Over SAR275 Billion Granted to SMEs in Six Years

Riyadh, May 22, 2024 – The banking and finance sectors in Saudi Arabia have granted SAR275.576 billion in facilities to small, medium, and micro enterprises over the six years through 2023, according to the Saudi Central Bank (SAMA). This represents a 154% growth, or SAR167.1 billion, compared to 2018, when the figure stood at SAR108.519 billion.

Context and Background

This remarkable growth aligns with Saudi Arabia’s Vision 2030, which prioritizes the development of small and medium enterprises (SMEs) as a key driver of economic diversification and job creation. The Kingdom has implemented various initiatives to enhance access to financing for entrepreneurs and businesses, including the establishment of the Small and Medium Enterprises General Authority (Monsha’at) and the injection of capital through the Saudi Development Fund. The increase in facilities reflects the growing confidence of financial institutions in the SME sector’s potential.

Additionally, the 2024 annual growth rate of 20.3%, with facilities reaching SAR46.544 billion compared to SAR229.032 billion in 2022, demonstrates sustained momentum. This surge is expected to contribute significantly to the GDP, as SMEs are vital to fostering innovation and reducing reliance on oil revenues.

Key Details

According to the monthly statistical bulletin issued by SAMA for March 2024, medium-size enterprises accounted for the largest share of total facilities, at 57.5% (SAR158.411 billion). Small enterprises followed with 33.5% (SAR92.275 billion), while micro-enterprises received 9% (SAR24.890 billion). The banking sector contributed the bulk of these facilities, providing 94% (SAR258.295 billion), with finance companies contributing 6% (SAR17.281 billion).

Quarterly data shows a 3% growth in total facilities by the end of Q4 2023, increasing by about SAR7 billion from SAR268.574 billion in Q3 2023. This quarter-on-quarter rise indicates sustained demand and effective distribution channels.

Implications and Impact

The significant financing provided to SMEs is expected to accelerate the growth of the sector, create thousands of jobs, and stimulate innovation. It also supports non-oil exports and aligns with the Financial Sector Development Program, a Vision 2030 initiative aimed at increasing SME access to funding from 5% in 2018 to 20% by 2030. This progress not only strengthens the national economy but also positions Saudi Arabia as a hub for entrepreneurship and investment in the region.

The robust participation of banks and finance companies highlights the health of the financial system and its readiness to support business expansion. Moreover, the classification of SMEs by revenue and employee count ensures tailored support, fostering an enabling environment for businesses of all sizes.

Vision 2030 Alignment

This achievement exemplifies Saudi Arabia’s commitment to fostering a vibrant SME ecosystem capable of driving economic transformation and realizing the ambitious goals of Vision 2030. The continued growth in financing facilities underscores the Kingdom’s dedication to empowering entrepreneurs and enhancing the business environment. As Saudi Arabia advances toward its vision, such initiatives will play a pivotal role in building a resilient and diversified economy for generations to come.

20 Questions

Q1. What is the total amount of facilities granted to SMEs in six years?

A1. The total amount is SAR275.576 billion, as reported by the Saudi Central Bank for the period ending 2023.

Q2. What was the growth percentage compared to 2018?

A2. The facilities grew by 154% compared to 2018, when the figure was SAR108.519 billion.

Q3. What was the annual growth rate in 2023?

A3. The annual growth rate was 20.3%, an increase of SAR46.544 billion over the previous year.

Q4. Which category of enterprises received the largest share?

A4. Medium-size enterprises received the largest share at 57.5%.

Q5. What percentage did micro enterprises receive?

A5. Micro enterprises received 9% of the total facilities.

Q6. How much did banks contribute?

A6. Banks contributed SAR258.295 billion, making up 94% of the total.

Q7. How much did finance companies provide?

A7. Finance companies provided SAR17.281 billion, accounting for 6%.

Q8. What was the quarterly growth in Q4 2023?

A8. There was a 3% growth, an increase of about SAR7 billion from Q3 2023.

Q9. What is the revenue range for medium enterprises?

A9. Medium enterprises have revenues between SAR40 and SAR200 million.

Q10. How many employees do small enterprises have?

A10. Small enterprises have between 6 and 49 employees.

Q11. What is the revenue threshold for micro enterprises?

A11. Micro enterprises have revenues up to SAR3 million.

Q12. Who issued the statistical bulletin?

A12. The Saudi Central Bank (SAMA) issued the monthly statistical bulletin.

Q13. What is the role of Monsha’at in this context?

A13. Monsha’at, the Small and Medium Enterprises General Authority, classifies SMEs and supports their development.

Q14. How does this align with Vision 2030?

A14. It aligns with Vision 2030’s goal to increase SME contribution to GDP and diversify the economy.

Q15. What is the target for SME funding by 2030?

A15. The target is to increase SME access to funding from 5% in 2018 to 20% by 2030.

Q16. Did the facilities show consistent growth yearly?

A16. Yes, the facilities have shown consistent growth over the six-year period.

Q17. What is the significance of banking sector participation?

A17. The banking sector’s 94% share demonstrates its crucial role in financing SMEs.

Q18. How does SME financing contribute to job creation?

A18. SME financing enables businesses to expand, leading to the creation of new job opportunities.

Q19. Are there any specific sectors receiving this financing?

A19. The data does not specify sectors; it covers all small, medium, and micro enterprises.

Q20. What impact will this have on Saudi Arabia’s economy?

A20. This will boost economic diversification, support entrepreneurship, and reduce oil dependence, aligning with Vision 2030.

---