SME

SME BANK TO CHANNEL INNOVATIVE FINANCE TO SAUDI ENTREPRENEURS

In a bid to boost funding for the private sector, Monsha’at, the Public Authority for Small and Medium Enterprises, launched the Small and Medium Enterprises Bank.

The SME-dedicated bank will provide all its products and services digitally, without the need for branches, which will enable the institution to offer services across Saudi Arabia. 

It is also focused on applying global best practices in co-operation with international and local partners to build a portfolio of products suitable for each segment of small and medium businesses. The bank will be an umbrella for all financing solutions, including lending and capital financing, guarantee financing and alternative financing, as part of its work to create a stimulating environment that meets the basic needs of SMEs, providing them with opportunities for growth and prosperity.

The bank’s launch is part of Monsha’at’s strategy, which includes 16 basic and nine critical initiatives to boost SME’s contribution to the GDP.Monsha’at’s central mandate is to increase financing for the SME sector, bridge financing gap, enhance contributions of financial institutions in providing innovative solutions, and ensure the financial stability of a critical growth driver of Vision 2030.

ENTREPRENEURIAL REPORT

Saudi Arabia fared extremely well in the Global Entrepreneurship Monitor (GEM) 2020/21, a survey of 43 countries.

“In six of the 43 participating economies, more than three out of four adults agree or strongly agree that it is easy to start a business in that country, peaking at more than nine out of 10 in Saudi Arabia,” according the GEM report.

The survey stated that the kingdom’s framework conditions for entrepreneurs were evaluated as quite robust overall, with many conditions being ranked at or near the top of all GEM economies.

For example, in “access to entrepreneurial finance”, Saudi Arabia’s score stood at 6.0 (out of 10 points), improving significantly from 5.0 in 2019, and was third among GEM participating economies. 

For “government policy: support and relevance”, Saudi Arabia scored 6.2, fourth overall, and an increase from 6.0 in 2019. The kingdom also improved its scores for “government policy: taxes and bureaucracy” and “government entrepreneurship programmes” (10th among GEM economies for both conditions).

The kingdom was also ranked first in the world in the “government response to the corona pandemic,” and the “response of entrepreneurs to the corona pandemic”. 

Saudi Arabia led the 43-country rankings in noting that it was easy to start a business in their country, and businesses were most optimistic among their peers when noting that “there are good opportunities to start a business in the area where I live.”

Saudis were second most sure among the 43 states when asked where there are good opportunities to start a business in the area where they live.

Saudis perceptions of entrepreneurship visibly changed during the pandemic, as they were most likely to say among peer nations, that they were looking to start a business in the next three years due to the pandemic.

The kingdom’s citizens were also aspirational as they led the world when asked whether they were motivated by building great wealth or very high income.

NURTURING THE ENTREPRENEURIAL SPIRIT

GEM reported that the rate of Total early-stage Entrepreneurial Activity (TEA) in Saudi Arabia increased from 14% in 2019 to 17.3% in 2020, while 52% of the Saudis involved in TEA reported that they saw new opportunities as a result of the pandemic. 

In addition, 9.4% of Saudi adults said that they planned on hiring six or more employees within the next five years, one of the highest rates in the 43-countries survey, the report noted. “Considering that only 2% stated that they planned on hiring no employees for their business, it appears that Saudi Arabia is well positioned for a strong recovery from the pandemic.”

Other areas of improvement include the market-related conditions: “ease of entry: market dynamics”, for which Saudi Arabia’s 6.9 rate was third overall, showed an increase from 5.9 in 2019; and “ease of entry: market burdens and regulations” earned a 5.8 score (fourth overall), representing a vast improvement from 2019 (4.7). 

“The experts’ scores suggest that Saudi entrepreneurs have the ability to compete in markets while not being overly constrained by regulations. Perhaps this has given entrepreneurs more visibility in Saudi Arabia, as other related scores also reflect a positive entrepreneurial environment,” according to GEM. 

For ‘social and cultural norms’ Saudi Arabia scored 6.4, sixth among the 43 economies and an increase from 5.9 in 2019, according to the report. “But what is of greater consequence is that experts gave the entrepreneurial response to the pandemic a 7.7 rating, ranking Saudi Arabia first overall" in the survey.