“There is no doubt that economies are facing immense challenges today,” wrote H.E. Fah Al-Rasheed, Vice Chair of the Mohammad Bin Salman College Board of Trustees, in the forward of the GEM 2019/2020 Kingdom of Saudi Arabia Report.
“Navigating the turbulence successfully and achieving excellence will require unwavering commitment from both the public and private sectors, and I for one am confident that we will emerge stronger and more resilient from this year’s global health crisis.”
The Kingdom of Saudi Arabia does indeed have reason for optimism that it can foster entrepreneurship in the midst of a global pandemic based on some of the positive trends from over the years. These developments are highlighted in the country’s latest GEM National Report, authored by Alicia Coduras, Professor of Quantitative Methods and Applied Economics at the Institute Opinòmetre in Spain and a member of the GEM Global Data Team; Donna Kelley, Professor of Entrepreneurship at Babson College and a Member of the GEM Board of Directors; and Muhammad Azam Roomi, Professor of Entrepreneurship at the Mohammad Bin Salman College and Team Leader for GEM Saudi Arabia.
The aim of the report is to inform policymakers, socioeconomic organisations, academics, educators and practitioners about the multidimensional nature of entrepreneurship in Saudi Arabia. In the following Q and A article, Professor Coduras, representing the entire team, highlights some of the key takeaways.
What were some of the positive developments from the report?
Coduras: In 2019, positive changes were seen in Saudi Arabia’s entrepreneurial activity, experienced across all stages. Entrepreneurial intentions increased by over 7% from 2018, reaching 36% of the adult population. Nascent activity increased almost 2%, and new activity showed a 26% gain; together, these two phases represent an increase in total entrepreneurial activity (TEA) of over 15%. In previous years, Saudi Arabia reported a relatively low rate of established business activity; in 2019, however, this indicator rose to over 5%, a 73% increase from 2018. Adding to these results, the business discontinuance rate of 14% in 2018 slowed to 2% in 2019.
What did you learn about the motivations of entrepreneurs in Saudi Arabia from the study?
Coduras: In 2019, the most prevalent motivation for starting or running a business in Saudi Arabia was to earn a living because jobs are scarce (more than 72% of entrepreneurs). Additionally, 63% of entrepreneurs reported being motivated to build great wealth or a very high income, 36% engaged in this activity to continue a family tradition and 45% were inspired to make a difference in the world.
Can you share some of the report’s findings as it relates to gender?
Coduras: In the MENA region, Qatar has equal entrepreneurship rates for women and men, while in Saudi Arabia, women are more active. Egypt shows the greatest gender gap, where women are starting businesses at less than half the male rate. In the other countries in the region, women engage in entrepreneurship at between half and three quarters of the male rate.
What is the perception of entrepreneurs in Saudi Arabia?
Coduras: In 2019, there was a moderate- to-high cultural affinity for entrepreneurship, a strength reflective of the increased activity registered during the year. Almost 70% of Saudi adults consider starting a business to be a good career choice, and about 79% believe that entrepreneurs are well regarded and enjoy high status within society. Additionally, 72% believe that entrepreneurs garner substantial media attention. However, 74% favor an equal standard of living for all people, signaling less support for free competition.
While the research was done prior to the COVID-19 crisis, how do you suspect some of the positive developments from last year will be impacted by the pandemic?
Coduras: The health crisis is different from the last economic crisis. Saudi Arabia is facing a different situation, given the social impact COVID has imposed. Over the last few years, a big effort has been done to implement Vision 2030 programs, which include policies and actions promoting entrepreneurship to diversify the economy and make it less dependent on the oil industry. Saudi society is showing a remarkable positive attitude towards entrepreneurship since we re-entered GEM in 2016, and we hope this social support will not be impacted negatively by the pandemic. We suspect that the rate of business discontinuation will raise somewhat compared to 2019, and that some nascent activity will be delayed because of the pandemic. At the same time, we suspect that new opportunities will arise from the situation and that potential and veteran entrepreneurs will pursue them. The increase in participation among women, a noteworthy recent achievement, will be critical to maintain coming out of the pandemic.
With regard to the context for entrepreneurship, we suspect that some pillars will show lower ratings, while others could remain stable, especially those associated with government policies undertaken to stimulate the economy during the pandemic.
Access the full report at the following link.