men and women in the labor market. These numbers and achievements are just few highlights of what the development ecosystem has been doing, and as Saudi Arabia’s development finance allocator and supervisor, NDF plays an important role in ensuring capital is put to work in projects that are impactful, sustainable, and achievable.

Can you speak to the role of the private sector in the National Development Fund’s initiatives?

Transformation goals such as Saudi Arabia’s Vision 2030 can only be achieved when development finance institutions, government enablers and the private sector are fully aligned on strategy and outcomes. Development finance is where public policy, private money and transformative businesses meet to encourage entrepreneurship and enable governments to deliver ambitious national development plans. NDF uses development finance to fund projects and accelerate key industries in Saudi Arabia. By unlocking money from banks and financial institutions and directing it to SMEs and large enterprises in high-growth sectors, development finance provides capital where conventional financing options are either unsuitable or unavailable.

How do you foster and enable the Private-sector Funding and Participation?

We are honored to be tasked with building a complete development ecosystem. In doing so, we ensure private banks and financial institutions can play their role in contributing to a prosperous future and a better society for all Saudis. The ecosystem we are building partners with commercial banks and financial institutions to encourage their engagement in delivering development finance and unlocking private sector capital. We work with private sector partners to increase their appetite for financing in target segments, and we offer to share risk to maximize their participation. We are also continuously identifying opportunities to maximize synergies with private sector at all levels, such as enhancing product delivery for development funds and banks.

Can you discuss any particular challenges or obstacles that the National Development Fund has faced in its work?

I wouldn’t say that we face particular obstacles, but we rather tackle challenges that release greater potential. Before the restructuring and consolidation of capital, we had a fragmented ecosystem with certain limitations when it came to the optimal allocation of capital. But today, after great efforts across the ecosystem, NDF is able to optimize financial resources, enhance performance, embark on long-term financial sustainability, open access to capital markets and external financing, and reinforce its role in mitigating the effects of unexpected crises or economic fluctuations. In fact, we saw early benefits in this regard with the Funds Response Committee that was created to develop appropriate solutions, initiatives, and programs to mitigate the potential negative effects of the COVID-19 pandemic on the Kingdom’s economy. Leveraging resources across our ecosystem, we were able to support greater impact on the local economy. Through this approach, collectively, the development funds and banks were quite effective in mitigating the effects of the pandemic. We are building synergies across development funds and banks, government enablers, financial institutions, and the private sector. And as Saudi Arabia’s development finance allocator and supervisor, we place great emphasis on alignment and maximization of impact in support of the development journey this country is undergoing today.

How does the National Development Fund measure the success of its projects and investments?

We oversee immensely capable development funds and specialist banks that have been tasked with accelerating the growth of sectors deemed critical to Saudi Arabia’s future. We ensure these entities are prioritizing those projects that will have real and positive impacts on the lives of all Saudi citizens. We also ensure development capital is generating impact and being deployed according to social and economic needs by measuring economic impact for all supervised development funds and banks.

What is your vision for the future of economic development in Saudi Arabia, and how do you see the National Development Fund contributing to that vision?

With Vision 2030, the Kingdom undertook unprecedented reforms to the public sector’s operating model, the economy, and society as a whole. This lays the foundation of success for the future. The Kingdom has improved the effectiveness and response of the government, unlocked opportunities for growth and investment, opened Saudi Arabia to the world, built and launched platforms for future growth, and increased citizens’ quality of life. The reforms we’ve witnessed over the last six years have enhanced existing opportunities and opened a whole range of new prospects for investors, large enterprises, SMEs, and entrepreneurs in the Kingdom or from abroad. In fact, the Saudi economy grew by a remarkable 8.7% in 2022, driven by significant increases in non-oil activities, up to 6.2% YoY in 4Q. With NDF’s support, the private sector will continue to grow at an accelerated pace, ensuring achievement of development targets in Saudi Vision 2030. And by energizing and mobilizing the private sector to support economic and social development, NDF will help shape the future of the Kingdom, safeguarding the best outcome for its citizens and guaranteeing their place in the world of tomorrow.

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