Overall Rating: B

For full strategic analysis, see the private sector priority. Related coverage: Shareek Programme, SME growth, regulation.

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Progress Assessment

Private sector growth is one of the most structurally important priorities within Vision 2030 and one where progress has been genuine but uneven. The B rating reflects strong performance on business environment reform and entrepreneurship indicators alongside a stubborn gap on the headline private sector GDP contribution target. At 48 percent against a 65 percent target, this KPI represents one of the most ambitious structural transformation goals in the entire programme.

Business environment reform has been a clear success story. The Kingdom has climbed from 94th to 63rd in ease of doing business benchmarks, driven by comprehensive regulatory reform across company formation, construction permitting, contract enforcement, and insolvency resolution. Business start-up time has been compressed from 18 days to approximately 2 days through the Meras digital platform, approaching the 1-day target. New commercial registrations have more than doubled to 89,000 annually, indicating rising entrepreneurial activity.

The privatisation programme has generated SAR 98 billion in cumulative proceeds through partial sales of healthcare assets, education infrastructure, milling companies, and energy distribution. However, the pace has been slower than initially planned, reflecting the complexity of preparing public entities for market transfer and the political sensitivity of sectors with public service implications. Government procurement from the private sector has increased from 45 percent to 62 percent, supported by Etimad procurement platform digitalisation and deliberate policy to channel government spending through private contractors rather than in-house delivery.

Key Achievements

• Ease of doing business ranking improved from 94th to 63rd globally
• Business start-up time reduced from 18 days to approximately 2 days via Meras platform
• New commercial registrations more than doubled to 89,000 annually
• Privatisation proceeds of SAR 98B generated across healthcare, education, and infrastructure
• Government procurement from private sector increased from 45% to 62%
• Companies Law modernisation providing stronger corporate governance framework
• Bankruptcy and restructuring law enabling healthier market dynamics
• Competition law strengthened, establishing independent General Authority for Competition
• Public-private partnership framework operationalised across infrastructure sectors
• Franchise law modernisation attracting international brands to Saudi market
• Industrial licensing reform reducing barriers to manufacturing investment
• Digital business registration and compliance reducing regulatory burden

Risks and Challenges

• Private sector GDP contribution at 48% against 65% target is the widest structural gap
• Government spending remains the dominant demand driver for private sector activity
• PIF’s domestic expansion may crowd out independent private sector investment in some sectors
• Labour market restrictions, including Saudisation quotas, increase private sector cost base
• Access to finance constraints for mid-market companies between SME and large enterprise
• Judicial system capacity for commercial dispute resolution still developing
• Regulatory fragmentation across multiple new authorities creating compliance complexity
• Private sector profitability compressed by rising labour and compliance costs
• Economic diversification dependency on government-directed megaproject spending
• International competitiveness challenges against lower-cost regional alternatives

Outlook

The private sector growth priority will be the ultimate test of whether Vision 2030 delivers genuine economic structural transformation or remains dependent on state-directed investment. The 65 percent GDP contribution target is extremely ambitious and is unlikely to be fully achieved by 2030, though continued progress toward 52 to 55 percent would represent a meaningful directional shift.

The path to a higher rating requires three developments: accelerated privatisation of remaining government service delivery, deepening of PIF portfolio company independence from government contracts, and a sustained increase in private sector credit growth driven by market demand rather than government procurement. The institutional foundations are strong, with reformed commercial laws, digital platforms, and regulatory capacity that did not exist a decade ago. An upgrade to B+ would require the private sector GDP figure to cross 52 percent and annual commercial registrations to exceed 100,000.