Saudi Arabia will establish a $1.1 billion fund to develop its venture capital industry and support the creation of small and medium-sized companies, the cabinet said on Monday, as the kingdom tries to strengthen its economy in an era of cheap oil.

The cabinet approved a plan for the Public Investment Fund, Saudi Arabia's top sovereign wealth fund, and the Ministry of Commerce and Investment to establish the new fund, according to a statement carried by state news agency SPA.

The fund will invest in venture capital operations and private assets on a commercial basis in order to encourage investment in smaller firms, which Riyadh hopes will create jobs as low oil prices force cuts in state spending.

The cabinet also told the ministry to remove obstacles to growth of the venture capital industry in Saudi Arabia, where the sector has so far played only a minor role, and to facilitate the entry of foreign venture capital firms into the country.  – Reuters