Saudi Aramco, the largest integrated energy and chemicals company globally, has announced a significant achievement in its In-Kingdom Total Value Add (iktva) programme by reaching a 70% local content benchmark in its supply chain. This milestone is a key part of the Kingdom’s strategy to enhance domestic industrial capacity and diversify its economy in alignment with Saudi Vision 2030. The accomplishment is expected to yield substantial economic benefits, including job creation and increased foreign investment.

Understanding the iktva Programme

Initiated in 2015, the iktva programme seeks to maximise economic value domestically by promoting the sourcing of goods and services within Saudi Arabia, developing local suppliers, and cultivating a competitive national industrial ecosystem. The programme invites global investors and manufacturers to set up operations in the Kingdom, thereby boosting domestic production and supporting economic diversification. Achieving a 70% local content rate signifies that a majority of Aramco’s procurement expenditures are now localised—a stark contrast to previous years when imports dominated.

Economic Impact of Local Content

The economic ramifications of Aramco’s success in the iktva programme have been substantial, with over 200,000 jobs created, both directly and indirectly, across various sectors within the Kingdom. The initiative has also elevated Saudi Arabia’s gross domestic product (GDP) by more than $280 billion since its inception. The programme has attracted over 350 investments from approximately 35 countries, infusing around $9 billion in foreign capital into the Kingdom’s industrial sectors and facilitating local production of 47 strategic products.

Support for Economic Diversification

As part of Saudi Arabia’s Vision 2030, the energy sector is perceived as a catalyst for wider economic transformation. Localising Aramco’s procurement processes ties directly into this vision by fostering local manufacturing, enhancing export potentials, and diminishing reliance on foreign supply chains. The concentrated procurement approach encourages suppliers to improve their capacity and quality, thereby enhancing the Kingdom’s industrial competitiveness across various sectors.

Enhancing Supply Chain Resilience

Recent global disruptions, whether due to political events, health crises, or economic pressures, have highlighted the need for resilient supply chains. By localising a significant portion of its procurement, Aramco mitigates risks associated with external disruptions, ensuring that essential energy infrastructure is bolstered by a sustainable domestic ecosystem.

Investment in Skills and Workforce Development

Skills development and workforce training are integral elements of the iktva strategy. Saudi Aramco has partnered with both public and private sectors to establish national training centres, equipping thousands of Saudi workers with valuable skills needed in various industries. These initiatives are designed to align human capital development with local industry needs, thereby enhancing workforce localisation.

Global Engagement and Supply Network Integration

The localisation initiative is not solely inward-looking. Through the iktva programme, Aramco has organised regional supplier forums to engage global investors and manufacturers. This facilitates the integration of Saudi Arabia into global supply networks, promoting opportunities for both local and international firms to contribute to the Kingdom’s growth.

Strategic Vision towards 2030 and Beyond

Reaching the 70% local content target represents a significant step towards Aramco’s goal of achieving 75% by 2030. This progression reflects over a decade of planned strategies aimed at enhancing local production capabilities. By turning procurement spending into economic multipliers, the programme stands out as an effective model of supply-chain-led industrial transformation. Its success is fundamental not only for Aramco but also for the long-term economic resilience of Saudi Arabia. The ability to develop local industries, create employment opportunities, and attract investments positions the Kingdom favorably in a future where domestic capabilities are increasingly critical.