"Saudi Arabia is moving in the right direction by promoting SMEs throughout the Kingdom to develop its economy further," Lars H. Thunell, executive vice president and chief executive officer of International Finance Corporation (IFC), said at a news conference .

He added that the country's new economic activities, including its wide range of infrastructure projects, would not only strengthen its already vibrant economy but also provide job opportunities for local youths.

"Unemployment is a problem that affects both developed and undeveloped countries."

He advised banks to be more considerate with SMEs in offering facilities, even though the volume of their transactions is less than bigger establishments.

Thunell, who attended a seminar on SMEs organized by the Institute of Banking in cooperation with the International Finance Corporation (IFC) in Riyadh on Tuesday, pointed out that Muhammad Al-Jasser, governor of the Saudi Arabian Monetary Agency (SAMA), has emphasized the need for increasing the contribution of SMEs to the economy.

He said that SAMA has urged financing programs to develop this sector, which accounts for only a third of private sector contributions to the Kingdom's gross domestic product.

The Finance Ministry has in association with Saudi banks established a program with a capital of SR200 million to finance SMEs.

It is managed by the Saudi Industrial Development Fund. The program funded projects worth SR644 million last year, while banks have given loans amounting to SR1.6 billion under the program. As many as 1,113 firms have benefited from this financing scheme.

Thunell added that youths should not only have the capability to engage themselves in SMEs, but they should also have the required interest and involvement in a chosen sector. He stressed the need for university education in their field so that they would be competent partners.

IFC, as a member of the World Bank, is involved in Kingdom investments and also acts in an advisory capacity, Thunell said, pointing out that it is interested in helping deserving countries in the region with the cooperation of the Saudi government.

He said that IFC already has projects in countries such as the West Bank, Iraq, Afghanistan and Yemen.

"We have a cement project worth $400 million in Yemen in cooperation with the Kingdom, most of which is funded by Saudi Arabia," he said, adding that IFC has a desalination water project in Morocco.

"We are also seeking cooperation from Saudi companies to promote various other economic activities both in and out of the Kingdom."

He added that IFC would also offer its consultancy expertise in developing new housing properties to cater to the increasing local population.

Recently, IFC signed a SR75 million investment in Saudi Orix Leasing Company (SOLC) to expand sustainable energy financing and increase access to finance for smaller businesses in the Kingdom.

The loan was to help SOLC, the largest private leasing company in Saudi Arabia, increase the number of leases it provides to small and medium enterprises investing in energy efficient, renewable energy and cleaner production projects.

IFC creates opportunities for people to escape poverty and improve their lives. It fosters sustainable economic growth in developing countries by supporting private sector development, mobilizing capital for private enterprise, and providing advisory and risk mitigation services to businesses and governments. Its new investments totaled $14.5 billion in the fiscal year 2009, helping channel capital into developing countries during the financial crisis.