Saudi entrepreneurship: Between attitude and realization
Despite perceived difficulties, 90% of Saudi adults say they still want to start a business within the next three years.
The importance of entrepreneurship is recognized worldwide as a key driver of economic growth. More recently, Saudi Vision 2030 identified entrepreneurship as a focal point in its strategy for economic growth and diversification as well as a conduit for employment for a young and emerging population. Saudi Arabia ranks high in terms of attitudes toward entrepreneurship. However, does a positive entrepreneurial attitude translate into higher business creation?
The entrepreneurs are often known as a source of new ideas they bring to the market. Starting a business, however, requires more than a good idea. It takes careful planning and foresight, market knowledge, as well as funding and ongoing support.
A good source of information about the state of entrepreneurship is the Global Entrepreneurship Monitor (GEM). This is an annual survey that measures the attitudes and intentions of entrepreneurs across more than 110 economies, including Saudi Arabia and other countries from the Gulf Region. The survey provides information on how countries fare and compare across dimensions such as attitudes toward entrepreneurship, business activity, and performance.
A positive attitude and the ability to spot opportunities are important conditions for the success for entrepreneurs. These are important indicators about the level of entrepreneurial ambition in an economy and a leading indicator for early-stage entrepreneurial activity.
Saudi Arabia fared well in both of these categories in 2020, with about nine out of 10 adults having a positive outlook concerning the ease and opportunities to start a business. At the same time, fear of failure also remained a significant constraint to go into business with one out of two people reporting it as a concern. This was true in all GCC countries.
Creating a new business can be challenging, and it is therefore not surprising that it remains an initiative of only a few. Approximately one in 20 adults reported starting/running a new business in 2020, which was comparable with other GCC countries.
The gap between ambition and realization remains large. Starting a business can be challenging to most and few are ready to take on the risks.
Moreover, although Saudi entrepreneurs perceived starting a business to be more difficult than it was a year ago due to the challenges brought by the pandemic situation, a large proportion of adults (90%) still expressed the desire to start a business within the next three years. Saudi Arabia scored highest in this category among GCC countries, which range from 62% to 84%.
Another challenge, however, will be to have Saudi adults make entrepreneurship their main activity. Although GEM does not measure this characteristic for Saudi Arabia, it is likely to be a similar situation as in the UAE where about 83% of Emirati entrepreneurs are not full-time, i.e., they share this activity with another occupation.
The key is to therefore translate ambition into realization, as to create an enabling environment where government helps with regulation, financing, and information.
By Reem Alhashem, Laila Alabdrabalnabi, and Sylvain Cote