The seventh consecutive annual GEM Kingdom of Saudi Arabia National Report demonstrates the continuous improvement of the national ecosystem for entrepreneurship in Saudi Arabia (the country ranked second in the GEM 2022 National Entrepreneurship Context Index).
Here are 10 interesting tidbits that emerged from the research.
- High levels of entrepreneurship reported in 2021 continued in 2022, where over 19% of adults were starting or running new businesses. A notable result can be seen in the high rates reported among youngest age groups (18-24 year olds), where over 19% were engaged in entrepreneurship, a 50% increase from 2021.
- Societal attitudes toward entrepreneurship in Saudi Arabia remained high in 2022 and similar to the levels reached in 2021. Most working-age adults (18–64 years old) thought that entrepreneurship is a good career choice (95%), that entrepreneurs are afforded high status in society (97%), and that successful entrepreneurs receive positive media attention (95%). On all of these indicators, Saudi Arabia reported the highest levels among 29 high-income economies (with more than $40,000 GDP/capita) that participated in the GEM 2022 survey.
- In 2022, 90% of adults surveyed stated that they saw many opportunities to start a business and 88% believed they had the capabilities to do so. Again, both indicators ranked highest among the 29 high-income economies in GEM 2022.
- Established business ownership jumped from 5.3% in 2021 to 9.7% in 2022, the highest level reported in the seven consecutive years of the GEM survey in Saudi Arabia.
- Business closure rates declined by nearly 40% in 2022 over the prior year; in 2022, 3.5% of the adult population reported closing a business in the prior year.
- The strongest motivators for entrepreneurs in Saudi Arabia were income related, with over 87% citing a desire to create great wealth or earn a very high income, and 85% identifying the need to earn a living because jobs are scarce.
- At least 60% of entrepreneurs and established business owners have taken actual steps to minimize their business’ environmental impact and/or to maximize their business’ social impact.
- In Saudi Arabia, entrepreneurial activity is chiefly local or national, but 18% of entrepreneurs and 11% of established business owners indicated that they were selling to international markets. Among entrepreneurs, this result is nearly three times the amount reported in the year prior.
- With regard to job creation, 33% of entrepreneurs and 30% of established business owners currently employed 6 or more employees in their businesses. Regarding future growth expectations, 46% of entrepreneurs and 73% of established business owners expect to create 6 or more new jobs in the next 5 years.
- The sector distribution of entrepreneurs and established business owners in 2022 shows the continuing dominance of the consumer-oriented sector in Saudi Arabia, accounting for 89% of entrepreneurs and 85% of established business owners.
The Executive Summary concluding remarks note:
“The rate of entrepreneurial activity in Saudi Arabia has increased steadily, which may be attributed to the measures implemented, such as those facilitating the inclusion of women in the business world; the promotion of events focused on entrepreneurship; the provision of formal and informal investment; the establishment of incubators, accelerators, contests, and prizes for entrepreneurs; and the delivery of a number of other business development services.
When the pandemic hit in 2020, entrepreneurial intentions fell to the lowest rate in the 7 years of GEM surveys in the country. Yet the number of entrepreneurs and established businesses continued to grow, maintaining a high level in 2022. Looking to the future, progress needs to be made to ensure that the key factors that contribute to an economy—employment, international competitiveness, innovation, and diversification—continue to make strides in the Kingdom.”
The report authors are: Muhammad Azam Roomi, Professor of Entrepreneurship at the Prince Mohammed Bin Salman College (MBSC) and Team Leader of GEM Saudi Arabia; Donna Kelley, Professor of Entrepreneurship, Frederic C. Hamilton Chair of Free Enterprise at Babson College; and Professor Alicia Coduras, GEM NES Coordinator.
The report was published by the Babson Global Center for Entrepreneurial Leadership at MBSC. Other partner institutions include Lockheed Martin, King Abdullah Economic City (KAEC) and the Prince Mohammed bin Salman bin Abdulaziz Foundation (Misk).