Interview: Ibrahim Al Rashid
How can small and medium-sized enterprises (SMEs) in non-oil sectors be supported further?
IBRAHIM AL RASHID: The year 2023 has seen the Kingdom’s SMEs make significant progress. During the first quarter of 2023 there was a 6% rise in the number of SMEs, as well as a 2.9% expansion in the wages bill and a 3.4% increase in employment in the segment. SDB has contributed to this progress through its role in nurturing start-ups, and small and emerging enterprises. For example, loans are offered with subsidised flat fees, extended grace periods and streamlined loan application processes for startups in the initial stages of launching their business.
To date, SDB has funded over 40,000 SMEs with more than $4.2bn in loans, supporting 80,000 fulltime jobs and generating more than 370,000 freelance opportunities. Support mechanisms include the Entrepreneurs Programme, a customised solution to support the assets and operational needs of emerging businesses. In contrast, the Franchise Programme was created to minimise the risk for entrepreneurs during the inception stage of their business endeavour. Meanwhile, the Liquidity Loan, one of SDB’s four products for existing enterprises, was introduced to help established and emerging enterprises weather periods of adversity and crisis, such as the Covid-19 pandemic.
What are some of the steps being taken to advance financial inclusion in the Kingdom?
AL RASHID: Financial inclusion tends to be a marker of thriving, modern societies and economies. Making sure that people have access to the kinds of tools and services that can help them build up their own wealth is essential to promoting financial stability, advancing social and economic progress, and safeguarding the welfare of diverse communities.
Accordingly, financial inclusion is an important part of Vision 2030. By providing access to a range of programmes, initiatives and offerings, financial institutions aim to empower more individuals, families and enterprises so that they can fulfil their potential and attain lasting success, which in turn contributes to the Kingdom’s growth and development. The aim is to ensure that individuals, households and businesses across the country have access to a broad range of quality financial services, including credit, insurance, savings, and local and cross-border payments. To this end, SDB has provided more than $38bn in financial support to its clients since the bank was first established in 1971. The bank currently operates a fully insured, $5.6bn lending portfolio with 674,000 account holders.
In what ways have social lending strategies evolved to meet current trends?
AL RASHID: Social lending policies translate into a wide array of product options for Saudi families that are looking to adopt more sustainable attitudes towards savings, offering them viable alternatives to commercial bank loans while protecting beneficiaries from loans with high interest rates. This approach protects citizens from falling into financial distress, helping promote upward social and economic mobility. For example, during the pandemic, increased lending and the deferral of loan repayments helped SMEs navigate the difficult economic environment, maintain employment rates and stabilise their overall cash position.
Looking ahead, the aim is to support more individuals and families across the entirety of the country through strategic collaborations between the government, private enterprises and NGOs. Furthermore, surveys are being conducted to assess attitudes, as well as to gauge customer experience and satisfaction, and invite feedback. Policies are also being implemented to facilitate various forms of freelancing, which is still nascent in the Kingdom.
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