More than $4 billion loaned to Saudi SMEs at height of Covid battle

RIYADH: More than $4 billion was pumped into Saudi Arabian small and medium businesses by the kingdom’s banks to help them get through the height of the pandemic, Arab News reported.

Homma Hashem, general manager of the country’s Small and Medium Enterprises Loan Guarantee Programme, known as Kafalah, said the size of the lending represented a 106 per cent rise on 2019, as the firms battled to stay afloat, as the Covid-19 swept the globe.

Kafala Programme is a collaboration between the Ministry of Finance, represented by the Saudi Industrial Development Fund (SIDF) and Saudi banks, which aims at promoting financing to the SMEs within the Kingdom of Saudi Arabia.

A survey carried out by the Rand Corporation in June 2020 found that 85 per cent of the SMEs in the region believed that they would not survive 12 months without external support.

Speaking during the first day of the International MENA Guarantee Conference, Hashem set out how the scheme worked to save businesses, as the impact of the coronavirus outbreak gripped the region.

He said: “During the pandemic in 2020, and in the midst of the crisis, the demand for guarantees from Kafalah programme increased by more than 106 per cent from the previous year, and the programme was able, with the God’s Grace, to meet the call and issue the necessary guarantees,”

Hashem said: “The programme also expanded the network of success partners from the financing agencies to reach 33 financial institutions licensed by the Saudi Central Bank.”

According to the forum, micro, small, and medium enterprises make up 80 per cent to 90 per cent of all regional businesses, and are responsible for 70 per cent of regional employment.

The borrowing by the SMEs continued to grow in the first quarter of 2021, figures released by the Saudi Central Bank on Monday revealed.

The statistics showed the total amount of credit awarded to the SMEs between the first quarter of 2020 and the first quarter of the current year increased 39.74 per cent.

Kafalah, in partnership with the SME Finance Forum, is holding the conference under the slogan: “The Role of Credit Guarantee Schemes in Rebuilding the SMEs post-Covid-19,” on September 6 and 7.