Saudi Arabia Strengthens Role of SMEs as Key Driver of Economic Growth

Asharq Al-Awsat

a day ago

Saudi Arabia's small and medium enterprises (SMEs) are experiencing unprecedented growth, positioning themselves as a vital pillar in the Kingdom's efforts to diversify its economy and increase private sector participation, which are core goals of Vision 2030.
According to the Q1 2025 report by the General Authority for Small and Medium Enterprises (Monsha'at), commercial registrations surged 48% year-on-year, reaching 154,640 new registrations in the first quarter alone. Active registrations climbed to 1.68 million, reflecting a 6% annual increase.
As part of the Kingdom's accelerating digital transformation, over 41,000 active businesses now operate in e-commerce. Notably, 45% of active commercial registrations are women-owned, highlighting growing female participation in the national economy.
Support from Monsha'at has been crucial to this expansion. Nearly 9,850 companies benefited from SME support centers, and over 1,400 received assistance from innovation hubs. The flagship Tomouh (Ambition) program, launched in 2017, has played a central role in financing high-growth companies, facilitating 34 listings on the parallel equity market (Nomu) with a combined market value of $450 million in 2025 alone, from a total supported portfolio of $6.6 billion.
To date, Tomouh has funneled more than $15.7 billion into startups and SMEs, cementing Saudi Arabia's status as an entrepreneurial hub.
Flexible Financing and Government Support
In Q1 2025, the SME Bank expanded debt-based crowdfunding and launched a new 'agency model' in partnership with fintech platforms. This initiative provided flexible financing between $13,300 and $266,000, disbursing $23.4 million in its initial phase, with a target of $64 million.
The Kafalah loan guarantee program also saw major expansion, issuing $3.7 billion in guarantees to 5,346 SMEs, facilitating total funding of $4.8 billion, a 17% rise from 2023.
Craft industries also surged in 2025, driven by global demand for cultural goods, e-commerce growth, and initiatives like 'Made in Saudi' and 'Year of Handicrafts,' which improved artisans' access to finance, training, and global markets. The global handicraft market reached $1.22 trillion in 2025.
Sector Breakdown and Impact
Spokesperson Badr Al-Qadi told Asharq Al-Awsat that Riyadh accounted for 39% of commercial registrations, followed by Makkah (17%) and the Eastern Province (16%). Key growth sectors include manufacturing, fintech, tourism, entertainment, health, and e-commerce.
Initiatives like Tomouh, the Nawafeth app for easy access to support services, the Jadeer procurement tool, and Monsha'at Academy for skills development have further empowered entrepreneurs.
By end-2024, SMEs employed 7.86 million people, surpassing employment targets. Their contribution to GDP hit 21.9% in 2023, exceeding the 20.2% target - even amid oil production cuts - and attracting 30% of regional venture capital investment.
With robust funding channels, digital integration, and inclusive policies, Saudi Arabia is advancing steadily toward making SMEs a cornerstone of its national economy and Vision 2030 strategy.