Saudi Arabia sees surge in credit for SMEs in 2020: SAMA

Official figures showed that in the third quarter of 2020 the total amount of credit awarded to SMEs was SR176.2 billion ($46.99 billion), up from SR115 billion in Q3 2019 and SR106.7 billion in Q3 2018. )Shutterstock)
Official figures showed that in the third quarter of 2020 the total amount of credit awarded to SMEs was SR176.2 billion ($46.99 billion), up from SR115 billion in Q3 2019 and SR106.7 billion in Q3 2018. )Shutterstock)
Short Url
Updated 07 February 2021

Saudi Arabia sees surge in credit for SMEs in 2020: SAMA

Saudi Arabia sees surge in credit for SMEs in 2020: SAMA
  • Micro companies — those with less than five staff — see the biggest increase in funding

RIYADH: Saudi Arabia saw a surge in financing awarded to small and medium-sized enterprises (SMEs) in 2020 by the Kingdom’s banks and financial companies despite the constraints of the economic impact of the coronavirus, according to recent official data.

Figures released by the Saudi Central Bank (SAMA) in late January showed that in the third quarter of 2020 the total amount of credit awarded to SMEs was SR 176.2 billion ($46.99 billion), up from SR115 billion in Q3 2019 and SR 106.7 billion in Q3 2018.

While the total figure rose 8.3 percent in 2019, it surged 52.4 percent in 2020.

Amount the four categories of companies monitored by SAMA, the biggest increase was for micro companies — classed as those with less then five employees — which saw an 89 percent rise in the total credit awarded to them.

The figure for small and medium companies rose by 58.9 and 48.4 percent, respectively.

BACKGROUND

Small companies are classed as those with six to 49 employees and medium-sized are those with 50 to 249 staff members.

Small companies are classed as those with six to 49 employees and medium-sized are those with 50 to 249 staff members.

The SAMA data also showed that credit from banks accounted for 93.6 percent of credit for SMEs, with the remainder coming from other financial companies.

The SAMA report said that SMEs also account for 8 percent of banks’ lending in Q3 2020, up from 5,8 percent in Q3 2018.

Commenting on the results, Wassim Basrawi, managing director for Wa’ed, the entrepreneurship arm of Saudi Aramco, told Arab News: “These new statistics confirm the growing confidence we also share at Wa’ed in the dynamic resilience that is being demonstrated by Saudi start-ups during the COVID pandemic.

Earlier this year, Wa’ed reported that it had tripled the amount of money loaned to startups in the Kingdom last year. The Dhahran-based initiative gave out 12 loans to small and medium-sized enterprises (SMEs), up from four in 2019, with the value surging to SR31 million, up from SR10 million in 2019. In venture capital funding, Wa’ed deployed SR43 million to SMEs, up 34 percent year-on-year.

“In 2020, we also experienced rising demand for our loan, venture capital and incubation services at Wa’ed . . . The demand was there . . . We are doing this because we have full confidence and trust in our entrepreneurs and are deeply committed to supporting new ideas, solutions and products that fill critical gaps in the Kingdom’s economy and promote economic diversification.”

Basrawi also confirmed that Wa’ed is planning to double its deal volume over the next three years to meet this increasing demand for financing by SMEs. Since Wa’ed was established in 2011, it has deployed more than SR375 million startups in the Kingdom.

Last month, a new industry report also revealed that Saudi Arabia recorded a 35 percent year-on-year increase in the number of investment deals in the technology startup sector in 2020. A study by data research platform Magnitt found that the Kingdom accounted for 18 percent of the 496 investment deals across the Middle East and North Africa last year.

When it comes to the monetary value of the deals, the UAE and Egypt still dominated overall, but Saudi Arabia recorded a surge of 55 percent year-on-year to $152 million. By comparison the value of deals in the UAE rose 5 percent and Egyptian funding increased 31 percent.

Despite the SAMA figures for the surge in credit for micro companies, the Magnitt study identified a change in the allocation of capital away from early-stage ventures. Pre-seed investments — deal sizes of less than $100,000 — represented 47 percent of transactions in 2019, while in 2020 it fell to 27 percent. This revealed that last year investors were showing a preference for bigger-ticket Series A investments, or deals of between $100,000 and $3 million.


Abu Dhabi’s G42 forms big data JV with Israeli defense company Rafael

Abu Dhabi’s G42 forms big data JV with Israeli defense company Rafael
Updated 19 April 2021

Abu Dhabi’s G42 forms big data JV with Israeli defense company Rafael

Abu Dhabi’s G42 forms big data JV with Israeli defense company Rafael
  • The joint venture will have a research and development site in Israel and will develop products for sectors including banking, health care and public safety

DUBAI: Abu Dhabi-based technology company Group 42 (G42) has formed a joint venture with Israel’s state-owned Rafael Advanced Defense Systems to commercialize artificial intelligence and big data technologies, the companies said on Monday.
The joint venture, called Presight.AI, will have a research and development site in Israel and will develop products for sectors including banking, health care and public safety, to be sold in Israel, the United Arab Emirates and internationally.
Israel and the UAE agreed to normalize relations in August, triggering a number of announcements from businesses stating their intention to cooperate across the two countries.
UAE Ambassador to Israel Mohamad Al-KHajja said the joint venture strengthened the relationship between Israel and the UAE and opportunities for bilateral economic growth.
G42 is an Abu Dhabi-based artificial intelligence and cloud computing company set up in 2018 which works with government and private clients. In September it became the first UAE company to open an international office in Israel.
UAE national security adviser Sheikh Tahnoon bin Zayed Al Nahyan is its chairman and a shareholder. Abu Dhabi’s sovereign fund Mubadala in November invested in G42 and last week US private-equity firm Silver Lake invested to help the company expand.
G42 rose to prominence last year as it led Phase III clinical trials of a vaccine developed by Sinopharm’s China National Biotec Group (CNBG) in the UAE and regional countries, as well as offering medical diagnostic services.
The joint venture agreement is subject to regulatory approvals by Israeli and UAE authorities.


More than 1,000 Saudi businesses benefit from $586.5m in Monshaat funding

More than 1,000 Saudi businesses benefit from $586.5m in Monshaat funding
Updated 19 April 2021

More than 1,000 Saudi businesses benefit from $586.5m in Monshaat funding

More than 1,000 Saudi businesses benefit from $586.5m in Monshaat funding
  • Overall, the ‘Kafalah’ program has provided more than SR14.407 billion in 8,718 guarantees

RIYADH: The General Authority for Small and Medium Enterprises (Monshaat) has financed 1,130 SMEs with about SR2.2 billion ($586.5 million) over 15 months through the end of March 2021.
Overall, the ‘Kafalah’ program has provided more than SR14.407 billion in 8,718 guarantees, Monshaat told the Al-Eqtisadiah newspaper.
The Kafalah program was founded in 2006 as a joint initiative between the Kingdom’s ministry of finance and Saudi commercial banks to help overcome SME financing constraints.
Monshaat said that financing could reach a maximum of SR7.5 million and there is no minimal range for applicants.
Enterprise Support Centers also offer a package of programs to develop small and medium enterprises and entrepreneurs, the Authority added.
Support is also offered in the form of training and networking with other companies operating in a similar field.

 


PIF-backed Noon signs deal with UAE emirate to support small businesses

PIF-backed Noon signs deal with UAE emirate to support small businesses
Updated 19 April 2021

PIF-backed Noon signs deal with UAE emirate to support small businesses

PIF-backed Noon signs deal with UAE emirate to support small businesses
  • SMEs in Ajman will be able to promote and sell their products through the e-commerce’s company’s “Noon Mahali” platform

DUBAI: The UAE emirate of Ajman has struck a deal with online retailer Noon to support the growth of small businesses.
It will help members of the emirate’s Tazz program for small and medium-sized enterprises, as well companies that are signed up to the Riyada program for small business owners and e-commerce license holders.
“Through this cooperation, we aim to inspire innovation, encourage local entrepreneurs and assist in the SMEs’ digital transformation in the emirate,” Abdulla Bin Nassir Al-Nuaimi, Ajman DED’s director of planning and development, said.
SMEs in Ajman will be able to promote and sell their products through the e-commerce’s company’s “Noon Mahali” platform, which is specifically designed for them.
There will also be training sessions and other activities to guide sellers in making the most of Noon’s platform.
Al-Nuaimi said the private sector “has become a major partner and supporter of the government sector” in strengthening local businesses.
The move follows the UAE’s wider push to revitalize its SME scene as the country diversifies its income sources and encourage more economic activity amid a pandemic-induced slowdown.


Revenue management systems key to success of Saudi health reforms says KPMG

Revenue management systems key to success of Saudi health reforms says KPMG
Updated 19 April 2021

Revenue management systems key to success of Saudi health reforms says KPMG

Revenue management systems key to success of Saudi health reforms says KPMG
  • The Kingdom’s Ministry of Health (MoH) is transitioning from being an all-in-one payer, provider and regulator of health services to becoming a regulator

RIYADH: Robust revenue cycle management systems will be essential for Saudi Arabia’s new health care model, KPMG said in a report.
The Kingdom’s Ministry of Health (MoH) is transitioning from being an all-in-one payer, provider and regulator of health services to becoming a regulator, governing corporate payers and providers.
A key aspect of this transformation is the separation of the payer and the provider functions in the public health care sector, KPMG said. To facilitate future reimbursement to public health care providers, the Ministry of Health has set up the Program for Health Assurance and Purchasing (PHAP).
In addition, the Council of Cooperative Health Insurance (CCHI) has also firmed up regulations for private insurers.
With the introduction of mandatory health insurance underway in the public sector in the Kingdom and the wish to standardize across the public and private sector, Saudi health care providers will need to develop new capabilities to be able to generate revenue under the new reimbursement system, KPMG reported.  
“One of the key implications for health care providers of this introduction is the transformation of how health care service providers are reimbursed. Providers will primarily be paid on a per-patient basis, rather than via allocated budgets from the government,” said Emmeline Roodenburg, head of health care at KPMG in Saudi Arabia.
Patient acceptance and registration; billing and claims management; patient treatment and documentation; and coding and grouping are the four key operational elements of the Revenue Cycle Management (RCM) under the new mechanism.
While the risks that come with having a poor RCM function can be managed and mitigated, if they are left unchecked then the consequences could include revenue losses and fines for inaccurate invoicing, KPMG said.


Fashion retailers launch dedicated Gulf online stores

Fashion retailers launch dedicated Gulf online stores
Updated 19 April 2021

Fashion retailers launch dedicated Gulf online stores

Fashion retailers launch dedicated Gulf online stores
  • The website will feature new collections of the fashion line, as well as exclusive deals for online shoppers

DUBAI: Global fashion brands are launching dedicated online platforms as the pandemic upends shopping habits in the region.

Brands are launching dedicated channels as online shopping booms across the region.

Germany-based Hugo Boss has become the latest brand to open a regional online store serving Saudi Arabia, the UAE, Kuwait, Bahrain and Oman.

Customers can now shop through those dedicated online platforms, which will feature exclusive deals and collections.

E-commerce leaders said the pandemic has accelerated the industry's digital push.

Last year, luxury brands Bulgari, Louis Vuitton, and Dior launched their online selling platforms in the region, at the height of COVID-19-induced lockdowns and curfews.

Diesel has also announced an e-commerce platform targeting the UAE and Saudi markets.

Fashion labels  have been reinventing ways to engage with customers who are used to visiting stores to try on garments.

Some companies have also started to use 3D technology and augmented reality to create a holistic shopping experience for their customers.