The volume of investments on small and medium enterprises (SMEs) in the Kingdom is expected to hit more than SR262.5 billion ($70 billion) by the end of 2015 thanks to support given by the state budget and banking loans, local media said.
Share of the SME projects to the Kingdom’s GDP may possibly rise to 37 percent by the end of the said year compared to 35 percent at the end of last year, local media quoting data released by Zawya business newswire.
According to other data, the number of SMEs in the Kingdom stood at nearly 1.97 million by January 2014 while this figure is projected to jump to more than 2.5 million by end of 2015.
Based on SME Center at the Council of Saudi Chambers (CSC), only 71 percent of the Kingdom’s SMEs were operational while the remaining 29 percent were shut down due to financial difficulties. The single proprietor firms accounted for 85 percent, or 688,000, of all operational SME companies.
Riyadh city has captured 25 percent of all SME projects followed by Makkah Region at 24 percent, according to the SME Center.
Meanwhile, the Saudi banks have played a pivotal role in supporting the SME sector through providing loan guarantees known as Kafala Program through the Saudi Industrial Development Fund (SIDF). However, some banks are reluctant to finance the SME projects due to the absence of feasibility studies or guarantees which led, in the log run, to the failure some of those companies.
According to data released by the Gulf Organization for Industrial Consulting (GOIC), over 4.5 million persons, mostly foreigners, are employed in SME firms whose investments are estimated at SR250 billion and are absorbing 82 percent of work force in the Kingdom.
It is worth-mentioning that the government of the Custodian of the Two Holy Mosques has, for the first time, placed development of the SME sector among the goals of its 2010-2014 development plan as part of efforts to diversify the economy and expand share of the SME to the GDP, the report said.