The Business Year

SA22_EC_AEI_ Stuart DSouza

SAUDI ARABIA - Economy

Stuart D’Souza

CEO, Arabian Enterprise Incubators (AEI)

Bio

Stuart D’Souza is CEO of AEI. He has lived in Saudi Arabia for over 15 years and is a regular contributor and commentator on all matters relating to the transformation of the country and has worked as an advisor to the ministries of defense in Saudi Arabia, Qatar, and the UAE.

"Our focus, as a business, is principally on companies that are looking to enter the Saudi market rather than investors per se."

Stuart D’Souza, CEO of Arabian Enterprise Incubators (AEI), talks to TBY about recent milestones, the local investment environment, and plans for the coming period.

What milestones and achievements would you highlight during this past year?

Going into 2021 there were still uncertainties around the pandemic but we were hopeful that a return to “nearly normal” would be possible. In fact, 2021 was a good year for AEI, as we recorded a 30% growth in sales and we hit our target of USD25million in sales. This was a huge milestone for us not only after the pandemic, but also in the context of AEI being a relatively small business in Saudi Arabia. Since 2019 we have had an ambition to position AEI as the “go-to” support partner for companies seeking to enter, establish, or expand in Saudi Arabia and we have seen a massive increase in interest in the Saudi market from foreign companies as well as companies actually seeking to register a subsidiary in the Kingdom through the Ministry of Investment (MISA). Our corporate services team are often the backbone of the support that we provide to those clients looking at registering an entity. In order to accommodate the YoY growth in demand for corporate services we launched a transformation plan in 2021, investing in our people, growing the team, as well as ensuring we have the right systems in place to deliver for our clients. We had nearly a 200% increase in sales in corporate services. More broadly, our headcount has grown to over 200 employees up from 150 last year. Over the last year we have invested heavily, particularly in our corporate services business unit and we are ready for further growth in 2022 and 2023.

How do you assess the interest of investors in the Kingdom?

Our focus, as a business, is principally on companies that are looking to enter the Saudi market rather than investors per se. There has been strong demand for a number of reasons – comparing the Saudi market to the regional market, other countries in the Gulf continue to struggle after COVID-19. They cannot keep up with Saudi in terms of the opportunities, projects, budgets, and the appetite for change that Vision 2030 is bringing. There is a focus on infrastructure projects, and the giga- and megaprojects are leading the way of course. However, those projects provide opportunities for companies, not only in construction related sectors but also in terms of training, consultancy, and so on. Across the board, whatever you are doing, there are significant opportunities in Saudi. Additionally, in the last 12 months, the regulatory reform, which has tightened the rules around awarding contracts to entities that are not registered in Saudi Arabia, has resulted in a huge boost to our sales in corporate services. The Saudi authorities rightly want to be contracting with companies that are registered in the Kingdom. There are opportunities in every sector, particularly because Vision 2030 is everywhere and, particularly, as Vision 2030 moves from strategy to implementation. There is still a big demand for consultancy and external support to augment ministries and commissions to provide oversight and governance. Another area that remains strong is human capital development, whether that is education, training, vocational, or academic. The Ministry of Investment has launched a number of programs to attract foreign universities and schools. It is not only the academic side of it but also vocational training opportunities and professional development, providing training to companies, and helping employees. There are many opportunities – the challenge is figuring out a route to market that is low-cost and low-risk, and of course that is what a lot of our clients use AEI for.

What clients would you like to add to your client base?

We work as a partner of foreign businesses. We could provide accommodation, transport, office space, consultancy, help set up their entities or develop a strategy for doing business in Saudi. Planning is absolutely essential in Saudi. Every company needs to understand how to deal with compliance, tax, resourcing, recruitment, and retention. They get all that advice from us, and because of that we sit at the crossroads of so many businesses coming into the Kingdom. We can also act as an accelerator and help companies enter the Kingdom as quickly as possible, in a low-cost, low-risk way. Since 2021, we have helped an additional 200 companies with their Saudi journeys. AEI has supported over 1,700 companies that have been successful in the Kingdom. There are still many challenges, although the digitalization of government services has helped make things easier.

What strategy will you implement to maintain growth in the next two to five years?

We have had a plan since 2017 to grow the business around three core offerings: support services, people services, and corporate services. We aimed to have this structure and the required depth of knowledge and experience in place by 2022 and we are well on track to achieve this. Support services focuses on providing accommodation, transport, office space, or procurement. People services focuses on outsourcing opportunities, recruitment, and employment services. Corporate services focuses on setting up companies and providing back-office services. These three business units mean that we provide an end-to-end service. We are a one-stop shop for everything that a client might reasonably require. At the moment, we will not add anything significant to that. We are a service-based business; each client pays for the services that they use. We are not interested in exclusivity, and we are not interested in taking percentages of sales. The challenge for growth is scale. One of the things that we are doing in 2022 is more proactive business development (BD) and we have invested in some dedicated BD resource. We are already seeing the benefits of that.

Looking ahead, into 2022, what are your goals and priorities for the next six to 12 months?

Our goals in 2022 are growth. We hit a major milestone of USD25 million in 2021. We want to see growth in terms of clients, sales and margins. We are proud of the fact that we did not cut anyone’s wages during COVID-19 and we did not terminate any staff. Our employees are still the foundation of the business. Everyone is completely committed to AEI. We still describe ourselves as a family business. We want most of our growth to come from corporate services. We will significantly accelerate our business development efforts in corporate services as well as for the broader business of course. We will attend more events, do more webinars, and work with embassies and governments around the world to promote Saudi Arabia. Another objective for 2022 is to expand our accommodation capacity. We are looking at taking on a third compound in Riyadh to support the growing demand from clients.

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