Al-assaf: SMES enjoying many benefits
The government has taken several initiatives to strengthen small and medium enterprises in the country, said Finance Minister Ibrahim Al-Assaf yesterday.
“SMEs enjoy many benefits to drive the Kingdom’s economic growth,” he said.
The Saudi Credit and Savings Bank’s capital has been increased to SR 36 billion to provide more loans to open SMEs, he said while addressing an international forum on SMEs in Riyadh. More than 21,000 enterprises have benefited from the bank’s soft loans valued at SR 3.14 billion.
At global level, he said, SMEs provide 80 percent of jobs in the private sector and contributes 47 percent of the gross domestic product. “In Saudi Arabia SMEs provide 51 percent of jobs in the private sector and account for 22 percent of the GDP,” he pointed out.
He said the Kafala Program had provided loans worth SR 8 billion to support 593 small and medium enterprises across the country. “We have provided guarantees for more than 5,250 bank loans worth SR 2.6 billion.” As many as 3,160 SMEs received funds worth SR 5.3 billion as a result of this program.
“The government wants to promote SMEs by increasing its support, facilitating finance, easing procedures,” the minister said.
In Riyadh, an SME is licensed by the Ministry of Commerce and Industry within three days.
For the last four decades, the government has been extending loans worth SR 200,000 each to graduates of technical and vocational training institutes to establish small-scale projects.
Ali Al-Ayed, director general of Saudi Industrial Development Fund, said the fund extended 3,480 loans valued at more than SR 106 billion since its inception. It has contributed to the establishment of 2,475 industrial projects, with 53 percent of them being smallscale industries.
“Every SR 1 billion invested in these projects has created at least 2,500 jobs,” he said.
Supported by the Ministry of Finance and Saudi banks, the Kafala Program is tailored to guarantee the bank a percentage of the finance credit given to SMEs in order to allow them to get finance from the bank after studying their economic feasibility.
“Its main function is to offer guarantees to financial establishments in order to minimize risks of SMEs. It can guarantee up to 80 percent of the financae amount given to new and existing SMEs,” one expert said.
Any activity that has total annual revenue of up to SR 30 million can get finance under this program.
The legal entity of the establishment is also necessary because if more than one company are under one legal entity, the total revenue of all these companies will be taken into consideration.
The maximum limit of guarantee is SR 1.6 million.
In a related development, Commerce and Industry Minister Tawfiq Al-Rabiah highlighted the strength of Saudi economy and said it had supported global economies during difficult times. Addressing a conference in Riyadh of the International Chamber of Commerce, he said Saudi Arabia is one of the largest economies in G20 and enjoys huge budget surpluses. Saudi Arabia held 27th position in Enabling Trade Report 2012 published by the World Economic Forum, he pointed out.