Business & Money | Wednesday 26 December, 2018 2:46 pm |

The 10th edition of Kafalah Awareness Campaign #تمسّك_بحلمك (Hold on to your Dream) has been launched through a press conference in a partnership with the contributing banks on Tuesday the 25th of December 2018.

Homam Hashem, Kafalah Director General, unveiled that 11,912 SMEs covering a wide range of industries and sectors have benefited from Kafalah program since it established in 2006 until mid of December. While the total of funding provided by the contributing banks reached above 25 billion riyals, the value of guarantees (kafalaat) provided to banks during the same period reached more than 13 billion riyals. He noted that the program has succeeded in energizing the growth of small and medium enterprises sector, and supported their remarkable contribution to the gross domestic product.  

Homam pointed out the developed mechanism of the program to support its objectives in expanding the participants’ base, enhance efficiency in addition to boosting preferential features for SMEs.. He also noted the updated agreements with contributing banks aming to expand the scope of beneficiary enterprises and increase the financing portfolio allocated to finance small and medium enterprises.

He added that Kafalah program in cooperation with the local content and private sector development unit "Namaa" continues to raise the program’s capital by 800 million riyals through private sector stimulate initiative that in turn contributed to reach 1.6 billion riyals. In addition, this initiative enabled Kafalah to introduce new products, cooperation agreements with new non-banking financial institutions and the introduction of incentive programs for businesswomen sector and promising regions.

Homam stressed positive impact and significant indicators reflected on the program this year till mid of December with 16% increased beneficiaries to reach 1954 against 1685 last year. In addition, The value of financing granted by banks increased to SR 4.7 billion against SR 3.2 billion, recording 46%, raising the outstanding portfolio to SR 3,8 billion, with 62% increased financing (kafalaat) with more than 2.8 billion riyals compared to 1.7 billion riyals during the same period last year.

Homam pointed out that "financing" will remain the main driver for SME sector development supporting its presence and contribution to GDP in line with the Kingdom vision 2030, which has given special priority to this vital sector within its economic agenda to stimulate the national economy and boost production and income diversification.

Homam marked Saudi banks facilities to encourage Saudi youth of both genders to benefit from the financing and advisory services provided by banks under the program, in view of the awareness campaign #تمسّك_بحلمك(Hold on to your Dream) aims to attract more business leaders to benefit of the program.

For his part, Talat Hafiz, secretary general, Media and Banking Awareness Committee of Saudi Banks said that year after year, the small and medium enterprises sector confirms its presence and growth in economies of the developed countries, and there are real efforts to maximize its role and contribution to these economies in view of its direct role in creating jobs, diversifying sources of income and enhancing productive and competitive capacity of the national economy, which elucidates the interest and attention this sector enjoys.

Hafiz added that in the context of the kingdom’s approach of diversified sources of income and the gradual reduction of reliance on oil, in its long-term economic strategies, which were clearly expressed by the Kingdom's vision 2030 and the National Transition Program 2020, is to raise the GDP contribution of SMEs in the Kingdom from 20% to 35%.

Hafiz stressed Saudi banks as a major supporter of the development of this sector and that they have harnessed their potentials to ensure the success of Kafalah program, which proved to be a pioneering model on the Arab and regional levels. He pointed to the developmental steps of the contributing banks to improve the efficiency of the program and its outputs where banks loans to SMEs increased to nearly 5% of the banks loan portfolio of 1.4 trillion riyals, compared to 2% two years ago, indicating that it targets to reach 5% in 2020, with greater ambition in the near future, God willing.

He added that the Saudi banks comprehensively reviewed their agreements with Kafalah program, and are keen to modernize and expand their ranges, and allocated committees to supervise the implementation of the support required for the sector such as; funding, training and financial, administrative and marketing guidance, directly linked to the senior departments in banks and under the supervision and follow-up of the Saudi Arabian Monetary Agency (SAMA), reflecting the firmness and seriousness of supporting this sector, noting that the 10th edition of  #تمسّك_بحلمك (Hold on to your Dream) is dedicated to raise awareness about the program facilities to enable SME owners to grow their business and enhance its quality.