Saudi support for SMEs must focus on innovation

  • Kalam Admin

    Associate Fellow, Middle East and North Africa Programme, Chatham House

The rapidly changing investment landscape in the Gulf Cooperation Council (GCC) countries is drawing much attention to the region. In Saudi Arabia, the economic diversification project is led by the Public Investment Fund (PIF), a sovereign wealth fund. PIF aims to stimulate the non-oil private sector through both foreign and domestic investment as well as by fuelling the local start-up ecosystem with new funding bodies, venture capital and angel investor networks. PIF has sought to generate more funds for these initiatives by borrowing, taking 5% of Saudi Aramco public and selling their full stake in the Saudi Basic Industries Corporation (SABIC). While PIF is not Saudi Arabia’s only sovereign wealth fund, it is the one tasked with growing into one of the largest in the world.

But despite the unprecedented levels of capital and funding available for new businesses, along with new business infrastructure to harness innovation and support entrepreneurs, a fear of failure combined with unclear and rapidly changing regulations are viewed as major barriers to innovation.

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