quotes SMEs: The key driver of the Saudi economy

13 March 2023
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Updated 13 March 2023

SMEs: The key driver of the Saudi economy

During my high school years, I used to spend my evening hours at my father’s company: Al Ghalayini Fountains, a specialized construction company for the beautification of waterworks. Back then, there were only a handful of small and medium enterprises in the country and they did not have any guidance or support, but with my father’s patience and perseverance, he managed to keep his business afloat. Now, SMEs are considered the backbone of every economy, as they play a key role in generating employment opportunities and fostering economic empowerment for the youth.

One of the goals of Saudi Vision 2030 is to make SMEs a key driver of the Kingdom’s economic development and enabler in achieving the vision and beyond. The government plans to raise the contribution of SMEs from the current 20 percent of gross domestic product to 35 percent by facilitating their access to funding and encouraging financial institutions to allocate up to 20 percent of overall loans to them from the current 5 percent. As a gesture of support, the country’s sovereign fund, the Public Investment Fund, has also supported SMEs by setting up a $1 billion fund that will provide them with access to capital. The “Fund of Funds,” as it is known, will invest in venture capital and private equity funds targeting SMEs.

The most important support from the government was the establishment of the Small and Medium Enterprises General Authority, known as Monsha’at. Several years back, Monsha’at launched the Biban Forum, which became the most important tool for the country’s accelerated development in SMEs and entrepreneurship. Biban has contributed to the creation of a catalytic environment, in partnership with public and private sector stakeholders. Since its inception a few years back, according to the Global Entrepreneurship Monitor report, Saudi Arabia’s ranking in the National Entrepreneurial Context Index has risen from 41st in 2018 to fourth place last year. This increase is in line with the country’s vision, which gives a prominent role to SME growth.

The most important support from the government was the establishment of the Small and Medium Enterprises General Authority, known as Monsha’at

Biban’s mandate is not only for local SMEs; it also receives participants from around the world and facilitates access to different services and initiatives that help SME owners and entrepreneurs promote business growth and embrace a culture of innovation. This allows entrepreneurs and business owners to develop the latest ideas, which in turn benefits the domestic and international economy while connecting them with investors and financing sources in the country and abroad. Monsha’at’s ambitious plans include enhancing the Kingdom’s position so that it becomes the first-choice destination for national and international entrepreneurs, and promoting communication between SME owners and entrepreneurs locally and internationally.

Since one of our key competencies is advising and preparing companies to list publicly on the Saudi Parallel Market, Nomu, we at BMG Financial Group meet regularly with entrepreneurs who, after a positive financial performance, wish to list their startups on Nomu. These days, I am witnessing young entrepreneurs, supported by Monsha’at and its global forum Biban, who are taking calculated decisions and risks on the future of their SMEs in a speedy fashion. After waiting for more than three decades, I think it is about time to convince my sisters and brother to take our medium family enterprise, Al Ghalayini Fountains, public.

Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group