Latest news with #Kafalah
Arab News
17-07-2025
- Business
- Arab News
Saudi MSME lending surges 31% in Q1 amid digital optimism and financial reform
RIYADH: Saudi Arabia's lending to small, medium, and micro enterprises rose by 31 percent year on year in the first quarter of 2025, according to recent data from the Saudi Central Bank. The total value of facilities reached SR383.2 billion ($102.18 billion), up from SR293.43 billion in the same period last year. Of this, 95.12 percent was disbursed by banks, while the remaining 4.88 percent came from finance companies, highlighting the formal sector's growing involvement in SME credit provision. Medium-sized companies — defined as those with revenues between SR40 million and SR200 million and 50–249 employees — accounted for the largest share of loans, receiving SR190.18 billion. Small enterprises followed with SR139.6 billion, while micro-enterprises received SR53.43 billion. Notably, micro-enterprises saw the fastest growth, with loan volumes surging by 82 percent year on year, compared to 35 percent for small enterprises and 18 percent for medium-sized firms. The lending boom reflects the expanding role of SMEs in Saudi Arabia's economic diversification strategy under Vision 2030. Monsha'at, the General Authority for Small and Medium Enterprises, has played a pivotal role through programs like Kafalah — a loan guarantee initiative designed to de-risk lending to SMEs by assuring a portion of the loan value to participating financial institutions. This has been instrumental in extending access to credit, particularly for micro and first-time borrowers. Despite rising loan volumes, credit access remains a structural challenge. According to the World Bank, SMEs across the Middle East and North Africa region receive only 8 percent of total bank credit, compared to 22 percent in high-income economies. In Saudi Arabia, SMEs accounted for just over 9 percent of total loans in 2024 — far below the Vision 2030 target of 20 percent. New players are helping bridge the gap. Saudi-based fintech platform Erad recently raised $16 million in a pre-Series A funding round to expand its Shariah-compliant, data-driven SME financing offering, according to Wamda in April. The company, which provides funding in as little as 48 hours, says over 60 percent of its clients are first-time credit takers. Since launch, it has processed more than SR100 million in funding and received over SR2 billion in applications, underscoring pent-up demand for fast, flexible finance. Meanwhile, digital optimism among Saudi entrepreneurs is on the rise. According to the 2025 Mastercard SME Confidence Index, 93 percent of surveyed SMEs expressed confidence in the year ahead. The adoption of digital payments has risen sharply, with 99 percent now accepting them, up from 88 percent in 2023. SMEs cited faster access to revenues, enhanced credibility with financial institutions, and more streamlined transactions as key benefits. Data and AI are also seen as enablers of smarter, more inclusive lending. Nearly 97 percent of surveyed SMEs said better data and analytics tools were essential to scaling operations. A growing number are prioritizing AI, automation, and cybersecurity in their growth strategies — trends that align with broader efforts to digitize financial infrastructure. Lending models must evolve alongside SME needs. Traditional bank lending often requires fixed-asset collateral and extensive documentation, limiting access for tech-oriented or service-based SMEs, according to a June article by International Banker. Risk assessment remains based on backward-looking financials, rather than dynamic indicators like sales or payroll data. Fintechs like Erad are disrupting this model by using real-time revenue data to underwrite loans. Globally, the credit gap for SMEs stands at $5.7 trillion, with Gulf Cooperation Council countries accounting for roughly $250 billion of that, according to International Banker. Saudi Arabia's efforts to close this gap are gaining momentum. In addition to loan guarantees and fintech innovations, open banking frameworks, SME-focused digital banks, and embedded finance models are helping to lower access barriers. Vision 2030 sets a clear target: raise SME contribution to GDP from 30 percent to 35 percent. With over 1.8 million SMEs now operating in the Kingdom, financial empowerment of this sector is not just a policy goal — it is a macroeconomic imperative. The path ahead will require deeper ecosystem alignment, tailored credit models, and continued innovation. But the first quarter of 2025 has already signaled a strong start — one that reflects both institutional commitment and entrepreneurial momentum across the Kingdom.
Arab News
09-07-2025
- Business
- Arab News
Program to boost youth, SME role in Saudi economy
RIYADH: The Small and Medium Enterprises Loan Guarantee Program, known as Kafalah, in collaboration with the Riyadh Chamber, will hold interactive sessions on July 15 to mark World Youth Skills Day. The initiative aims to raise awareness and develop entrepreneurial skills among youth, entrepreneurs and SMEs, the Saudi Press Agency reported on Wednesday. The sessions will cover key topics to boost youth contributions to national economic development, in line with the Kingdom's Vision 2030 reform plan. Focus areas include access to finance, building administrative and financial capabilities, enhancing SME sustainability, and turning ideas into viable projects. These sessions highlight the collaboration between entities supporting the SME sector in the Kingdom, the SPA added. The Kafalah program and Riyadh Chamber aim to foster youth growth and strengthen their role in the national economy. Kafalah supports micro, small and medium enterprises by providing financial guarantees, improving their access to financing and reducing lending risks for banks.
Zawya
28-04-2025
- Business
- Zawya
Saudi: Kafalah grants 1,900 loan guarantees worth over $1.28bln to SMEs during 1Q 2025
RIYADH — The Small and Medium Enterprises Loan Guarantee Program (Kafalah) has issued 1,900 loan guarantees to small and medium enterprises (SMEs) with a total financing worth over SR4.8 billion during the first quarter of 2025. This figure marks an increase of 19 percent compared to SR4 billion during the same period last year. The value of credits amounted to more than SR 3.4 billion, compared to SR2.9 billion during the same period last year, an increase of 17 percent. The number of enterprises that benefited from the Kafalah program during the first quarter of the fiscal year 2025 reached 1,610 small and medium enterprises (SMEs). Hammam Hashem, CEO and Board Member of Kafalah, considered SMEs as a fundamental pillar in driving the national economy and a pivotal element in achieving sustainable development and diversifying sources of income, in line with the Saudi Vision 2030. He praised the Kafalah program's experience as a successful model of public-private sector integration in empowering SMEs to meet challenges and achieve growth. "The program, since its launch in 2006 and until the end of the first quarter of 2025, has approved more than 67,700 loan guarantees, benefiting over 25,000 SMEs. The total financing exceeded SR115 billion, compared to guarantees totaling approximately SR82 billion," he said. The Kafalah program seeks to strengthen the national economy by providing loan guarantees to enhance enterprises' access to necessary financing. To reduce lending risks borne by financing entities, the program leverages strategic partnerships and innovative technical tools, supported by the program's knowledge base. This complements the Small and Medium Enterprise Bank, which supports the expansion of financing for small and medium enterprises (SMEs), under the management of the National Development Fund, which works to provide an incubator environment for SMEs in the Kingdom. © Copyright 2022 The Saudi Gazette. All Rights Reserved. Provided by SyndiGate Media Inc. (
Leaders
27-04-2025
- Business
- Leaders
Kafalah Program Boosts Saudi SMEs with 17% Growth in Q1 2025
The Saudi SMEs Guarantee Program (Kafalah) has proudly reported a significant increase in funding for the first quarter of 2025. It boasted a 17% increase in guaranteed financing, reaching SAR 4.8 billion in Q1 2025. A total of 1,610 SMEs benefited from 1,900 guarantees, securing SAR 4.8 billion compared to SAR 4 billion in Q1 2025. Financing approvals surged by 19%, with commitments exceeding SAR 3.4 billion versus SAR 2.9 billion in the prior year Hamam Hashim, CEO and Board Member of Kafalah, emphasized SMEs as vital drivers of economic growth and income diversification under Saudi Vision 2030. He praised the program's public-private partnerships for empowering SMEs to overcome challenges and expand sustainably. Government and private-sector collaboration, he noted, remains critical to fostering a resilient entrepreneurial ecosystem. Decades of Impact: Kafalah's Legacy Since 2006 Since its 2006 launch, Kafalah has approved over 67,700 guarantees, benefiting more than 25,000 SMEs. Total funding surpassed SAR 115 billion, with guarantees valued at SAR 82 billion. The program continues to reduce lending risks through strategic partnerships, innovative tools, and knowledge-based frameworks. Kafalah aligns with the National Development Fund's SME Bank to expand financing access. By offering financial guarantees, the program enhances SMEs' eligibility for loans while mitigating risks for lenders. This integrated approach supports Saudi Arabia's goal to cultivate a thriving SME sector, fueling job creation and long-term economic stability. Short link : Post Views: 20
Saudi Gazette
27-04-2025
- Business
- Saudi Gazette
Kafalah grants 1,900 loan guarantees worth over SR4.8 billion to SMEs during 1Q 2025
Saudi Gazette report RIYADH — The Small and Medium Enterprises Loan Guarantee Program (Kafalah) has issued 1,900 loan guarantees to small and medium enterprises (SMEs) with a total financing worth over SR4.8 billion during the first quarter of 2025. This figure marks an increase of 19 percent compared to SR4 billion during the same period last year. The value of credits amounted to more than SR 3.4 billion, compared to SR2.9 billion during the same period last year, an increase of 17 percent. The number of enterprises that benefited from the Kafalah program during the first quarter of the fiscal year 2025 reached 1,610 small and medium enterprises (SMEs). Hammam Hashem, CEO and Board Member of Kafalah, considered SMEs as a fundamental pillar in driving the national economy and a pivotal element in achieving sustainable development and diversifying sources of income, in line with the Saudi Vision 2030. He praised the Kafalah program's experience as a successful model of public-private sector integration in empowering SMEs to meet challenges and achieve growth. "The program, since its launch in 2006 and until the end of the first quarter of 2025, has approved more than 67,700 loan guarantees, benefiting over 25,000 SMEs. The total financing exceeded SR115 billion, compared to guarantees totaling approximately SR82 billion," he said. The Kafalah program seeks to strengthen the national economy by providing loan guarantees to enhance enterprises' access to necessary financing. To reduce lending risks borne by financing entities, the program leverages strategic partnerships and innovative technical tools, supported by the program's knowledge base. This complements the Small and Medium Enterprise Bank, which supports the expansion of financing for small and medium enterprises (SMEs), under the management of the National Development Fund, which works to provide an incubator environment for SMEs in the Kingdom.
