The Female-driven Business Environment in Saudi Arabia is Flourishing

The Female-driven Business Environment in Saudi Arabia is Flourishing

Nowadays, it’s nearly hard to envision the Saudi economy without the vibrant startup community and its female founders.

A decade and a half ago, things were very different.

One of the first female Saudi entrepreneurs in Riyadh, Maha Shirah, told DW that “there was literally no ecosystem for startup companies.”

Establishing a business was especially difficult for women.

When Shirah established the nation’s first female-only workspace in 2014, there were still legal restrictions on women’s access to numerous businesses.

Ten years later, the Saudi Ministry of Commerce has released an extensive list of workplaces just for women, and women are driving all sectors of the local startup scene in addition to it being prospering.

“When it comes to laws affecting women’s decisions to work, laws affecting women’s pay, constraints on women starting and running a business, and laws affecting the size of a woman’s pension, Saudi Arabia gets a perfect score of 100,” the conclusion of the most current World Bank report, Women, Business, and the Law 2024.

According to the Kingdom of Saudi Arabia’s 2021–2022 Women’s Report, 95% of Saudi women thought becoming an entrepreneur would be a suitable career choice.

The trend is clear even though the most recent data on female entrepreneurs and labor force participation are not yet available.

“The Saudi female labor force participation rate doubled from 17.4% to 35.6% between 2017 and 2021, comfortably exceeding the ‘Vision 2030’ target of raising it to 30%,” stated a January 2024 letter written by Tim Callen, visiting fellow at the Arab Gulf States Institute, a think organization based in Washington.

Without a question, the main force behind this process has been Vision 2030, a socioeconomic package of reforms that Saudi Crown Prince Mohammed bin Salman unveiled in January 2016.

Women’s employment, addressing the urgent problem of unemployment, advocating for diversification from oil earnings, and welcoming tourism are all integral parts of the transformation.

Organizing The Saudi Startup Community

“I remember well that before 2017, very few courses at school or university focused on startups or entrepreneurship at all,” Shirah remarked.

She also recalled that, for everyone else, launching a business “was considered a stigma.” Starting a business was only an option for the wealthy.

But today, she noted, “everybody with a solid idea can become an entrepreneur, obviously including women,” thanks to government programs.

The government has even turned into one of the most involved investors in the local startup community over time.

Leap24, a tech event held in March this year, saw the Saudi Ministry of Communications and Information Technology invest an astounding $11.9 billion.

According to Shirah, the Saudi startup scene is expanding and doing fairly well. She thinks that additional startup incubators and accelerators will be required going forward.

Startup incubators assist fledgling companies in refining their concepts into viable businesses. Existing businesses receive resources and mentorship from accelerators.

Next Are Incubators and Accelerators

Startup advisory has become a new venture for Marriam Mossalli, a Saudi entrepreneur who for years has championed female empowerment through her nonprofit group Under The Abaya. (An abaya is a garment like a robe that covers the complete body, excluding the hands, feet, and head.)

Mossalli established C-Suite Advisory, a business and investment consulting firm, in 2024. The CEO (chief executive officer) and COO (chief operating officer) leadership positions within a firm are referred to as the “C-Suite.” She also made investments in a number of firms headed by women.

She told DW, “As a female entrepreneur myself, I know firsthand the challenges presented to us,” and that “it was time to put my money where my mouth is.”

In the interim, entrepreneurs have discovered that failures can happen along the way. According to Sebastian Sons, senior researcher at the German Center for Applied Research in Partnership with the Orient, “the concept of failure was frowned upon in Saudi Arabia for decades.” Sons told DW this.

“This has been changing as many young people recognize that failure can be part of their business experience and they are now willing to take this risk,” he stated.

Using Startups As A National Branding Tactic

Sons stated that promoting a vibrant startup environment benefits Saudi Arabia’s government as well as society.

“The focus is on economic diversification as the state is no longer able to absorb many employees in the public sector, and the private sector needs to be strengthened,” he said. “The second reason is the external and internal impact of supporting startups.”

According to him, the government is indicating through startups that it supports individual initiative as a component of nation branding.

There is a further element, according to Son: “It is also part of Crown Prince Mohammed bin Salman’s consolidation of power in the country.”

Even if more women are able to start their own businesses, the state of women’s rights in Saudi Arabia remains far from ideal.

In accordance with the Human Rights Watch World Report 2024, “further legal reforms remain severely undermined by widespread repression under de facto ruler Crown Prince Mohammed bin Salman, and a number of women’s rights defenders, including Loujain al-Hathloul, remain banned from travel and under suspended prison sentences.”