176 billion riyals financing for small and medium enterprises, an increase of 52%

The Saudi Central Bank (SAMA) revealed that financing for small and medium enterprises rose to 176 billion riyals in the third quarter of last year compared to 115 billion riyals during the same period in 2019. The increase was 52% compared to 9% during the same period in 2019. The report indicated Micro-enterprises were the most obtainable of financing, at 89%, while the percentage of financing for small and medium enterprises was 58% and 44%, respectively. Bank financing represented 93% of total financing, compared to 7% across various financing companies. Small and medium enterprises acquired 6% of total financing last year, exceeding the target rate of 5%, in light of the conviction of the importance of the role of these enterprises in supporting the national economy. In 2018, the state launched an initiative to recover government fees to reduce the burden on small and medium enterprises, most notably the municipal license fees, as well as 80% of the fees for visas to bring in foreign workers. Thousands of establishments benefited from this initiative, which was launched in 2016, which enabled them to withstand during the Corona crisis. Reports issued by the World Bank show that small and medium enterprises represent about 90% of businesses around the world, and despite their lesser contribution to the economy, they have a major role and other contribution to addressing poverty, reducing unemployment rates, and moving the wheel of production.

The state assists banks in bearing the risks resulting from financing this segment, as it guarantees, through specialized funds, part of the financing in the event that the company or institution fails to pay, and the financing is granted to the company that actually contributes to the production process, in order to achieve a profit from both parties.

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