Saudi Arabia’s PIF gives $1bn leg-up for small firms

Downtown Riyadh in Saudi Arabia. The launch of a new investment vehicle by Saudi Arabia’s Public Investment Fund will put funds into venture capital and private equity funds. (Shutterstock)
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Updated 19 December 2019

Saudi Arabia’s PIF gives $1bn leg-up for small firms

  • Move seen as key part of plans to diversify economy away from oil and to help create jobs

RIYADH: Saudi Arabia’s Public Investment Fund (PIF) has launched a new investment vehicle aimed at boosting small and medium enterprises (SMEs) in the Kingdom.

It will invest in venture capital and private equity funds geared towards small businesses.


The rebirth of AlUla
Hegra, ancient city of the Nabataeans in Saudi Arabia’s historic AlUla Valley, is emerging from the mists of time to take its rightful place as one of the wonders of the world

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The SR4 billion ($1.07 billion) “Jada” initiative is the latest move by the government to support SMEs, seen as a key part of plans to diversify the economy away from oil.

“Jada is the first instrument of its kind in the Kingdom,” the PIF said in a statement. “It is a catalyst for small and medium enterprises, seeking to secure rewarding incomes, to ensure financial sustainability and support the Kingdom’s priorities in terms of supporting small and medium enterprises.”

It said that the aim of the initiative was to help create jobs and diversify the economy.

Business leaders across the Kingdom have welcomed the move.

“Jada” is a long-anticipated step to support this sector, which is the backbone of the economy,” said Helmi Nato, a member of the business youth committee at Jeddah Chamber of Commerce and Industry.

Saudi Arabia’s Vision 2030 blueprint for economic and social reform aims to increase the contribution of the SME sector to overall GDP to 35 percent from 20 percent.

The government also wants financial institutions in the Kingdom to allocate up to 20 percent of overall funding to SMEs.

The rebirth of AlUla
Hegra, ancient city of the Nabataeans in Saudi Arabia’s historic AlUla Valley, is emerging from the mists of time to take its rightful place as one of the wonders of the world

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Saudi Arabia looks to cut spending in bid to shrink deficit

Updated 01 October 2020

Saudi Arabia looks to cut spending in bid to shrink deficit

  • Saudi Arabia has issued about SR84 billion in sukuk in the year to date

LONDON: Saudi Arabia plans to reduce spending next year by about 7.5 percent to SR990 billion ($263.9 billion) as it seeks to reduce its deficit. This compares to spending of SR1.07 trillion this year, it said in a preliminary budget statement.

The Kingdom anticipates a budget deficit of about 12 percent this year falling to 5.1 percent next year.

Saudi Arabia released data on Wednesday showing that the economy contracted by about 7 percent in the second quarter as regional economies faced the twin blow of the coronavirus pandemic and continued oil price weakness.

The unemployment rate among Saudis increased to 15.4 percent in the second quarter compared with 11.8 percent in the first quarter of the year.

The challenging headwinds facing regional economies is expected to spur activity across debt markets as countries sell bonds to help fund spending.

Saudi Arabia has already issued about SR84 billion in sukuk in the year to date.

“Over the past three years, the government has developed (from scratch) a well-functioning and increasingly deeper domestic sukuk market that has allowed it to tap into growing domestic and international demand for Shariah-compliant fixed income assets,” Moody’s said in a statement on Wednesday. 

“This, in turn, has helped diversify its funding sources compared with what was available during the oil price shock of 2015-16 and ease liquidity pressures amid a more than doubling of government financing needs this year,” the ratings agency added.