2021 Entrepreneurial Activity Review

Unlike most GEM economies, Saudi Arabia experienced increases in both entrepreneurial activity rates and attitudes through both 2020 and 2021, despite the COVID-19 pandemic. From the outside, this is an unexpected development, given that the state did not push a heavy stimulus package during the pandemic. Yet, thanks in part to increased taxes, a recent increase in oil prices and more domestic consumer spending, the Saudi economy grew over this period on a sustained footing. This has played a role in generating new opportunities, particularly for domestically focused entrepreneurs.

In 2021, Saudi Arabia’s TEA rate was 19.6%, a peak level for the country — and up from 17.3% in 2020. This increase was expected given the previous year’s high levels of entrepreneurial attitudes, which increased again in 2021, likely setting the stage for even more growth in the near future. For example, over 90% of Saudis see good opportunities, agree they have the skills, knowledge and experience to start a business, and consider it easy to start a business. On these three questions, Saudi had the highest rates among all GEM Level A economies.  This sentiment helps explain how Saudis managed to increase their entrepreneurial activity even during COVID-19 related restrictions.

Yet, if Saudi Arabia is to achieve its Vision 2030 policy goals of sustained high-impact entrepreneurship, there are some areas that need addressing. Because of the country’s strong consumer spending rebound in 2020 and 2021, most Saudi entrepreneurs have focused their products and services domestically, resulting in the secondlowest rate of new business owners expecting 25% or more of their revenue to come from outside the country (0.3% of Saudi adults). While Saudi Arabia is a large domestic market with abundant opportunities, achieving impactful scale often also requires an international footprint. Therefore, policymakers should also be aware of this when promoting their domestically focused entrepreneurship policy. This has worked well recently, but can eventually limit growth in the longer term.

2021 Framework Conditions Review

In 2021 Saudi Arabia performed well on some key framework conditions, particularly on finance and governance. On the condition Entrepreneurial Finance, the country scored a 6.7, second among GEM Level A economies. While its governancerelated conditions — Government Policy: Support and Relevance (6.5) and Government Entrepreneurial Programs (6.5) — were ranked first and second, respectively, among GEM Level A economies. This may be expected given the recent priority on entrepreneurial governance resulting from the country’s Vision 2030 strategy, which began in 2019. So far, the push for more entrepreneurship as a means of diversifying away from oil production has worked, and policymakers should look to maintain their progress as competition from regional economies intensifies. Other areas are improving and can hopefully continue this trend. This is true in the areas of education and access to professional services.

The condition Entrepreneurial Education at School received a 3.7 score in 2021, ninth among GEM Level A economies, but an improvement from a 2.9 score in 2020. Similarly, the condition Entrepreneurial Education Post-School received a 5.2 score, seventh among GEM Level A economies, representing an increase from 4.6 in 2020. This improvement is encouraging, as the state has emphasized entrepreneurial capacity building as part of its economic strategy. The condition Commercial and Professional Infrastructure received a 6.1 score in 2021, which was also an improvement from the previous year, but still ninth among GEM Level A economies. This will need further improvement, as entrepreneurs need access to affordable professional services as their firms require more advanced business operations to grow.