The Economics of the Saudi Pilgrimage Season

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Article Summary
Muslims making the annual pilgrimages to Mecca pump billions of dollars into the Saudi economy. But with few local products being marketed, Saudi industries don't benefit as they should, writes Najla Rashid.

Expert sources have estimated the revenues of Hajj and Umrah (pilgrimages to Mecca) this year at over 62 billion riyals ($16.5 billion), a 10% increase compared to last year. They noted that the Hajj revenues represent 3% of the Saudi GDP, and that the number of visitors to the kingdom for the purpose of performing Hajj and Umrah this year reached nearly 12 million.

In statements to Al-Hayat, the sources attributed the increase in revenues to the high Hajj fees and cost of living, which had a positive impact on the service sectors, including hotels, money exchange and retail shops, communications and restaurants in the cities of the western region, especially Mecca and Medina.

They stressed the need to provide job opportunities for the Saudi youth during the Hajj season, reduce reliance on temporary foreign labor that is being used during the season, and provide rehabilitation and training programs that would allow them to work during these seasons.

A recent economic study showed that the average spending per pilgrim ranges between 7,000 and 15,000 riyals ($1,870 - $4,000), and that 75% of the pilgrims spend between 6,000 and 18,000 riyals ($1,600 - $4,800) on accommodation, food and drink, gifts and communications.

Yasser al-Khawli, an economic expert on the Hajj season and investor in the Hajj and Umrah, said that “despite the enormous size of shopping during the Hajj season, Saudi products, including gifts and handicrafts, are very weak, and the efforts of productive families lack the necessary marketing channels and sponsors to ensure good marketing outlets, because they do not know the size of market demand due to their limited capabilities.” He attributed this to lack of coordination.

He pointed out that “the entry of imported Chinese products kills competition, unless Saudi products get a good protection system and care to strengthen them.” He stressed the need to “have an executive body from the private sector under a government umbrella responsible for local production,” saying that “the first three years would be a strong competitive stage with the foreign market until the Saudi market finds domestic and international markets and demand.”

Youth Potential

He stressed the need to support the innovative potential of young Saudis in the pilgrim gift industry, and in promoting and marketing materials for Mecca and Medina. He noted that “the size of sales ranges between 500 and 800 million riyals ($13.3 million - $21.3 million), and highlighting and supporting these local products in such seasons would double revenue in a short time.”

Khawli suggested the activation of a program called “Plus Incentive” to encourage young people, support them financially and morally to work in such occupations, and train them in rehabilitation programs. This would provide Saudi labor for Hajj activities without financial and moral problems.”

Economic adviser Hijazi Idris agreed with Khawli, saying that “despite the great business activity during the Hajj, Umrah and visiting seasons, local products are almost non-existent, since most of what is being offered and sold to pilgrims and visitors are imported products.” Idris demanded that there be goods labeled with “Made in Saudi Arabia” or “Made in Mecca.”

Idris attributed the failure to highlight local industries to the fact that businessmen do not provide commercial space for local products. He stressed the need to highlight  the Saudi touch in order for Saudi products to acquire a share of the revenue estimated at over 62 billion riyals ($16.5 billion), adding that this would also help to provide jobs for the unemployed.

Economic writer Mohammed al-Angari said that "there are local products and services that affect the local economy, and there are great opportunities for the development of local industries and services that have not been exploited yet." Angari pointed to the existence of programs for the development of small local industries. 

Found in: saudi, pilgrimage
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