Complex Made Simple

The financial impact of keeping Saudi businesses open during prayer times

Saudi Arabia has officially allowed businesses to remain open during the five daily Muslim prayers. How will this impact revenues to Saudi coffers?

In August of 2019, Saudi hinted at altering the need for businesses to close four times daily Punishments for failure to close ranged from detention to deportation for expatriate shop attendants $22 bn was estimated as lost due to prayer times over the year for the retail sector

Saudi Arabia has officially allowed businesses to remain open during the five daily Muslim prayers.

“Stores and other commercial and economic activities will remain open throughout the working day and especially during [prayer] hours,” the Federation of Saudi Chambers said in a statement in mid-July, 2021.

Officially, the decision is part of the fight against the coronavirus pandemic and aims to avoid “gatherings and long queues in front of closed stores during prayer hours.”

However, it comes after a 2019 decree that said businesses could stay open 24 hours a day for an unspecified fee.

The move, which triggered confusion over whether it included the prayer times, was seen by some as a trial loosening of the rules.

Since then, some restaurants, supermarkets, and other stores have stayed open, particularly in the capital Riyadh, AFP reported.

The 2019 precursor decision

In August of 2019, Saudi hinted at altering the need for businesses to close four times daily following dawn prayers, restrictions that members of the advisory Shura Council said costs the Saudi economy tens of billions of riyals a year.

This followed Saudi Crown Prince Mohammed bin Salman implementing a series of reforms such as allowing women to drive, reopening cinemas and reining in clerical power as he seeks to project a business-friendly image.

Saudi state media reported in July 2019 that the kingdom will allow round-the-clock trading for what some local media said was a fee of up to 100,000 riyals ($27,000).

At the time, when Saudi-owned Al-Arabiya television first tweeted that the decision included prayers, a government official rejected the claim on air, forcing the media to delete its tweet.

Large malls and shops appeared to be observing the shutdown.

The previous shut down rules

Previously, after the pre-dawn Fajr prayer, businesses were obliged to close during the day’s other four prayers, putting workers out of action for a total of about two hours in the Muslim world’s only mandatory prayer-time shutdown.

Saudi Arabia’s religious police were notorious for chasing men and women out of shopping malls to pray. 

Violations were regulated by the Commission for the Promotion of Virtue and Prevention of Vice (CPVPV), also known as Haia, or the religious police. Officers of the commission had the power to arrest and punish shopkeepers for even delaying the closure of their stores for a few minutes. Punishments ranged from detention to deportation for expatriate shop attendants.

Cost of closures

In a white paper by Takamol advisory unit last March 2018, the below calculation was used to approximate the costs of closure for businesses and the kingdom.

At the time, there were around 2.7 million workers in the Retail & Wholesale industry, and the retail contribution to the GDP was 16%, or $110 billion.

Dividing that by the number of workers equals $40,666 per worker.

Assuming that each worker is contracted to 10hrs per day over a 365-day year equates to $11.14 per hour contribution to GDP. For the two hours per day lost to Prayer Times, that is $22.2 per day, $8,133 per year, or up to a total of $22 bn (2.7 million workers x $8,133) estimated as lost due to prayer times over the year.

This approximation totals 2.9% of the overall GDP of the Kingdom, lost in the retail and wholesale sector due to prayer times.

This also does not take into account revenue lost as consumers who would be buying were not active in these periods

However, this calculation does show that amendments to prayer times or regulations will have a significant impact on the market.