SAUDI CENTRAL BANK BOOSTS LOANS TO SMEs

The Saudi government has been paying close attention to the challenges facing small and medium sized business amid the coronavirus crisis.

Indeed, the helping hand has come straight from the top. The Saudi Arabian Monetary Authority (SAMA) is helping banks to facilitate lending to small businesses and private sector amid the downturn.

“This programme consists of three basic elements aiming at reducing the burdens of fluctuating cash flow and to support working capital for this sector in order to enable growth during the coming days and maintain the continuity of employment,” SAMA said.

The three-pronged strategy includes:

Deferred Payments Programme: Depositing an amount of SAR 30 billion in favour of banks and financing companies, in exchange for delaying the collection of their dues from small and medium enterprises (SMEs) for a period of six months.

Funding for Lending Programme: Depositing an amount of SAR 13.2 billion soft finance for SMEs by granting loans through banks and financing companies.

Loan Guarantee Programme: SAMA is incurring the fees of ‘Kafaalat’ issued by the guarantee programme in the amount of SAR 6 billion for the benefit of banks and financing companies. This exempts SMEs from costs of the loan financing.

The central bank has also directed banks and other financial institutions to restructure current financing contracts without any additional costs or fees, in order to allow companies to keep paying employee salaries during the crisis.

“Commendably, banks and financing companies initiated a delay of three months instalments for all public and private health workers who have credit facilities (real estate, consumer, leasing financing) starting in April, in appreciation of their strenuous efforts to preserve the health of citizens and residents, and without changing the cost of financing,” SAMA said.

In addition, SAMA noted that insurance companies have initiated provisions for telemedicine service using electronic applications, and extended the dispensing period of medicines for chronic diseases, to ensure citizens’ health and safety.

The Small and Medium Enterprises General Authority (Monshaat) is also stepping up efforts to alleviate the financial burden of SMES in their time of need.

The authority is providing a number of services via its Mazaya platform, www.mazaya.monshaat.gov.sa, to SMEs that would allow them to reduce operating costs and increase their efficiency.

SMEs can view and apply for the services provided through the platform. “The application will be examined and made sure that it meets the criteria for obtaining the advantage and will be answered by accepting or rejecting it within 10 working days,” Monshaat said.

Monshaat serves around 560,000 small businesses, representing around 99% of companies in the country.

In March, Monshaat launched the Saudi Center for Economic Business in Riyadh, which aims to help businesses meet international best practices.

The centre aims to integrate government services that include business licenses and other services, currently provided by seven government agencies, including the Ministry of Commerce, the Ministry of Human Resources and Social Development, the General Authority of Zakat and Income, the Ministry of Municipal and Rural Affairs, the Ministry of Investment, and the General Organization for Social Insurance.

Monshaat also launched an Intelligence Center, considered the first specialised centre in the kingdom, to enable enterprises and human capital with data science and artificial intelligence. The centre will facilitate the creation of innovative companies and increase the efficiency of SMEs through a package of programmes.

Meanwhile, Monshaat’s Entrepreneurship Complex will support emerging businesses by providing office space, logistical services, administrative, marketing, legal and financial consulting. It will also create a vibrant platform for entrepreneurs to share experiences and generate new ideas. Major companies, universities and investors are also expected to take part in nurturing the community.

Finally, the authority also launched Enterprise Support Center in March to provide training services, business support services and consultative sessions by specialists with scientific competence and commercial experience.

These centres of excellence, launched just before the virus exploded, should provide support to small businesses and help them push past the short-term challenges.

The coronavirus will take its toll on the economy in the short run, but the kingdom’s efforts to boost SMEs will start to pay off, as small companies look for innovation solutions to grow the economy.