RIYADH, Jan 14 (Arab News): Credit facilities provided to micro, small, and medium enterprises in Saudi Arabia saw an 18 per cent annual rise in the third quarter of 2023, according to the latest figures.
Data from the Kingdom's central bank, known as SAMA, showed borrowing lines allocation to this sector reached a total of SR268.57 billion ($71.61 billion) in the three months to October 2023, showing a rise from SR228.03 billion in the same period of the previous year.
This increase is attributed to government initiatives aimed at providing support to these firms.
Given its pivotal role in the economy, contributing to employment, innovation, and diversification, the small business sector has experienced notable growth in recent years.
Consequently, the SME General Authority, also known as Monsha'at, has introduced various initiatives to foster the development of this area in the Kingdom.
Key initiatives include the reimbursement of taxes paid by SMEs to the government, the introduction of the Kafalah program to mitigate risks in investments in the sector, providing indirect funding of $426 million to banks for supporting small businesses at reduced costs, and the initiation of the Saudi Venture Capital program, which invests in funds targeting high-growth potential startups.
The Guaranteed Financing Program, launched in 2020 by SAMA in cooperation with Kafalah, guarantees 95 per cent of the value of financing granted by banks and companies according to the approved mechanisms within the Kafala program, with the aim of providing additional support and enhancing the creditworthiness of micro-enterprises.
As per the most recent data from Kafalah, the cumulative guarantees extended to SMEs in the third quarter of 2023 amounted to SR60.95 billion. Among these guarantees, the economic activity dominating the largest share was wholesale and retail trade, along with the repair of motor vehicles and motorcycles, comprising 34 per cent during this period. Construction followed closely, constituting 26 per cent of the total guarantees.
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