WASHINGTON, D.C. -- Although small shares of Saudi Arabia's adult population own businesses or plan to open them soon, Gallup surveys in 2011 reveal these shares are even smaller outside the three major cities of Riyadh, Jeddah, and Dammam. Saudis living in these major cities are twice as likely as their counterparts in the rest of the country to be business owners (9% vs. 4%) and have plans to open a business in the next 12 months (4% vs. 2%). The differences in their ambitions may lie in the diverse challenges they face in becoming business owners and their attitudes.
Internal migration from Saudi Arabia's minor cities is swelling the populations of these three major cities, where almost 40% of Saudis live. The expanding population is making it increasingly difficult for educators and healthcare providers to cope with residents' needs. In addition, as the demand for houses or apartments overwhelms the supply, real estate prices have reached exorbitant figures, rendering ownership a distant dream for many.
Many of the migrants from minor cities are moving to find jobs, but the public sector's ability to accommodate more job seekers is limited as the demand for jobs is exceedingly high. Growth in the private sector is necessary to create more employment opportunities. Increasing entrepreneurial activity in minor cities might have a stronger effect than supporting existing private companies. Although Gallup findings show the majority of Saudis in minor cities would prefer a government job, a significantly higher percentage of respondents in minor cities prefer to be self-employed than to work for a private business (20% and 13%, respectively).
Saudis in Minor Cities Driven, but Less Willing to Take Risks
Saudis living in major cities and minor cities are driven: 81% of those in major cities and 76% of those in minor cities say they never give up until they reach their goals, no matter what. Furthermore, more than 80% in each group say they feel optimistic, even when things go wrong.
However, those in major cities are more profit-oriented and less risk-averse -- two traits often associated with entrepreneurs. Eighty percent of Saudis in major cities believe that a successful business is one that makes a big profit, compared with 66% of those in smaller cities. Nearly two-thirds of Saudis in major cities say they would rather take risks and build their own business than work for someone else, compared with less than half of those in minor cities.
Access to Capital and Training More Out of Reach in Minor Cities
Access to capital and training is a challenge in major and minor Saudi cities alike. A slim majority of Saudis in major cities who are not already business owners think that they would have access to capital if they wanted to open their own businesses, while among minor cities' respondents, the percentage is much lower at 38%. In addition, 58% of those in major cities and 46% in minor cities say they have access to training on how to start a business.
Minor Cities, Major Bureaucracy?
Respondents in major cities are less likely to perceive bureaucratic obstacles to launching and managing their own businesses. Sixty percent in the major cities say the government makes it easy for aspiring entrepreneurs to start their own businesses and 52% say the government makes it easy to manage one. About half as many in minor cities say the government makes it easy to start a business (38%) and fewer say it makes it easy to manage one (32%).
Implications
Job creation agencies in Saudi Arabia have pledged to increase financial and technical support to aspiring entrepreneurs in minor cities. The Centennial Fund, for example, vowed that support devoted to minor cities would account for 70% of the Fund's overall budget over the course of the next several years. Although important, facilitating access to capital and training may not be enough to spur the growth of small and medium-sized enterprises (SMEs) in minor cities, partly because it is not what largely differentiates minor cities from major ones.
Facilitating the process of starting and managing businesses may be the most important factor in promoting SMEs' growth in minor cities because the largest differences between respondents in major and minor cities lie in their perceptions of how easy or hard the government makes the process. Government efforts to fight corruption can potentially improve the perception of the easiness to start and manage businesses. The creation of the National Anti-Corruption Authority in March 2011 is a major step toward fighting corruption. Yet, the authority must focus its efforts on minor cities, where entrepreneurial activity and the perceived easiness of starting and managing businesses are low.
For complete data sets or custom research from the more than 150 countries Gallup continually surveys, please contact SocialandEconomicAnalysis@gallup.com or call 202.715.3030.
Survey Methods
Results are based on face-to-face interviews with 1,022 adult Saudi nationals and Arab expatriates, aged 15 and older, conducted Sept. 2-Oct. 6, 2011, in Saudi Arabia. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3.4 percentage points. The margin of error reflects the influence of data weighting. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
For more complete methodology and specific survey dates, please review Gallup's Country Data Set details.
