JEDDAH: The Saudi Export-Import Bank allocated around SR250 million ($66.6 million) for small and medium enterprises in the first quarter of 2022 and plans to earmark SR300 million by the end of the year, amounting to a total grant of SR550 million.
“About 42 percent of our client base currently are SMEs. From the bank’s inception to the end of 2021, we approved over SR1.2 billion for them,” Saad Alkhalb, CEO of Saudi EXIM Bank, told Arab News.
The bank signed a tripartite memorandum of understanding on April 19 with Monsha’at and the International Islamic Trade Finance Corp. to launch a program to support SMEs exports.
“With this MoU, we expect to release SR300 million in the latter part of 2022,” he said on the sidelines of the MoU signing event.
Established in Feb. 2020, the Saudi EXIM Bank provides export financing, guarantees, credit insurance and other services to bolster confidence in foraying into new markets. The institution also aims to minimize risks and add value to the Kingdom’s international trade.
Capacity building
The bank will host a workshop for SMEs during the third quarter of this year, where it will identify suitable companies and accelerate their export potential.
“The criteria is their products. If they have the right products, they will be encouraged to export and grow,” added Alkhalb.
The MoU also aims to accelerate digital transformation among the targeted SMEs to boost their export capabilities and provide indirect funding by offering insurance, products and financial guarantees.
“The MoU will also encourage Shariah-compliant SMEs in Saudi Arabia to access new markets,” Hani Sonbol, CEO of the International Islamic Trade Finance Corp., told Arab News.
Sonbol also plans to roll out new products and services for SMEs in the Kingdom.
“We will provide lots of products to support this crucial sector, which comprises almost 85 percent of the economy in the Kingdom,” said Sonbol.
Making projects bankable
The agreement will cover areas that will enable SMEs to access funds from financial institutions and submit bankable projects.
According to Sonbol, SMEs need capacity building. Some need expertise. Some need more training in certain areas. “We will also support them with advisory services. We are signing this critical agreement to support SMEs as part of the Kingdom’s 2030 blueprint to support the diversification of exports toward the non-oil sector,” he added.
Besides offering training and advisory services, Monsha’at will also dole out discounted vouchers to facilitate SMEs with financial aid to overcome their overhead costs.
“The agreement will eventually give them access to finance when they decide to approach international markets,” said Abdulrahman Alotaibi, director at Monsha’at, told Arab News. The initial agreement was signed on April 19 in Jeddah in the presence of the Saudi minister of commerce, Majid Al-Qasabi, who is also the chairman of the board of directors of Monsha’at and Minister of Industry and Mineral Resources Bandar Al-Khorayef, who is also the chairman of the board of directors of the Saudi EXIM Bank.
Saudi banks and finance companies have been on a lending spree over the last few years, with both collectively extending loans worth SR200.3 billion to the MSME sector in the third quarter of 2021, up from SR175.7 billion in the third quarter of 2020, the Saudi Central Bank, or SAMA, had earlier revealed.