Do you know someone who stopped owning a business due to COVID-19? On the other hand, are you aware of individuals who started a business of the pandemic?
Global Entrepreneurship Monitor is able to show survey responses to these questions in countries around the world. The Kingdom of Saudi Arabia GEM National Report 2020–2021 reveals that well over half (57%) of survey respondents reported knowing at least one person who had stopped owning and managing a business due to the coronavirus pandemic. On the other hand, 42% had met at least one person who had started a business as a result of COVID-19. This is based on a representative sample of 4,027 working-age adults (18–64 years of age) in Saudi Arabia who took part in GEM’s Adult Population Survey.
“During the first months of the pandemic and lockdown, the business environment in Saudi Arabia underwent rapid change, both in terms of the birth of new businesses and the closure of existing ones,” said Muhammad Azam Roomi, Ph.D Professor of Entrepreneurship, Mohammed Bin Salman College, Team Leader of GEM Saudi Arabia and the lead author of the report. “Like entrepreneurs in the rest of the world, those operating in the travel and tourism, food and beverages, and entertainment sectors suffered severely in the Kingdom of Saudi Arabia.”
“The pandemic affected demand in the market, reducing profitability for most businesses but with greater adverse effects on small and medium enterprises (SMEs), which typically suffer from limited cash reserves and a consequent inability to meet expenses beyond the next few months,” added Donna Kelley, Ph.D., Professor of Entrepreneurship, Frederic C. Hamilton Chair of Free Enterprise, Babson College and a report co-author.
Here are eight other select findings from the report that show the impact of the COVID-19 pandemic on entrepreneurship in the Kingdom.
- Around a fifth (21%) of households suffered a significant reduction in their household income during the pandemic, with an additional 51% reporting a moderate decrease.
- Half of the entrepreneurs surveyed perceived starting a business to be more difficult than it was a year ago, and this impression was even more widespread among established business owners (69%).
- Job growth was predicted to be lower because of the pandemic by 52% of entrepreneurs and 63% of established business owners.
- A high percentage (85%) of new or established business owners stated that the coronavirus pandemic had put an end to some of their core business activities.
- Over half of established business owners and entrepreneurs (56% and 52%, respectively) have identified, and want to pursue, new opportunities for doing business because of the pandemic.
- Of those exiting or closing businesses during the past year (9% of the total sample), 62% cited the pandemic as the main reason.
- The majority of entrepreneurs (91%) and established business owners (92%) stated that the government’s response to the economic impact of the coronavirus pandemic had been effective.
- An international comparison of expert ratings for the Middle East and North Africa (MENA) region on the response of both entrepreneurs and governments to COVID-19 shows that Saudi Arabia is rated more highly than other countries in the region on both counts.
“The survey results provide information for policymakers and other stakeholders to understand the early effects of the pandemic on an economy’s entrepreneurship and business activities. For Saudi Arabia, these results can be assessed relative to changes in GEM’s traditional indicators and, in the future, they could be used to track patterns in the entrepreneurship sector as the country and the world emerge from this unprecedented situation,” concluded Alicia Coduras, Ph.D, Professor of Quantitative Methods and Applied Economy, Institute Opinòmetre in Spain, a member of the GEM Global Data Team and a report co-author.
The report was sponsored by Lockheed Martin, Mohammed Bin Salman College, King Abdullah Economic City (KAEC), the Babson Global Center for Entrepreneurial Leadership and Misk.
Access the complete report at the following link.