The private sector in Saudi Arabia is gaining significant momentum, overcoming global market challenges. In Q2 2024, the number of new commercial registrations grew by 78% compared to the same period last year, indicating a surge in new business establishments, particularly those led by entrepreneurs. This growth reflects a supportive and innovative business environment.
This record growth in new companies can be attributed to several factors, including Saudi Arabia’s ambitious vision to transform its economy, government policies that encourage investment, and streamlined business procedures. Initiatives supporting entrepreneurs, such as the “Kafaat” program, have played a crucial role in enabling Saudi youth to realize their entrepreneurial dreams.
This rapid growth of the private sector highlights Saudi Arabia’s ability to tackle global economic challenges and strengthen its position as a regional business and investment hub. Small and medium-sized enterprises (SMEs), which form the backbone of the private sector, significantly contribute to job creation, local production, and economic diversification.
The number of new companies in Saudi Arabia is expected to continue growing, driven by substantial investments across various sectors and increasing demand for local products and services. The advent of Industry 4.0, with a focus on modern technologies and artificial intelligence, is likely to open new avenues for growth and prosperity.
Given these positive developments, the government and relevant institutions must continue their efforts to support entrepreneurs and new business owners by providing an attractive business environment and focusing on developing the necessary skills and competencies for competing in the digital economy.
The private sector should also invest in research and development and form strategic partnerships with universities and research institutions to enhance its innovation capacity and develop value-added products and services.
Record Growth in Commercial Registrations
The Small and Medium Enterprises Observatory reports a record increase in new commercial registrations in Saudi Arabia during Q2 2024, with a 78% rise compared to the same period last year. This growth reflects the vibrancy of the Saudi economy and increasing investor confidence, including among women, who own 45% of the new registrations.
Geographical Distribution
Commercial registrations were evenly distributed across various regions of the Kingdom, with Riyadh accounting for 32%, Mecca for 23%, and the Eastern Province for 15%. Other regions made up 30% of the total registrations.
Factors Contributing to Growth
- Improved Business Environment: Government reforms have eased company establishment procedures and reduced bureaucracy, boosting investor confidence.
- Entrepreneurship Support: Government initiatives have provided essential funding, technical, and marketing support to new businesses.
- Increased Awareness: Growing awareness of entrepreneurship among Saudi youth has driven them to pursue financial independence and contribute to the national economy.
- Digital Sector Development: Advances in the digital sector have streamlined registration and licensing processes, saving time and effort for entrepreneurs.
Fintech Sector in Saudi Arabia
Saudi Arabia’s fintech sector continues to advance as a key pillar of Vision 2030. Since the launch of the “Fintech Saudi” initiative in 2018, the sector has seen unprecedented growth, with significant investments and the creation of over 6,500 direct jobs by the end of 2023.
Key Achievements and Future Prospects
Notable achievements include the initial public offering of “Rasan,” the first insurtech and fintech company in Saudi Arabia, and participation in the third edition of the “Fintech Saudi” accelerator program. Future initiatives, such as the “Open Banking Lab” and increased training programs by the “Financial Academy,” aim to further enhance sector growth and innovation.
Strategic Goals
- Increase Fintech Companies: Aim to have 525 fintech companies by a specific year.
- Boost Digital Transactions: Increase non-cash transactions to 80%.
- Economic Contribution: Raise the fintech sector’s GDP contribution to 13.3 billion SAR.
- Job Creation: Create 18,000 new jobs in the fintech sector.
- Attract Investments: Secure 12.2 billion SAR in venture capital investments.
Targeted Sectors
- Retail: Digital payment solutions and e-commerce growth.
- Real Estate: Transparent and efficient digital platforms for transactions.
- Transportation: Improved traffic management and reduced congestion through smart applications.
- Hospitality: Enhanced customer experiences with instant booking and secure payment systems.
- Investment: Innovative tools for easy market participation and financial inclusion.
- Healthcare: Efficient management of health records and payment systems.
Saudi Arabia’s fintech strategy underscores the sector’s importance in driving economic development and achieving Vision 2030, positioning the Kingdom as a regional leader in financial technologies.
