According to Monsha’at, the Small and Medium Enterprises General Authority in Riyadh, the number of small and medium businesses (SMEs) in Saudi Arabia has reached a staggering 892,000, with an increase of 25.6% compared to the Q4 of 2021, in light of the incentives provided by Saudi Arabia’s Vision 2030.
The report stated that the capital, Riyadh held the highest share of total enterprises, across the country, with a percentage of 35.4%. Other cities like Makkah recorded 21% and Al-Shraqiyah stands at 12.7%. The Authority further stated that 81% of these SMEs are micro and small enterprises. Amongst these SMEs, 45% of them are women-owned enterprises, which is double the percentage compared to 2017.
Digital Transformation in KSA
The Digital Transformation Program stated that SMEs made up 99.5 percent of the total companies in the country, which the Monsha’at Authority aims to regulate, support, develop, and sponsor in KSA, implementing global best practices in order to boost their GDP contribution.
As the business climate has drastically improved in Saudi Arabia, the Kingdom has become the second most active venture capital market in the Middle East and North Africa (MENA) region. The strong reaction of Saudi Arabia to the threat posed to small enterprises by the COVID-19 outbreak was perhaps the most critical element in preserving this steady prosperity.
A report disclosed that SMEs received financing facilities through various programs and initiatives up to $17.2 billion through the Kafala program launched by Monsha’at, which guarantees bank loans to small and medium enterprises. Retail, construction, and food and drinks were the most active sectors, accounting for 14, 13, and 10.2 percent of SMEs in the first quarter of 2022, respectively.
Distribution of SMEs in Saudi Arabia in Q1 of 2022
According to MAGNiTT, along with KSA, the UAE and Egypt have also been focusing, supporting, and investing in SMEs. Both countries have raised over $450 million in VC funding in Q1 of 2022. Furthermore, the UAE has seen rapid growth of up to 75 percent in startup funding in 2022 with 61 percent of investments being from foreign investors.