Saudi Arabia is entering a new phase in its economic diversification drive, placing small and medium-sized enterprises and entrepreneurship at the heart of growth.
The shift follows the Cabinet’s Tuesday approval of a new national strategy for the sector at a meeting chaired by Crown Prince Mohammed bin Salman.
The kingdom aims to turn SMEs from a broad base of business activity into a stronger force in production, investment, and job creation. The strategy seeks to widen access to financing and markets while helping businesses scale up and compete.
It reflects a Saudi bet on a new generation of growing companies that can help build a more diversified and resilient economy—one less reliant on large corporations alone to drive economic activity.
GDP Contribution
Commerce Minister Majid bin Abdullah Al-Qasabi, chairman of the Small and Medium Enterprises General Authority, known as Monsha’at, said the strategy would develop the entrepreneurship ecosystem, help businesses grow and expand, and increase their contribution to the national economy.
The goal is to raise SMEs’ share of gross domestic product to 35%, in line with Saudi Vision 2030, he said.
The strategy comprises 13 initiatives within an integrated framework. They aim to improve access to financing and markets, strengthen businesses’ operational readiness and capabilities, develop the regulatory and innovation environment, and make it easier to do business.
Together, the measures are designed to create a more efficient environment for business growth and expansion.
The strategy also aims to help create more than 500,000 direct and indirect jobs and propel Saudi Arabia to first place in the Entrepreneurial Skills and Knowledge Index by 2030, Al-Qasabi said.
Access to Megaprojects
“The strategy reflects the attention and support the government gives to entrepreneurship and small and medium-sized enterprises,” Al-Qasabi said.
It translates that support into “a more integrated and efficient ecosystem that opens wider avenues for businesses to grow and increases their contribution to economic development,” he added.
Implementation will depend on coordination among the relevant entities, enabling SMEs to capture opportunities across sectors, expand their roles in value chains and megaprojects, and reach new markets in Saudi Arabia and abroad.
Beyond Growth in Numbers
The number of SMEs in Saudi Arabia exceeded 1.83 million by the end of the second quarter of 2026, Monsha’at Deputy Governor for Entrepreneurship Saud Al-Subhan told Asharq Al-Awsat.
“The ecosystem has achieved significant growth in recent years, with considerable opportunities for further growth and expansion,” he said.
The strategy marks a shift away from focusing primarily on the number of businesses toward sustainable growth, higher productivity, and greater capacity to scale up and enter new markets.
It also seeks to strengthen competitiveness, increase SMEs’ contribution to the national economy, and support promising, established, and new businesses in key and emerging sectors.
The broader aim is to build an enabling ecosystem that firmly establishes a culture of entrepreneurship, Al-Subhan said.
Twelve Priority Challenges
A comprehensive assessment of the sector identified 12 priority challenges, ranked according to their impact and how readily they could be addressed.
They include limited support for commercializing innovations, a heightened fear of failure linked to a weak entrepreneurship culture, and a shortage of specialized talent needed by businesses and entrepreneurs across sectors and regions.
Other challenges include weak infrastructure and purchasing power in outlying regions, high and difficult-to-predict business costs, limited access to financing, and a shortage of market data needed for decision-making.
SMEs also struggle to retain talent amid competition from large companies and the public sector, while manufacturing and supply chains face weaknesses in infrastructure and support services.
“The strategy does not stop at identifying the challenges,” Al-Subhan said. “It links them to initiatives designed to address them directly.”
Monsha’at prepared the national strategy and will oversee its implementation in coordination with relevant public, private, and nonprofit sector entities, in accordance with their respective regulatory responsibilities.
Execution will not rest with a single body, but on complementary roles across an integrated ecosystem, Al-Subhan said.
The strategy’s 13 core initiatives directly address the obstacles SMEs face and cover several areas critical to their growth.
They include developing open commercial innovation, increasing participation in government procurement, supporting exports and international expansion, improving access to financing, and reducing business costs.
The initiatives also call for a comprehensive sector database and a framework to monitor implementation and assess its impact.
The intended effect on Vision 2030 indicators is clear: SMEs contributing 35% of GDP, more than 500,000 direct and indirect jobs, and placing Saudi Arabia first in the Entrepreneurial Skills and Knowledge Index.
Empowering the Private Sector
The new strategy is part of a wider set of national strategies supporting Vision 2030.
Together, they form a long-term road map for empowering the private sector and directing efforts toward ambitious economic and development priorities. The aim is to strengthen Saudi Arabia’s position and competitiveness as a more diversified, innovative, and sustainable economy.
The initiatives include supporting open commercial innovation and enabling SMEs and startups to operate and grow in industrial cities and special economic zones.
They also seek to support exports and international expansion, increase SME participation in government procurement and purchases by large corporations, and create a comprehensive sector database linked to other relevant databases across the ecosystem.
Further measures include attracting global innovative startups and encouraging them to establish operations in Saudi Arabia, reviewing minimum Saudization requirements by sector, and reducing the cost of doing business.
The strategy also aims to strengthen financial awareness and literacy, develop financing enablers, and provide incentives for SME financing institutions, creating a business environment better equipped to support the sector’s expansion and sustain its economic impact.
