The Prince Mohammed Bin Salman College of Business and Entrepreneurship (MBSC) along with the Babson Global Center for Entrepreneurial Leadership (BGCEL) released recently the Global Entrepreneurship Monitor (GEM) Kingdom of Saudi Arabia National Report 2020-21. The GEM Report, which charts levels of entrepreneurial motivation and activity across the globe, ranked Saudi Arabia amongst the top 7 countries of 44 nations, positioning the Kingdom among the world’s most elite entrepreneurial nations.
The report charts the Kingdom’s progress in setting the stage for entrepreneurial opportunities and culture. 90% of Saudis surveyed in the GEM report agree or strongly agree that it is easy to start a business, placing the Kingdom in top position among GEM economies. Further, experts surveyed rated both the government’s response to the COVID-19 pandemic and the response of entrepreneurs first among GEM economies. And in another first, Saudi Arabia is now the only nation among 23 high-income GEM economies with higher start-up rates for women than men.
Across the globe, entrepreneurs reported a worsening income due to the pandemic, and this was also true in Saudi Arabia. Yet, despite the turbulent context, Saudi Arabia’s total rate of start-up activity increased from 14% of the population in 2019, to 17% in 2020. Coupled with this, Saudi Arabia reported the highest rate of market confidence, with 80% seeing opportunities to start a business as a result of the changes brought about by the pandemic.
The fifth consecutive country report reveals that total entrepreneurial activity in Saudi Arabia has increased by 24% compared to 2019, regardless of the pandemic’s profound impact on entrepreneurship. The Kingdom recorded a 65% increase in business ownership over the past three years. The report also shows that more than 90% of adults see entrepreneurship as a favorable career choice, and a third of Saudis are keen on launching a business within the next three years.
H.E. Fahd Al-Rasheed, Vice Chairman of MBSC’s Board of Trustees, and President of the Royal Commission for Riyadh City: “Our ambition stated in Vision 2030 is for Saudi Arabia to be a world leading entrepreneurial nation, and with our shared efforts and confidence, we now proudly stand as 7th in in the world in entrepreneurial competitiveness. From government, to non-profits, universities, companies and youth, our country is being energized by an entrepreneurial spirit and mindset. I particularly want to recognize and celebrate the entrepreneurs propelling our country’s tremendous performance, and I invite all Saudis to take pride in this collective excellence and recognition.”
Eng. Saleh Ibrahim Alrasheed, Governor of the Small and Medium Enterprises General Authority (Monsha’at): “Saudi Arabia’s steady improvement on the NECI over the past five years is a testimony to the success of the Kingdom’s efforts to nurture a thriving entrepreneurship ecosystem in line with the goals of Vision 2030. At Monsha’at, we are proud of our contributions to this achievement through our endeavors aimed at providing support for SMEs and developing the sector in accordance with the best standards.”
Prof. Zeger Degraeve, Executive Dean, MBSC: “As testified by the successive GEM Saudi Arabia reports, Saudi Arabia has been building a solid foundation for a robust entrepreneurship ecosystem over the past few years. This strong footing enabled the Kingdom to remain resilient even in the face of extreme challenges stemming from the pandemic and provide required support for SMEs and startups. Even though academic institutions in the country have played an indispensable role in the development and growth of entrepreneurship, they now have a greater responsibility to support aspiring, nascent and established entrepreneurs by instilling confidence in them and providing them evidence- based guidance to start and grow their business. At MBSC, we have built an extensive portfolio of support tools in line with our commitment to contributing to the Vision 2030 objectives.”
GEM is the world's foremost entrepreneurship research program. It began in 1999 as a joint project between Babson College (USA) and London Business School (UK), with the aim of building an understanding as to why some countries are perceived to be more 'entrepreneurial' than others. Through a vast, centrally-coordinated international data collection effort, GEM has provided high-quality information on a comprehensive variety of indicators about entrepreneurship in 116 economies over 20 years. GEM is a trusted resource for organizations around the world to help inform decision-making to improve the quantity and quality of entrepreneurial activity.
The GEM KSA 2020-2021 report represents the fifth consecutive year in which GEM has tracked rates of entrepreneurship across multiple phases and assessed the characteristics, motivations, and ambitions of entrepreneurs as well as societal attitudes in Saudi Arabia. The report’s analysis is based on information that was collected through the Adult Population Survey (APS) and the National Expert Survey (NES). Additional questions were added to the two surveys in 2020 to assess the impact of the COVID-19 pandemic on entrepreneurship in the Kingdom. The APS surveyed a random, representative sample of 4,027 working-age adults (18–64 years) in Saudi Arabia, while the NES surveyed 43 experts, all carefully selected for their experience and knowledge of the conditions considered to be most representative of the context for entrepreneurship.
Highlights of the GEM Kingdom of Saudi Arabia National Report 2020-21
Over 90% of adults in Saudi Arabia reported believing that entrepreneurship is a good career choice, that entrepreneurs receive high social status and recognition, that entrepreneurs receive positive media attention, and that it is easy to start a new business in the Kingdom. These percentages are higher than those found in any of the other MENA countries participating in GEM in 2020.
The percentage of the adult population reporting that they personally know an entrepreneur declined from 83% in 2019 to 57% in 2020.
A high share (90%) of the adult population perceived good opportunities for starting a business, and 86% stated they have the capabilities to do so. The results for both indicators are higher than reported in the other MENA countries.
However, nearly half (49%) of those seeing opportunities stated they would be deterred from acting on them because of fear of failure. This is one of the highest percentages reported in the MENA region.
A third (33%) of adults in Saudi Arabia stated they intend to start a business in the next 3 years.
Almost one in six (17%) adults in Saudi Arabia reported being an entrepreneur who is
starting or running a new business, representing a 24% increase from 2019. Among the MENA countries in GEM, only Kuwait reports a higher rate (19%).
1 in 20 (5%) of the adult population stated that they are established business owners. This is similar to the 2019 results and represents a 65% increase from the levels reported in 2017 and 2018.
The majority of entrepreneurs (82%) said they operate in the consumer-oriented sector, up from 72% in 2019. Fewer were starting up in the transforming sector (13%) and business services (4%) than in 2019.
Just under a fifth (18%) of both entrepreneurs and established business owners are expected to create 20 or more new jobs in the next 5 years.
In terms of market scope, 26% of entrepreneurs reported that they sell nationally, while an additional 10% said they are international in scope.
With regard to the scope of innovation, 22% of entrepreneurs said they are introducing products and services that are new to local customers, while an additional 5% reported they have offerings that are new on a national level.
Societal attitudes show virtually no differences between the genders, but women were slightly less likely than men to report knowing entrepreneurs personally (55% vs 59%), to perceive opportunities (89% vs 92%), and to state they have the capabilities for starting a business (84% vs 88%). Fear of failure, however, is nearly equal for the genders.
Women were slightly less likely than men to report having entrepreneurial intentions (31% vs 35%), but they were starting businesses at a slightly higher rate (17.7% vs 17%). Rates of established business ownership were slightly lower for women than for men (4% vs 6%).
Results of the NES indicate that nearly all ratings on the nine entrepreneurship framework conditions improved in 2020, reaching their highest levels in a 5-year period.
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.
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.