RIYADH, 14 March 2004 — The Council of Saudi Chambers of Commerce and Industry (CSCCI) has created an office for the development of small-and-medium scale enterprises (SMEs), according to Dr. Fahd S. Al Sultan, CSCCI secretary general.

“The development of the SMEs, which constitute the majority of total business enterprises in many countries and are one of the driving forces of the national economy, is part of CSCCI’s moves in streamlining its operations,” he told Arab News in an interview recently.

Ibrahim S. Alkernass, research and economic Studies director general, said that moves are afoot in preparation for proposing to higher authorities that the local SME development be a partnership between the private and the government sectors.

The establishment of the office at the CSCCI comes in the wake of various consultations with reputable institutions like the Hong Kong and Shanghai Banking Corp. (HSBC) as well as travels to various countries which already have good experiences in the development of SMEs.

The HSBC has recommended the establishment of a Saudi Small Business Agency (SSBA), the setting up of a Loan Guarantee Fund, business incubation and clusters and for it to tackle medium-term issues like regulation.

The recommendations were made in a paper presented to the HSBC, entitled “Developing a Sustainable Small Business Sector in Saudi Arabia.” The paper covered main recommendations such as the SSBA, the BSC, a loan guarantee fund, and special support schemes, among others.

HSBC recommended that the SSBA should be a single umbrella organization for small firms (sponsored by the government) and with autonomous, joint public or private management.

It should also have a respected head with direct access to ministers. Its priorities ought to include training and giving advise through Business Support Centers (BSCs).

“BSCs are urgently needed. Research shows that only under 20 percent of firms set up were with feasibility studies, under 33 percent kept financial records, under 20 percent prepared annual budgets, and 33 percent had no separate business bank account, “ HSBC said. It added that typical SMEs could not assess assets and liabilities, insolvency, profitability and how finance were to be raised or used.

“Based on the experience of UK Business Link, impartial business advice; information through various channels; training, networking and mentoring as well as work with existing agencies like chambers or banks are possible,” HSBC said.

It was advised that advisory staff be recruited, the possible use of expatriates as mentors be considered, and that regular meetings and seminars should be conducted.

The creation of a loan guarantee fund was also recommended, suggesting that the government intervene to cover market failure.