The contribution of Small to Medium Enterprise businesses (SMEs) in Saudi Arabia to the Kingdom’s overall GDP has surged 45% since the launch of Vision 2030, according to a report in Zawya, citing official government data.
From 2016-2018, SMEs’ contribution to GDP increased from 20% to 29%, more than halfway toward the goal of 35% of GDP by 2030 outlined in the Kingdom’s Vision 2030. The total number of SME’s in Saudi Arabia grew from 447,000 five years ago to 614,000 in 2020.
SMEs’ share of bank loans rose from 2% to 8% in the 2016-2018 period, compared to a target of 11% by 2025, the Zawya report said.
Crown Prince Mohammed bin Salman placed a special emphasis on SMEs in the Kingdom’s Vision 2030 economic and social reform plan. Small and medium-sized enterprises (SMEs) are among the most important agents of economic growth in modern, diversified economies because they create jobs, support innovation and boost exports.
“SMEs in the Kingdom are not yet major contributors to our GDP, especially when compared to advanced economies,” the founding Vision 2030 document says. “Therefore, we will strive to create suitable job opportunities for our citizens by supporting SME entrepreneurship, privatization and investments in new industries.”
To boost SME development, Saudi Arabia established the SME Authority and pledged to continue “encouraging our young entrepreneurs with business-friendly regulations, easier access to funding, international partnerships and a greater share of national procurement and government bids.”
In recent months, Saudi Arabia’s venture capital scene has exploded with new deals and fundings as investor interest in partnering with new, innovative companies booms in the Kingdom. Saudi startups raised $76 million in the first quarter of 2021, a 137.5 percent increase on the previous quarter’s fundraising total of $32 million. The increasing number of venture investments in new, homegrown Saudi companies is indicative that efforts to transform the Kingdom’s economy away from oil are starting to pay off.
Saudi Arabia’s SME Authority, since its launch as part of Vision 2030, has been reviewing laws and regulations thoroughly, removing obstacles and facilitating access to funding in order to enable youth and entrepreneurs to market their ideas and products.
In March 2020, the government announced SAR50bn ($13.3bn) in financial aid for SMEs weathering a slump in business activity from the coronavirus pandemic and oil price decline.
