Saudi digital bank bridges financing gap for SMEs 
Saudi Vision 2030 emphasizes the importance of small and medium-sized enterprises to the Kingdom’s economy. In 2023, there were 1.3 million SMEs operating in the Kingdom, accounting for roughly 94 percent of businesses.
A medium-sized enterprise is one with revenues ranging from SR40 ($10.6 million) to SR200 million and employing 50-249 full-time employees. A company with revenues of between SR3 and SR40 million and employing 6-49 full-time employees is considered a small enterprise, while a company with revenue ranging from SR0 to SR3 million and employing 1-5 full-time employees is considered a micro-enterprise.
In the past, SMEs in the Kingdom faced several challenges that hindered their expansion. Obtaining financing from traditional financial institutions was one of the main ones.
An SME bank was established in 2021 with the aim of supporting Saudi Vision 2030’s goals, which include raising the SME sector’s contribution to the gross domestic product to 35 percent and increasing the volume of financing provided to SMEs to 20 percent of the total loan portfolio by 2030.
The bank provides several financing solutions, including debt financing, equity financing, and loan guarantees.
In line with Saudi Vision 2030’s aim of building a digital economy, the bank provides all its products and services to SMEs digitally, in collaboration with its partners, through several channels, facilitating access to all its services from any location in the Kingdom.
Empowering the SME sector to become the driving force in the Kingdom’s economy is the right thing to do, because SMEs are the backbone of any economy.
The bank has succeeded in achieving one of its main goals, which is to bridge the financing gap for SMEs.
Along with its subsidiaries, namely the Small and Medium Enterprises Loan Guarantee Program (Kafalah) and the Saudi Venture Capital Co., the bank has provided several funding instruments to SMEs and created new products to support their expansion and diversify their economic base.
It has also invested generously in human capital and developed several financial solutions that support the growth of SMEs.
The Small and Medium Enterprises General Authority (Monsha’at), established in 2016, is another Saudi government initiative designed to regulate, support, and develop the SME sector in the Kingdom.
I believe that the Saudi government has succeeded in supporting and promoting SMEs, not only by providing for their financing needs, but also by aiming to raise their contribution to the country’s GDP from 20 percent to 35 percent by 2030.
Empowering the SME sector to become the driving force in the Kingdom’s economy is the right thing to do, because SMEs are the backbone of any economy.
For example, according to the European Commission, SMEs represent 99 percent of all businesses in the EU, employing around 100 million people.
Moreover, they play a key role in adding value to every sector of the economy by bringing innovative solutions to challenges including climate change, resource efficiency, and social cohesion.
• Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz
