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RIYADH: The small and medium-sized business sector in Saudi Arabia continues to experience a growth trajectory in the first half of 2022 as the Kingdom pushes ahead with fostering entrepreneurship and stimulating investment in start-ups and small businesses as part of Vision 2030 .
The number of registered SMEs in Saudi Arabia reached 892,063 at the end of June, up 25.6 percent from the fourth quarter of 2021, according to the General Authority for Small and Medium-sized Enterprises.
Riyadh and Mecca were the most attractive regions for startups, with 35.4 percent and 21 percent of the kingdom’s SMEs, respectively, according to Monsha’at’s quarterly report titled SME Monitor.
The Eastern Province ranked third with 12.7 percent of all SMEs in Saudi Arabia.
Micro-enterprises lead the SME sector
According to the report, micro-enterprises accounted for 81 percent of registered SMEs in the kingdom, each generating revenue of up to SR 3 million (US$800,000) a year and employing up to five people.
It also found that Saudi Arabia’s private sector employs a total of 9,065,648 people, with 43.4 percent in Riyadh, followed by 19.7 percent and 19.9 percent in Mecca and the eastern provinces, respectively.
SMEs operating in the food and beverage sector continued to attract investor interest as these companies received more funding than any other in the first half of 2022.
According to MAGNiTT’s Saudi Arabia Venture Capital Report, F&B SMEs secured SR702 million worth of investments in H1.
Saudi startup FOODICS, which offers restaurant management software, digital payments and microcredit, led the growth of the F&B sector when it raised SR 638 million in April 2022.
“In the past quarter alone, we have opened new German, Greek, Italian, French, American, British and Emirati restaurants, cafes, concepts and chains across Saudi Arabia,” said Bandr bin Abdullah Alobied, Monsha’at Deputy Governor for Strategy .
He added: “The Saudis themselves are proud of their own traditions and support local concepts more than ever. Local entrepreneurs entering the F&B space have found an open-minded clientele eager to support local chains.”
The report also revealed that Saudi Arabia has successfully narrowed the gender gap in the kingdom, with 45 percent of SMEs now run by women.
Regulatory reforms in the first half of 2022 have played a crucial role in increasing the number of women entrepreneurs in the country. Most of these women are leaders in the food, wholesale and retail, healthcare, freelance, and support services industries.
“The ambitious Vision 2030 targets for women’s labor force participation have been achieved well ahead of the Kingdom’s original targets. With thousands of bright, creative and highly motivated new women entering the labor market each year, female-led SMEs will continue to transform the economy at large,” added Alobied.
Overall female labor force participation in Saudi Arabia increased from 20.5 percent in the same period in 2019 to 33.6 percent in the first quarter of 2022, when most countries around the world saw a decline in female labor force participation.
In the report, Monsha’at added that the kingdom’s female unemployment rate fell to 21.2 percent in the first quarter of this year, while it stood at 31.7 percent in the same period of 2019.
Alobied pointed out that the SME ecosystem is on a path of transition as the UK’s startups and entrepreneurs emerged as the second best funded in the Middle East and North Africa for the first six months of the year.
“The country as a whole is embracing the private sector in a way that has never been seen before. On the one hand, this is because we enjoy one of the most business-friendly and progressive governments in the world. On the other hand, we benefit from a huge demographic advantage,” he said.
Alobied further noted: “Saudi Arabia’s population is young, educated, affluent and growing. Seeing how innovative, technology-driven and imaginative our people are, I have no doubt the country will confuse observers everywhere for the better.”