SMEs in Saudi ArabiaSMEs in Saudi Arabia represent almost 93 percent of total enterprises and account for about 24.7 percent of total employment.Problems Confronting SMEs Unfortunately the IT sector is the exception. In Saudi Arabia, small (less than 59 employees) and medium sized (60-99 employees) businesses to date have not lived up to their potential for a number of reasons. Extensive surveys carried out by the Council of Saudi Chambers of Commerce and Industry (CSCCI) and the United Nations Industrial Development Organization document the main concerns of businessmen;Lack of credit/finance/capital. SME Loan Guarantees A loan guarantee scheme, to be managed by the Saudi Industrial Development Fund (SIDF), aims to promote commercial bank lending to the SME sector.For this purpose, SMEs are defined as companies having assets of SRl 50 million or less, a maximum of 250 employees, and a maximum turnover of SRl 10 million. Key features of the scheme would include (i) an initial contributions of SRl 200 million, funded half by the ten commercial banks (but in unequal shares) and half by the government; (ii) a guarantee fee and SIDF handling charges to the banks of about 175 basis points; (iii) guarantee ceilings of SRl 1.5 million and 75 percent of the underlying loan; (iv) durations of seven years on fixed assets and four years on working capital; and (v) possibly a cap on bank lending rates of 400 basis points over the Saudi Interbank Offer Rate. The Fund contributions will be invested by the SIDF to generate returns for the scheme. Collateral, excluding owneroccupied residential housing, will be sought and held by the SIDF. In event of default, banks will notify the SIDF, which will execute the collateral in accordance with the Public collections Act, which provides for an expedited collateral enforcement process without reference to the Sharia court. Banks are to receive 75 percent of their loan within three months of a declaration of default.
Saudi Arabian General Investment Authority (SAGIA)
The Saudi Arabian General Investment Authority (SAGIA), Venture Capital Bank, a Bahrain-based Islamic investment bank, and Global Emerging Markets (GEM), an international investment house with offices in New York, London and Paris, announced yesterday a cooperative effort to help establish an independent $100 million venture capital investment company to invest in venture capital opportunities and small-to-medium enterprises in the Kingdom. Being the first of its kind in Saudi Arabia, the objective of the company is to provide growth capital and late-stage financing to venture capital opportunities and SMEs in the Kingdom in compliance with Shariah principles. The company will invest in SMEs with strong and experienced management teams, strong growth potential, potential for market leadership and scalable business models seeking growth capital. The company will assume a leadership role in Saudi Arabian venture capital industry with a well-defined value creation strategy and active participation in the growth of SMEs. Investment opportunities in Saudi SMEs Saudi Chambers Call for Women-Only Factories Business Regulations and Procedures
CSCCI to set up WTO support services centre
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