MSMEs 16% Growth in Credit Offerings During Q1 2024 in Saudi Arabia

MSMEs 16% Growth in Credit Offerings During Q1 2024 in Saudi Arabia

(MSMEs) micro, small, and medium enterprises in saudia arabia have experienced significant advancement during the initial quarter of 2024. Having examined the SAMA lending to Saudi Arabian MSMEs, it revealed an improvement of 16% in credit facilitation, which underlines the Kingdom’s plan to enhance the economy. This increase of credit offerings to Saudi MSMEs by 16% affirms the strong backing of financial institutions coupled with government Vision 2030 strategies. As credit offerings expand by 16%, Saudi Arabia’s MSMEs have a significant opportunity to diversify the economy.

Breakdown of Credit Growth

The total credit facilities granted to MSMEs stood at SR293.43 billion ($78.25 billion), a significant rise from SR252.02 billion in Q1 2023. In particular, Saudi banks provided 94% of these facilities while finance companies offered only 6%. It further revealed that medium enterprises received the largest share of SR160.6 billion, whereas small enterprises registered a 32 per cent growth, reaching SR 103.5 billion. Micro end-users, which availed 10% of the total MSME financing, increased by 30% to SR29.4 billion.

Government and Financial Sector Support

The Saudi Arabian government has been keen on the development of MSMEs as a way of reducing the country’s reliance on oil. It is recommended that financial institutions should set apart at least 20% of their loan portfolio for MSMEs. Today, it is reported that MSMEs contribute about 8.6% to the country’s GDP and 20 per cent of the finance company advance. Risk mitigation as well as the improvement of access to finance is further enhanced through measures like the Kafalah Program under which loan guarantees are offered.

Monsha’at’s Role

Other organizations that have played great roles include the Small and Medium Enterprises General Authority (Monsha’at). According to the Monsha’at Q1 2024 statistics, 9,644 SMEs received support from the support centres, 15,766 trainees used the e-Academy, and 1,558 used the Mazaya platform. Moreover, tools like Jadeer and Tomoh have also extended market development and innovation among SMEs.

Technological Advancements and Global Trends

The use of technology and innovations such as digitization are assisting Saudi Arabia’s MSMEs to grow and compete in international markets. SMEs are already adopting e-commerce, with 75% intending to engage in online shopping. The Kingdom’s increasing international footprint means openings in renewables, logistics, fashion, Islamic finance, fintech, healthcare and tech.

MHK Services Perspective

At MHK Zatca integration Services we understand the importance of this 16% increase in credit offerings for Saudi MSMEs. So we know the importance of financial literacy in supporting entrepreneurs. All our business offerings such as financial advisory, digital solutions, and market entry services aim to help MSMEs manage growth prospects as indicated above efficiently.

Conclusion

Competitive dynamics have shifted significantly for Saudi MSMEs in the first quarter of 2024 where credit offerings have increased by 16%. The Saudi government’s actions and support from financial institutions combined with organizations like Monsha’at show the Kingdom’s dedication to supporting SME development and its economic diversification. Nevertheless, MHK Services continues to focus on delivering services to assist MSMEs in this context successfully.

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