Source: Zawya
Banks lead the spikes as the Kingdom boosts support for small businesses. The Kingdom of Saudi Arabia’s micro, small and medium enterprises (MSMEs) saw a sharp shift in financing in 2024, illustrating the Kingdom’s strong push to support a booming sector and grow its role in the national economy.
Recent data from the Saudi Central Bank, SAMA, reported that total credit to MSMEs exceeded SAR 351.7( approximately US $93.7 billion), in the last quarter of 2024 which is a 28% rise compared to the final quarter of 2023.
Banks Served a Big Role
The majority of the credit came from Saudi banks who provided SAR 333.5 billion of finance, which is nearly 30% more than the volume the previous year. The Finance Companies contributed SAR 18.2 billion of credit, which is a year-on-year increase of 5.4%.
This increase demonstrates the developing confidence in the MSME sector as well as the success of government initiatives aimed at providing additional access to funding for businesses.
Micro and Small Businesses Exhibit Robust Growth
Among the three types of MSME, micro businesses showed the largest increase in credit, Micro Enterprises increased by 69.5%, or SAR 42.2 billion. Micro businesses tend to be quite small, often only consisting of a few staff or a family.
The small businesses also posted considerable growth as they received SAR 122.3 billion of loans, 32.5% more than the previous year. Medium businesses received the greatest value of credit at SAR 187.3 billion with an increase of 18% over 2023.
This shift in financing allows these businesses to grow, invest in new equipment, hire skilled workers, and enhance their services.
Promoting Vision 2030 Objectives
This expansion demonstrates support for Saudi Arabia’s Vision 2030 plan to diversify the economy and reduce the reliance on oil. Among the targets established by Vision 2030 is the goal to increase the contribution of small and medium businesses to GDP from 20% to 35% by 2030.
To help achieve this goal, there are several support programs to stimulate economic growth. Much of this includes loans to micro, small and medium enterprises (MSMEs) that are guaranteed through the government Kafalah Program that guarantees up to 80% of loans to MSMEs, and therefore decreases the risk of lending. To further support MSMEs, the government is establishing a new SME Bank where new small businesses can access funding.
