Helping MSMEs In A Big Way

Ibrahim bin Hamad Al Rashid, CEO of the Social Development Bank (SDB), explains its approach to helping microbusinesses and reveals how it has helped to alleviate the pandemic impact.

What is your role in supporting micro and small business (MSMEs) and what are your main priorities to help businesses keep functioning? MSMEs are a vital catalyst to global economies and Saudi Arabia realized that early on. For the past 50 years, Social Development Bank (SDB) has been actively working as a full-fledged development finance institution. In 2007, SDB started providing concessional financing to MSMEs to amplify their contribution to the national economy, further shoring up our position among the leading DFIs in the MENA region.

We have funded over 180,000 MSMEs, with total lending of

$2.4 billion. Collectively, this has helped create 60,000 full-time and over 100,000 freelance jobs, complementing SDB’s sociallygeared financing, which amounts to $30 billion, disbursed to 2.7 million beneficiaries.

However, our MSMEs enablement extends beyond financing. It includes capability development, incubation, and facilitation of market entry.

In that context, we established “Dulani” business clinic in 2017, offering tailored consulting and capability-building services to over 10,000 entrepreneurs and enterprises annually.

We aim to offer all what it takes for MSMEs to thrive and be sustainable along their journeys.

What has SDB done to alleviate the impact the pandemic has had on Saudi’s society?

We have been at the forefront of extending support to stabilize the socioeconomic conditions in such exceptionally challenging times.

Under the umbrella of the National Development Fund, and in line with national efforts, SDB increased its social lending from $533 million to over $1 billion, and increased business lending from $1 billion to around $2 billion, shielding our beneficiaries from the financial burdens imposed by COVID-19. Additionally, a six-month loan deferment scheme was availed, benefitting more than 12,000 small enterprises to maintain employment rates and overall cash position.

SDB also introduced a range of products to tend to different financing needs, and create sector-specific solutions (e.g., healthcare, technology, retail, etc) to counter COVID-19 effects.

Moving forward, we will closely monitor socioeconomic developments to ensure sufficient protection for our citizens and MSMEs during the pandemic.

How do you see SDB’s role in fostering the Fintech sector?

We believe Fintech is quite instrumental in enhancing financial inclusion. In 2020, SDB sought to create alternative financing solutions to increase the reach and affordability of funding, catering to the needs and aspirations of MSMEs.

This culminated in the launch of our first Fintech product with a P2P-lending platform, providing accessible loans to MSMEs.

Continuing our mission for greater financial inclusion, SDB has also introduced the largest, fully digitized freelance-financing product in the kingdom, “Nafath,” which facilitated $1 billion to 70,000 beneficiaries during its first year.

What products and services have you created for home-based businesses (HBBs)?

We are committed to enabling a robust financing ecosystem to commercialize HBBs and integrate them into the formal economy. Through an Apex funding model, SDB empowers NGOs, allocating financial portfolios to transform them into microfinance institutions. Additionally, we also offer a wide range of non-financial services such as capability development programs and sales outlets.

To date, over 140 NGOs in KSA have benefited from such services and portfolios, and the model has served 95,000 beneficiaries with total lending of around $300 million.