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“Kafalah” financings increased by 156% during 2020… a total of 12.3 billion riyals

31/01/2021

During the year 2020, 5720 companies have benefited from the Small and Medium Enterprises (SME) Financing Guarantee Program “Kafalah", with a total financing value of 12.3 billion riyals compared to 4.8 billion riyals during 2019, which denotes an increase of 156%.

According to the information provided by the “Economic" programs, the total value of financing granted by the financing entities cooperating with the program is about 15.4 billion riyals, compared to 7.4 billion riyals during the same period of 2019, which denotes an increase of 107%.

The program management has approved to guarantee 5720 financing requests during 2020 compared to 2777 requests during the same period of last year, which denotes an increase of 106%.

The program explained that this increase in supporting the enterprises during last year 2020 is due to a number of initiatives; the Small and Medium Enterprises Financing Guarantee Program “Kafalah", with a contribution from the National Development Fund, has launched a number of initiatives worth 450 million riyals to guarantee the SME loans which total value is of more than 2.2 billion riyals, and supported by the “Kafalah" guarantee coverage reaching up to 90% of the loans value. It is thanks to the government's continuous efforts to confront the financial and economic impacts of the Corona crisis, and as one of the urgent and supportive measures for the sustainability of the SME sector.

The Small and Medium Enterprises General Authority “Monsha'at" supports the Financing Guarantee Program “Kafalah" to perform its economic role and maintain the development in a view to meet the increasing needs of the market, based on the decision of the cabinet and the judge to establish a financing guarantee program for the SME. The Authority's boards of directors are responsible for issuing the financial and administrative regulations of the program in agreement with the Ministry of Finance, in a way that guarantees the financial and administrative flexibility, and in accordance with the nature of the activity.

The program referred to directing the guaranteed financing to support promising cities and regions, as the guarantees issued by the program for SME during the last year were distributed to include all administrative regions in the kingdom.

The number of financing requests received by the financing guarantee program “Kafalah" from all main regions of the kingdom (Riyadh, the Eastern Province, and Mecca) increased in 2020 by 95% compared to the same period of the year before. As for the promising regions, the percentage of financing requests increased by 124% compared to the same period of the year before.

The program seeks to provide more financing opportunities that the banks provide to meet the needs of Saudi women entrepreneurs aspiring to implement their own projects or develop their existing ones, in a view to activate their investment role, especially in the light of the wide and varied list of activities covered by the program.

The program indicated that the increase of Saudi women's contribution to the national economy is a priority. And that is achieved by increasing the number of businesswomen qualified to manage business activities through specialized training and educational programs organized by the program.

The program's statistics indicate that the number of enterprises owned by women entrepreneurs in 2020 has increased by 186% compared to the previous year 2019.

According to the data issued by the Saudi Central Bank "SAMA", the figures show an increase in the percentage of the financing guarantee program "Kafalah" contribution to support financing provided to SME from 5% during the second quarter of 2018 to 9% at the end of the third quarter of 2020 of the total financing provided to the sector, with a gross total of 176 billion riyals.

For those who want to benefit from the program, now they can apply on the financing portal, a platform launched by the Small and Medium Enterprises General Authority “Monsha'at", and benefit from the preferential offers provided by the financing entities, such as banks and financing companies licensed by the Saudi Central Bank and cooperating with the Small and Medium Enterprises Financing Guarantee Program “Kafalah". Also, all micro, small and medium enterprises are allowed to benefit from the guaranteed financing program for the various types of facilities currently provided on the financing portal platform.

The guaranteed financing program, supported by the Saudi Central Bank “Sama", includes exempting the enterprises from any administrative fees and from providing any in-kind guarantees. SAMA will also bear the guarantee fees in favor of financing guarantee program “Kafalah" in lieu of the financing entities. The program will allow customers to start with the payments six months after obtaining the financing, and will ensure a maximum limit for profits and fees collected by the financing entities, provided that it does not exceed 4% of the financing value annually.

It is noteworthy to mention that the Saudi Central Bank launched, during the last year 2020, a guaranteed financing program, in cooperation with the Small and Medium Enterprises Financing Guarantee Program “Kafalah", by guaranteeing 95 percent of the value of the granted financing according to the approved mechanisms within the financing guarantee program "Kafalah", with the aim of providing additional support and strengthening the creditworthiness of micro, small and medium enterprises and overcoming the challenges of financing these enterprises, which reduces the impact of the decline in cash flows, and facilitates for them to serve their customers, pay the salaries and entitlements of their employees and fulfill their financial obligations.​

Last Update : 2/11/2021 5:32 PM
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