Entrepreneurship in Saudi Arabia

Entrepreneurship in Saudi Arabia is the process that aims to improve and organize the performance of the business projects of the youth in a way that gives value added to economy and develops it. Furthermore, an entrepreneur is an individual who has the will and ability to fulfill a successful innovation out of a novel idea or invention.

The Kingdom has recently began entrepreneurial activity because its main support was directed towards small and medium enterprises, until the appearance of business incubators that aimed to stimulate and create investment environments for youth projects. King Saud University started the initiative in 2008 by launching the first center for entrepreneurship among the Saudi universities, which included the first business incubator and an integrated program for entrepreneurs that goes in line with the requirements of the incubator concept.

Soon after that, entrepreneurship has increased as King Abdulaziz City for Science and Technology has also launched the first technical incubator in the Kingdom which is Badir Program for Technology Incubators in 2008. Later, entrepreneurship programs and initiatives kept appearing until they exceeded 30 entrepreneurship centers in 2020 within the Saudi universities and abroad.

Technical development and digital transformation played a vital role in enhancing the concept of entrepreneurship, as digital entrepreneurship which is concerned with developing ideas, establishing pioneering digital projects, and transforming the already existed projects by using new digital technologies has emerged. This urged the Ministry of Communications and Information Technology to issue a digital entrepreneurship policy document in 2021.

With the establishment of more centers and complexes, entrepreneurial activity has expanded more and more in the Kingdom which deepened the entrepreneurship culture. Also, the Entrepreneurship Association at King Saud University went on with its role in promoting the entrepreneurship culture in the Kingdom and became the scientific reference in all the different fields of entrepreneurship and the professional and research hub that supports the role of universities and institutions in promoting the entrepreneurial activities and practices.

This Association has worked hard to achieve many goals to increase entrepreneurship in the Kingdom through its efforts to improve and develop entrepreneurial thought and give an opportunity for the individuals working in the field of entrepreneurship, small enterprises and venture capital to contribute in the scientific progress in the Kingdom. It also tries to facilitate the exchange of scientific production and ideas, in addition to giving consultations and studies to raise the level of performance in various institutions and agencies.

King Fahd University of Petroleum and Minerals has established the Entrepreneurship Institute (KFUPM-EI) in 1431 AH, which attracts the attention of well qualified entrepreneurs from the graduates of Saudi universities and the Custodian of the Two Holy Mosques Scholarship Program. Since its establishment, the institute has contributed in examining hundreds of entrepreneurial ideas and incubated tens of start-up companies, including start-up technology companies and several service companies. This Institute concentrates on main fields such as energy, petrochemicals, water, nanotechnology, building and consumer technologies, as well as technology-based services.

Established in 2011, Saudi Aramco Entrepreneurship Center "Waed" was among the first centers in the Kingdom that was an essential enabler of entrepreneurial activity. It provides support for entrepreneurs either in founding or expanding their facilities through various financial programs, in addition to getting the necessary guidlines and tools to improve the entrepreneurs and their companies.

In the same context, the Center of Creativity and Entrepreneurship at King Abdulaziz University in Jeddah has done its best to empower pioneering practices through trying to be a pioneering interactive center serving the university and society in areas related to creativity and entrepreneurship. It also works to present an integrated model of the efforts done to spread awarness among university students about entrepreneurship, help and take good care of the creative students, adopt projects with scientific and economic values, and accelerate emerging business companies.

The National Entrepreneurship Institute “Riyada”, which is an independent, non-profit national institutional organization, has also been developed in response to the initiative of both the Ministry of Energy and the Technical and Vocational Training Corporation.

In an advanced and unprecedented step towards improving the concept and practice of entrepreneurship, Prince Mohammed bin Salman College of Business and Entrepreneurship was developed as the first academic research institution specialized in entrepreneurship in the Kingdom and the Middle East. It works to build future leaders via an integrated system of teaching and educational programs, applied research, and field studies.

The college offers all its scientific efforts to graduate distinguished entrepreneurs and entrepreneurship that meet the best international standards. It was developed through an international partnership between Emaar the Economic City, Babson Global (a wholly-owned subsidiary of Babson College, USA), and Lockheed Martin Corporation under the umbrella of the Economic Offset Program in the Kingdom and the Misk Foundation.

Moreover, the Ministry of Education has launched "Riyaadi" Initiative, which aims to equip students with labor market skills, foster entrepreneurship culture, and encourage entrepreneurship and investment.

Small and Medium Enterprises General Authority (Monsha'at) has worked to develop entrepreneurship complexes which offer different support programs. It also tries to create an attractive and sustainable investment environment that enables facilities to conduct their business through several initiatives, such as: training, guidance, and finding financing and investment solutions, presenting incubation programs and business accelerators, and offering co-working spaces, logistical services, and administrative, marketing, legal and financial consultations.

The practices of entrepreneurship have increased to cover various sectors and entities that have set their initiatives in this field. The Ministry of Tourism has launched the Tourism Innovation and Entrepreneurship Complex which targets entrepreneurs and tourist establishments. It is a complex for male and female entrepreneurs that aims to create an attractive and motivating environment to build a vibrant community that contributes to the growth of the tourism sector in the Kingdom. It also provides several interest arousing services and accommodations that serve all groups in the tourism sector with the highest international standards.

Because of the big growth of entrepreneurial activities in the Kingdom in recent years, the result was a positive change as it appeared in the indicators of 2019, with an increase in entrepreneurial projects by more than 7% compared to 2018, reaching 36% of the adult people. The percentage of the startup activities increased by approximately 2%, and the percentage of the new activities also increased by 26%, while the rate of business interruption slowed down from 14% in 2018 to 2% in 2019.

With the increasing number of those wishing to invest, the Kingdom has opened up to entrepreneurial activities in an obvious and noticeable way. In 2019, more than 20% of entrepreneurs have run or are starting to run new businesses under their employers' support. Looking for an income was the biggest motive for starting or managing new projects in the Kingdom. More than 72% of entrepreneurs were motivated by making a fortune or very high income, while 36% of them were involved just to continue family traditions, and 45% of them are trying to make a difference in the world.

According to the 2019 numbers and statistics for entrepreneurship in the Kingdom, the manufacturing sector, which represents 18% of entrepreneurs, has registered an increase by over 33% from 2018, and the business services sector has also recorded an increase by over 51% from 2018, which means 9% of the entrepreneurs in 2019. In contrast, the participation in the consumer sector has slowed to over 11% in 2019, reaching 72%.  Moreover, the primary or extractive sector has less than 1% of the entrepreneurs.

Entrepreneurship in the Kingdom is growing and flourishing through providing suitable environment and investment incentives, which led to achieving the first ranks in the indicators of the Global Entrepreneurship Monitor report in 2019/2020, as it ranked first in the indicator of “knowing someone who started a new project”, and second in the indicator of “possessing knowledge and skills to start a business".

The Kingdom's achievements in entrepreneurial activities continued at the international level, as it ranked third in the government policies supporting entrepreneurship, also third in the “Expectations of Jobs Created by Entrepreneurship” index, and sixth in the “Promising Opportunities for Starting a Project in My Area” index.

The Kingdom has continued getting advanced ranks in entrepreneurship at the global level. In 2020, it moved 10 places up in the Entrepreneurship Status Index, reaching the seventh position after being ranked 17th in 2019, according to the Global Entrepreneurship Monitor report in 2020/2021.

Another progress was made by the Kingdom in entrepreneurship education at universities, by advancing 19 ranks globally according to the Global Entrepreneurship Monitor report, and achieving the 23rd place in 2021, compared to the 42nd in 2020.

The Kingdom has also confirmed its global pioneering role in entrepreneurship with the more achievements it gets. During the pandemic of Corona virus "Covid-19", it reached first place in the world in "Entrepreneurs' Response to Corona pandemic." which reflected the great impact of the Kingdom's Vision 2030 on small and medium enterprises and entrepreneurs, which provided an ideal business environment characterized by flexibility and the ability to face challenges.