By launching a very robust and unprecedented strategic plan, the Kingdom of Saudi Arabia has begun to transform a high potential of economic power into a movement that will reshape the Kingdom´s economy for decades to come. As part of realizing this very ambitious strategy, three major themes have been selected to structure the Kingdom´s transformation. “A Vibrant Society”, “A Thriving Economy”, and “An Ambitious Nation” form the foundation of this movement, and allude to aspirations, concepts, and goals that were once but a set of ideas in the Kingdom´s capital. The Kingdom of Saudi Arabia is now leading an economic revolution fueled by centuries of experience and a strong will for a prosperous future.
Within the theme of “A Thriving Economy: Rewarding Opportunities,” the recently established Small and Medium-Sized enterprises Authority; “Monsha’at”, aims to adjust the role of SMEs in the Saudi economy. Saudi Vision 2030 outlines that “SMEs in the Kingdom are not yet major contributors to the country’s GDP, especially when compared to advanced economies” but strives “to create suitable job opportunities for its citizens by supporting SME entrepreneurship, privatization, and investments in new industries.” In other words, the Kingdom is now more than ever aware of the vital importance of enabling Small and medium-sized enterprises (SMEs) to contribute towards the prosperity of its economy proactively. These SMEs will undoubtedly bring Saudi Arabia a step closer to achieve its objectives of lowering the unemployment rate from 11.6% to 7% and increasing women´s participation in the workforce from 22% to 30%.
Facilitate enhanced access to funding and to encourage financial institutions to allocate up to 20% of overall funding to SMEs by 2030
As far as are Saudi SMEs are concerned, the Kingdom is now offering unique development opportunities by availing generous financing possibilities. For instance, “Monsha’at” aims to “to facilitate enhanced access to funding and to encourage financial institutions to allocate up to 20% of overall funding to SMEs by 2030.” In addition to this funding, Saudi Arabia intends to provide SMEs assistance in marketing by leveraging e-commerce and state-of-the-art digital solutions. Moreover, “Monsha’at” is now assisting SMEs in developing export channels for their products and services. Furthermore, their program “Tomoh” has been elaborated as a lean mechanism that identifies promising companies with potential for international growth.
Opportunities for Foreign Startups & SMEs
Given these efforts to boost the role of SMEs within the Saudi economy, there are currently countless opportunities for foreign SMEs to collaborate with Saudi counterparts. It is a demonstrable fact that several international SMEs have achieved remarkable growth in the Saudi market fueled by several years of strong commitment to add value to the country’s economy. Nevertheless, the nature of value creation in the Kingdom has changed, and foreign SMEs are now expected to identify ways to become lasting role models for local enterprises. Since the inception of the Saudi Vision 2030, there are visionary foreign SMEs that have been developing internal strategic transformation programs and launched several initiatives articulated around leading the development and empowerment of Saudi SMEs as a step towards the realization of Vision 2030.
In Germany, 99% of all companies belong to the “Mittelstand” and contribute almost 52% of total economic output.
SMEs currently contribute only 20% to the GDP of the Kingdom of Saudi Arabia whereas, in advanced economies, this contribution can reach up to 70%. For example, in Germany, 99% of all companies belong to the “Mittelstand” and contribute almost 52% of total economic output. The efforts behind Vision 2030 will help bolster the role of SMEs in the Kingdom of Saudi Arabia from the minor and limited position they maintain today to a vital, leading role in the economy.
For Foreign Startups & SMEs, this represents a unique opportunity to realize the ideas and efforts that have been developed in previous years and push their role within the Kingdom to a new level. It should be a shared goal among them to utilize this opportunity to its fullest and become an unrivaled leader in respective fields and to reshape the local economic landscape.
To sum up, the expertise of Foreign Startups & SMEs and strong commitment will undoubtedly help facilitate Vision 2030 goals by creating more employment opportunities and actively participating in attracting foreign investments to Saudi Arabia with medium-term objectives such as becoming incubators and support platforms for emerging Saudi startups and SMEs.