Access to finance tops obstacles for Saudi firms

Over half of Saudi firms named access to finance as the single biggest obstacle to doing business in the World Bank’s latest Enterprise Survey (pdf), more than double the 22% average across the wider MENA region and the highest reading among the survey's comparator groups. Yet the same survey shows Saudi companies tapping bank credit far more readily than their regional peers, leaving a gap between how firms actually fund themselves and how they rank their constraints. The survey covered over 1k businesses interviewed between March 2025 and February 2026.

Unlike much of the region, Saudi firms are growing. Real annual sales rose 6.3%, outpacing the 5.2% recorded across MENA. Employment grew 5.9%, comfortably ahead of the regional figure. That makes the prominence of finance as a perceived obstacle all the more notable: these are firms expanding sales and headcount, not retrenching.

Saudi firms are unusual in how much they rely on banks. Banks financed 41% of capital expenditure, against just 15% across the region and 18% in high-income economies. Internal funds covered 58% of investment, a heavier external-credit mix than the regional norm, where firms self-fund 71%. Supplier credit and equity were both negligible.

The strain falls hardest on small firms: Some 60% of small companies cited access to finance as their top obstacle, against 29% of medium-sized firms and 28% of large ones. Only around 14% of small firms reported holding a bank loan, compared with 23% of large firms. The survey does not explain the gap, but it may reflect concentrated lending to larger, more established borrowers, collateral requirements, or simply unmet demand for credit in a fast-expanding, diversifying economy.

Firms import heavily but rarely export. Around 95% of manufacturers use imported raw materials or supplies, the highest share among the comparator groups and well above the 60% regional average. Only 1.2% export at least 10% of their sales directly, the lowest reading and a fraction of the 11% regional norm. Customs is not the bottleneck: exports clear in around two days and imports in two, against six to eight days regionally.

Training, research, and women’s participation lag well behind peers. Only 1.4% of firms offer formal employee training, against 21% across MENA and 39% in high-income economies, and just 1.3% spend on R&D. Roughly 11% introduced a new product or service and 4% a process innovation — both below regional levels. Women make up 11% of the full-time workforce, 1.8% of top managers, and hold ownership stakes in just 2.4% of firms — among the lowest in the survey.

Informality is minimal, but corruption surfaces at the permit window. Only 9% of firms reported competing against unregistered operators, against 36% across the region, and 95% were formally registered from the outset. Bribery incidence, at around 10%, sat below the 13% regional rate — though above the 4% high-income benchmark. Some 17% of firms said they were expected to offer gifts or informal payments to obtain a construction permit.

One bright spot: working with the state is fast. Operating licenses took about six days to obtain, against 21 regionally and 42 in high-income peers, and construction permits took 16 days. Senior managers spent just 4% of their time on regulatory compliance, and barely 1% of firms were required to meet tax officials, a fraction of the 35% regional figure.

The big question: The survey depicts a private sector that is growing, well-banked by regional standards, lightly burdened by red tape, and largely unburdened by the informality and power-supply problems that hold back its neighbors. The soft spots lie elsewhere — in SME credit access, near-absent direct exporting, thin spending on skills and innovation, and low participation of women. These are precisely the areas the Kingdom is counting on to build a more diversified, non-oil private sector, which raises the question of whether the next phase of reform can convert a stable, fast-growing business environment into one that lends deeper, exports more, and trains and includes a broader workforce.