By Arab News
By Talat Zaki Hafiz *
The year 2020 is considered to be the worst for businesses across the globe, especially for entrepreneurs and micro, small and medium-sized enterprises, due to the pandemic. It was more difficult than ever to start a new business in 2020 compared with the year before.
Companies, especially MSMEs in the developing world, were under “intense strain, with more than half either in arrears or likely to fall into arrears shortly,” according to the World Bank.
Saudi Arabia’s business environment was not very much different from the rest of the world’s. It also experienced difficulties last year, especially during the peak of the pandemic. The Kingdom not only witnessed a decline in several key entrepreneurial activities in 2020, but several MSMEs also had to downsize their businesses.
Last year Saudi Arabia’s General Authority for Small and Medium Enterprises conducted a survey. It showed that out of 918 businesses, 46.7 percent of micro enterprises, 30 percent of small businesses and 30.6 percent of medium-sized enterprises decided to close down at least one of their branches as a result of the pandemic’s negative impact. Likewise, 14 percent of the micro enterprises, 19.8 percent of the small enterprises and 34.7 percent of the medium-sized enterprises went out of business.
But the rapid response of the Saudi government to the repercussions of the pandemic not only saved businesses, it secured jobs.
It is worth mentioning that data from the Saudi Central Bank showed the total credit facilities provided to MSMEs by both local banks and financing companies amounted to SR188.4 billion ($50.24 billion) at the end of 2021’s first quarter. This represented 8.3 percent of the total credit facilities provided to the private sector, an increase of 39.8 percent over the same period last year.
The Global Entrepreneurship Monitor, which assesses levels of entrepreneurial motivation and activity across the globe, ranked Saudi Arabia sixth for global entrepreneurial competitiveness.
It ranked top in four international sub-indices in the field of entrepreneurship this year among GEM economies: Easy to start a business, the government’s response to the pandemic, entrepreneurs’ response to the pandemic, and good opportunities to start a business.
The Kingdom ranked among the top five in areas such as individuals’ skills and knowledge, quality of infrastructure, government support for businesses, and easy access to financing for companies and entrepreneurs.
It is worth noting that the National Center for Performance Measurement (Adaa) is an independent government body, which aims to build and initialize performance measurement processes in public entities by providing the necessary support through the utilization of unified tools and models. Adaa compares the Kingdom’s performance to more than 217 countries and measures more than 700 global indicators across 12 axes.
I believe that the Kingdom has done a great job in managing one of the worst crises mankind has ever faced, especially when considering the dramatic impact of COVID-19 on businesses that has proven to be much harsher compared to the global financial crisis of 2007–2008 and World War II.
As Saudi nationals, we should be inspired and emboldened by our Vision 2030 because it has energized our country and our entrepreneurial spirit as well.
• Talat Zaki Hafiz is an economist and financial analyst.