Small and Medium Enterprise Financing in Saudi Arabia Surges by 20.4%
In a remarkable development, financing provided to small and medium enterprises in Saudi Arabia skyrocketed by 20.4 percent year on year to reach a staggering $73.5 billion in the fourth quarter of 2023, according to official data.
Breakdown of Credit Facilities
The Kingdom’s Small and Medium Enterprises General Authority, also known as Monsha’at, released its latest quarterly report detailing that micro and SMEs received credit facilities worth $6.7 billion and $24.6 billion, respectively, in the last three months of 2023. Medium enterprises in Saudi Arabia secured an impressive $42.2 billion in financing in the same quarter.
Bank and Finance Company Contributions
Banks in Saudi Arabia played a significant role in providing credit facilities, with a total of $68.9 billion in the fourth quarter of 2023, marking a notable increase of 21.1 percent compared to the previous year. Additionally, finance companies in the Kingdom contributed by offering loans amounting to $4.6 billion, reflecting a year-on-year rise of 9.3 percent.
Importance of SME Sector Development
Developing the SME sector is crucial for Saudi Arabia as the country is actively working towards economic diversification and reducing its dependency on oil. The report highlighted that 9,644 SMEs benefited from Monsha’at support centers in the first quarter of 2024. Furthermore, three SMEs had successful initial public offerings on the parallel market Nomu through the Tomoh program during the same period.
Saudi Arabia Leads Venture Capital Funding in MENA Region
Monsha’at disclosed that Saudi Arabia led venture capital funding in the Middle East and North Africa region, with $240 million deployed across 35 deals in the first quarter of 2024. The authority stated that the Kingdom accounted for an impressive 65 percent of all VC funding in the region. The report attributed a significant portion of this funding to the $130 million pre-initial public offering secured by Salla in March.
Expert Insights
Philip Bahoshy, founder and CEO of venture capital data platform MAGNiTT, commented on the funding trends, noting a 70 percent quarterly drop from the fourth quarter of 2023 and a 42 percent year-on-year decrease. Despite these declines, Bahoshy emphasized that the Kingdom’s entrepreneurial ecosystem continues to attract investors, showcasing resilience and potential for growth in the future.