Saudi Arabia has approved a new national strategy for entrepreneurship and small and medium enterprises (SMEs), shifting the focus of its private sector development agenda from establishing businesses to helping them scale, compete, and expand into international markets.

The strategy, approved by the Cabinet in September, sets three principal ambitions for 2030: increase SMEs’ contribution to gross domestic product to 35%, create more than 500,000 direct and indirect jobs, and place the kingdom first in the Entrepreneurial Skills and Knowledge Index. It comprises 13 initiatives designed to strengthen the country’s business environment and improve access to financing, markets, and innovation.

The framework supports Vision 2030’s broader objective of diversifying the economy and expanding the private sector’s role in growth and employment. Its emphasis on business expansion reflects a recognition that increasing the number of registered enterprises is only part of the challenge. Sustained economic impact depends on whether businesses can grow their revenues, improve productivity, hire workers, and compete beyond their domestic markets.

One priority is to help SMEs participate more fully in government procurement and purchasing by large companies. Access to these contracts can provide smaller businesses with a more predictable revenue base, allowing them to invest in equipment, talent, and operational capacity.

The strategy also seeks to integrate SMEs more deeply into industrial cities and special economic zones, where investment in manufacturing, logistics and other sectors could create opportunities for local suppliers. Supporting businesses to become part of the value chains associated with major development projects could help retain more economic activity within the domestic economy.

International expansion is another focus. Initiatives to strengthen export readiness and facilitate access to overseas markets are intended to help Saudi businesses diversify their customer base and reduce dependence on domestic demand. For smaller firms, achieving this will require not only financing but also expertise in product standards, logistics, distribution, and international regulations.

FINANCING ACCESS

Access to funding remains central to the strategy. The government’s initiatives include developing financing mechanisms, encouraging institutions to lend to SMEs, and improving financial awareness among business owners.

Smaller businesses often face constraints that larger companies can better absorb, including limited collateral, higher borrowing costs, and insufficient financial records. Improving access to suitable financing could help firms invest in technology, hire skilled employees, and manage the working capital needed to fulfil larger contracts.

The strategy also promotes open business innovation – connecting private sector research and innovation needs with entrepreneurs. Other measures seek to attract and localise innovative international start-ups, potentially bringing new technologies, expertise, and commercial partnerships into the kingdom.

Reducing the cost of doing business is a further objective. The initiatives include reviewing minimum Saudisation requirements by sector, alongside efforts to improve the regulatory environment and operational efficiency. A comprehensive database linking SME information across the business ecosystem is also planned, providing a stronger basis for policy coordination and monitoring.

The strategy comes as total financing guarantees provided by the Small and Medium Enterprises Bank (SME Bank) through the Small and Medium Enterprises Loan Guarantee Program (Kafalah) exceeded ⃁ 100 billion, benefiting over 28,000 SMEs.

SME Bank chairman of the board of directors Yousef Al-Benyan attributed the milestone to the continued support of the Saudi leadership, noting that it reflects the programme's role in strengthening the SME sector as a fundamental pillar of economic diversification under Vision 2030.

The programme has contributed to business expansion, enabling 51 medium-sized enterprises to list on the Nomu parallel market. Guaranteed credit facilities through the programme represent 8% of total SME facilities Saudi, which reached ⃁ 489 billion by the end of the first quarter 2026.

35% TARGET

The new SME strategy builds on earlier government programmes to strengthen entrepreneurship and private enterprise. Its significance will depend on implementation across government bodies, financial institutions, and the private sector, rather than on the announcement of targets alone.

The 35% GDP contribution goal is a substantial ambition. Reaching it will require SMEs to increase productivity and move into higher-value activities, while improving their ability to survive beyond the early stages of business formation. The employment target will similarly depend on sustainable business growth rather than short-term hiring.

Coordination will be important, particularly in ensuring that smaller firms can compete for contracts on practical terms and that financing reaches viable businesses across different sectors and regions. The planned database could help identify gaps and track progress, provided the information is comprehensive and consistently updated.

For Saudi Arabia, stronger SMEs could broaden the sources of economic growth, deepen domestic supply chains and create employment opportunities for a growing workforce. The new strategy provides a framework for that transition. Its ultimate test will be whether the 13 initiatives translate into more productive businesses, greater export capacity, and a more resilient private sector by 2030.