The Small and Medium Enterprises General Authority “Monsha’at” showed in a recently issued document that SMEs contribute 21% of Saudi Arabia’s GDP, while the average in the world’s 15 largest economies is around 46%.

According to the document, the contribution of SMEs to Saudi GDP is around 25% lower than that of their counterparts in the 15 largest economies in the world. If SMEs succeed in closing the gap with their global counterparts, this will lead to an increase of SAR 1.1 trillion in Saudi GDP.

In line with Saudi Vision 2030, Monsha’at aims to raise the contribution of SMEs to GDP to 35%. Compared with the 15 largest economies in the world alongside Saudi Arabia (16 economies), Saudi Arabia ranks 14th, with SMEs contributing 53% of job creation in the country, while the global average in the 15 largest economies is 67%, meaning that Saudi Arabia is 14% behind it. SMEs contribute 2.5 times more to employment than to GDP (driven by low value added and low-cost labor), according to the Economic Reports Unit at Al-Eqtisadiah newspaper.

Monsha’at believes that startups are likely to become the main source of job opportunities for Saudi youth in the coming years. According to the document, the share of SMEs is estimated at less than 5% of total non-oil exports, while the share in the 15 largest economies in the world ranges between 31% and 60%, meaning that Saudi Arabia is far below global averages. Monsha’at set two criteria for classifying enterprises: the number of full-time employees and revenues, with the classification favoring the larger category if the two criteria differ.

Monsha’at defined micro enterprises as those with 1 to 5 full-time employees and revenues between zero and SAR 3 million. It defined small enterprises as those with 9 to 49 full-time employees and revenues of more than SAR 3 million and up to SAR 40 million, while medium enterprises are those with 50 to 249 full-time employees and revenues of more than SAR 40 million and up to SAR 200 million, and large enterprises are those exceeding any of the above criteria.

According to a survey prepared by Monsha’at, bureaucracy and funding topped the list of obstacles facing SMEs, followed by access to markets, workforce-related matters, and technical and administrative obstacles. An analysis by the Reports Unit at Al-Eqtisadiah newspaper showed a 6.1 percent rise in the revenues of SMEs in Saudi Arabia during the second quarter of this year, reaching SAR 220.7 billion, compared with around SAR 208 billion in the same period last year, an increase of SAR 12.8 billion. According to the analysis, SMEs account for 29 percent of the total revenues of enterprises in Saudi Arabia in the second quarter of this year, which amounted to SAR 754.7 billion.