SAUDI EASES PATH FOR SMALL BUSINESSES WITH NEW RULES

The Saudi Arabian Monetary Authority (SAMA) has issued new rules in December that govern microfinance companies, small businesses and start-ups.

In line with SAMA’s efforts to build strong financial controls and support economic development as part of the Vision 2030 plan, the new rules have been designed to regulate licensing and organise activities.

They also aim to attract new investors, set the minimum paid-up capital of SAR 20 million, and cap financing to the company at SAR 50,000.

Firms operating under this umbrella will also be required to adhere to certain requirements issued by SAMA on security of information, corporate governance, internal regulation, risk management, compliance and internal audit.

Saudi Arabia aims to increase the contribution made by SMEs to 35% of GDP, from 20% when the plan was launched in 2016, as part of its Vision 2030 goal.

In November, the kingdom launched Qiwa, a work-visa programme, which will enable young Saudis to launch start-up projects, open small business and boost economic activity.

Ahmed Al-Rajhi, the minister of labour and social development, said the ministry aims to “provide a comprehensive set of integrated tools for small business owners, along with a framework for nationalising the workforce of such enterprises, after an initial grace period, under the Saudi nationalisation scheme, Nitaqat. This will help to maintain the stability and continuity of the business during its early days,” according to the Saudi Press Agency.

In November, Misk Foundation and the UAE’s Hub71 start-up incubator signed a memorandum of understanding (MoU) to create a more dynamic market for start-ups between the United Arab Emirates and the Kingdom of Saudi Arabia.

The MoU envisions a shared ecosystem aimed at helping start-ups access the Saudi and UAE markets by offering shared in-market business development insights, introductions to investors, mentor networks and strategic partnerships. The MoU also aims to provide other business services and mentorship from local and international experts, as well as offer access to a close-knit community and ecosystem supporting entrepreneurs.

“At Misk we’re committed to empowering young people around the world to realise their potential in the future economy. A vital part of that is supporting innovative entrepreneurship and exciting founder-led ideas,” said Shaima Hamidaddin, executive manager, Misk Global Forum. “This strategic MoU with Hub71 will allow us to create a more open and dynamic environment for these start-ups and others in the future, to grow, flourish, and succeed.”

Venture capital is also gearing up in the kingdom to boost start-ups and small enterprises. The Saudi Arabian General Investment Authority signed up 18 international venture capitals, including those from the United States, United Kingdom, and France, in a number of areas.

“This is a huge leap for the kingdom, as we are opening doors for foreign venture capitals, while encouraging investors and entrepreneurs to branch out to KSA; especially after amending 60% of the license requirements and allowing 100% ownership for the foreign investors,” said Sultan Mofti, SAGIA’s deputy governor of investment attraction and development.

‘Angel by Invest Saudi,’ a new SAGIA initiative, will allow foreign start-ups that are endorsed by angel investors to obtain an Instant Entrepreneurship License from SAGIA with 100% foreign ownership within three hours.

The two largest angel groups joining the initiative are Oqal Group and Dubai Angel Investors.