Saudi SMEs extend lifeline with borrowing to recover from the pandemic

Saudi SMEs extend lifeline with borrowing to recover from the pandemic
Saudi SMEs look for more loans as they face debt during pandemic. Image: Shutterstock
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Updated 07 April 2022

Saudi SMEs extend lifeline with borrowing to recover from the pandemic

Saudi SMEs extend lifeline with borrowing to recover from the pandemic
  • Borrowing by SMEs increased in the first quarter of 2021
  • The data showed that in the first quarter of 2021 the total amount of borrowing by SMEs was SR188.42 billion ($50 billion), up from SR134.84 billion in Q1 2020

RIYADH: Borrowing by SMEs increased in the first quarter of 2021, as they invested to emerge positively from the pandemic, and partly as they incurred debt due to the Covid-19 lockdown.

According to the most recent figures by the Saudi Central Bank, the total amount of credit awarded to SMEs between the first quarter of 2020 and the first quarter of the current year increased by 39.74 percent.

The data showed that in the first quarter of 2021 the total amount of borrowing by SMEs was SR188.42 billion ($50 billion), up from SR134.84 billion in Q1 2020 and SR113.17 billion in Q1 of 2019.


Also read: Saudi tech SMEs can get up to $4 million in loans


The SAMA data showed that the medium-sized enterprises were the top beneficiaries of the government subsidies and their revenues ranged between SR40 million and SR200 million. Medium enterprises are classed as those with 50-249 employees.

Mohammed Ramady, a London-based independent economist, told Arab News it is not surprising to see a surge in credit provided by both banks and finance companies due to “economic revival in this period, and due to the SMEs sector receiving increased government support through Monshaat (the General Authority for SMEs).”

"SMEs also borrowed to cover some debt during lockdown but more to move on from COVID slowdown and to expand some of their activities such as repairs, food and take aways," he added.

He said the Kingdom is also encouraging micro-financing especially for entrepreneurs in the high-tech sector. The economist expects this trend to continue.

All major economies started with a strong SME base, but some have moved on to empowering this sector by stimulating the commercial banking sector to play an effective lending role.

The government has also introduced several programs that are helping small and medium businesses financially, such as the sponsorship program with banks that provide loans.


Read more: Small businesses in the Middle East pay big price for pandemic protection measures


Ramady said: “It is a positive picture as compared to a few years ago when the overall percentage of total bank credit facilities was 5.8 percent for the SMEs sector and the share of finance companies was even much smaller (then).”

The report added that the Kingdom saw a 4.4 percent increase in small-sized enterprises compared to Q1 of 2020 and Q1 of 2021. Small companies are classified as those whose revenues do not exceed SR3 million to SR40 million, and the number of employees does not exceed 6 to 40.

SAMA also reported an increase in credit offered by financial companies in the first quarter of 2021 to SR12.97 billion compared to the first quarter of 2020, which totaled SR9.67 billion while the volume of corporate financing in Q3 of 2020 reached SR10.75 billion.

The banking sector, however, awarded the most credit to SMEs amounting to SR164.53 billion.

Total bank credit for the private sector increased to a record amount, SR1.874 trillion in July, SAMA figures show. 

This is up by 0.5 percent from June and by 15.7 percent year on year. This was the 25th consecutive month of growth.

Bank lending to the private sector increased for the 12th consecutive month, bringing the total to SR1.945 trillion, up by 15 percent year on year, and by 0.6 percent compared to June.


UAE producing near to its maximum oil production capacity: Energy minister

UAE producing near to its maximum oil production capacity: Energy minister
Updated 27 June 2022

UAE producing near to its maximum oil production capacity: Energy minister

UAE producing near to its maximum oil production capacity: Energy minister

ABU DHABI: The UAE is producing near to its maximum oil production capacity based on its current OPEC+ production baseline, Emirates News Agency (WAM) reported on Monday.

“In light of recent media reports, I would like to clarify that the UAE is producing near to our maximum production capacity based on its current OPEC+ production baseline (3,168 mbopd) which UAE is committed by until the end of the agreement,” Suhail bin Mohammed Al-Mazrouei, Emirati Minister of Energy and Infrastructure, said.

 


NEOM awards London-based Keller major piling contract for ‘The Line’

NEOM awards London-based Keller major piling contract for ‘The Line’
Updated 27 June 2022

NEOM awards London-based Keller major piling contract for ‘The Line’

NEOM awards London-based Keller major piling contract for ‘The Line’

RIYADH: Saudi Arabia’s $500-billion project NEOM has awarded UK’s Keller a major piling contract for “The Line,” a 170-km megacity being developed within the Kingdom’s flagship project. 

Starting in the west at the Gulf of Aqaba and terminating at the NEOM International Airport within the upper valley region, The Line is subdivided into around 135 modules, according to a statement. 

Each module contains eight buildings founded on large diameter bored piles. 

Keller had signed an umbrella framework agreement with respect to the project, and is mobilizing for an anticipated first works order on a portion of Module 40 which has an expected value to Keller of around £50 million ($61.5 million), with the work anticipated to be completed within the next 12 months.

Listed on the London Stock Exchange, Keller is an independent geotechnical solutions specialist.


NEOM, McLaren Racing partner to drive innovation in electric motorsport

NEOM, McLaren Racing partner to drive innovation in electric motorsport
Updated 27 June 2022

NEOM, McLaren Racing partner to drive innovation in electric motorsport

NEOM, McLaren Racing partner to drive innovation in electric motorsport

RIYADH: NEOM, one of Saudi Arabia’s flagship projects, has partnered with McLaren Racing to drive innovation and talent development in electric motorsport, according to a statement. 

With the partnership, NEOM becomes the title partner of the McLaren Formula E and Extreme E racing teams, which brings the two electric race series together under the banner of NEOM McLaren Electric Racing.

“Our partnership with McLaren Racing complements NEOM’s commitment to driving sustainable solutions and tackling some of society's most pressing challenges,” CEO Nadhmi Al-Nasr said. 

“The partnership will allow us to share our collective resources and experience to yield exciting results, not only for our own organizations, but also for the broader automotive and sports industries,” he added. 

McLaren will be located within OXAGON’s Research and Innovation Campus, which will provide cutting edge facilities and collaboration spaces. 

During 2023, McLaren and NEOM will create a bespoke program to nurture engineers and students, in line with the mega project’s commitment to develop Saudi talent. 


Thailand to seek fertilizer supply from Saudi producers

Thailand to seek fertilizer supply from Saudi producers
Updated 27 June 2022

Thailand to seek fertilizer supply from Saudi producers

Thailand to seek fertilizer supply from Saudi producers

RIYADH: Thailand is planning to negotiate with Saudi Arabia for the supply of fertilizers as the country is currently facing a shortage, especially due to the high cost of imports.

The Thai Chamber of Commerce will coordinate with Saudi suppliers and a business event is to be held between three major Saudi-based fertilizer suppliers and Thai importers on June 29, Thai local media reported citing Commerce Minister Jurin Laksanawisit.

Laksanawisit added that two Saudi suppliers were recently provided permission to sell fertilizers to Thailand.

Thailand heavily relies on imports for its fertilizers, with only 8 percent coming from domestic sources and a usage of about 5 million tons of fertilizer a year, according to the minister.

The country’s overall demand for fertilizer from Saudi Arabia is about 808,000 tons, the media report noted citing industry statistics.


US stocks — Wall Street sheds opening gains on losses in high-growth stocks

US stocks — Wall Street sheds opening gains on losses in high-growth stocks
Updated 27 June 2022

US stocks — Wall Street sheds opening gains on losses in high-growth stocks

US stocks — Wall Street sheds opening gains on losses in high-growth stocks
  • S&P 500 energy stocks among few gainers
  • Robinhood rises on Goldman Sachs upgrade
  • Indexes down: Dow 0.24 percent, S&P 0.36 percent, Nasdaq 0.68 percent

REUTERS: Wall Street’s main indexes fell after opening higher on Monday, as a rally last week on easing concerns over inflation lost steam, with high-growth stocks leading declines.

“We had a nice rally last week, so I think we’re seeing a little bit of profit taking this morning,” said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas.

“The stocks that were up the most last week are the ones getting hit the hardest here today.”

The tech-heavy Nasdaq Composite index, which gained 7.5 percent last week, fell 0.7 percent to lead declines among the three major indexes.

Investors were betting on the retreat in oil prices from the three-month highs hit in June to potentially ease inflationary pressures and likely push the Federal Reserve to moderate its aggressive policy tightening.

However, data on Monday showed new orders for US-made capital goods and shipments increased solidly in May, pointing to sustained strength in business spending on equipment in the second quarter.

Oil prices also moved back into positive territory, pushing up the S&P 500 energy index by 2.2 percent, reining in expectations for inflation falling on the back of lower energy prices.

The US central bank has rapidly raised interest rates to tame 40-year-high inflation, stoking fears its actions could tip the world’s largest economy into a recession.

After the benchmark S&P 500 index earlier this month recorded a 20 percent drop from its January closing peak to confirm a bear market, investors have been trying to gauge when the market might hit its bottom.

At 10:11 a.m. ET the Dow Jones Industrial Average was down 76.62 points, or 0.24 percent, at 31,424.06, the S&P 500 was down 13.94 points, or 0.36 percent, at 3,897.80 and the Nasdaq Composite was down 78.44 points, or 0.68 percent, at 11,529.19.

Shares of Robinhood Markets rose 0.6 percent after media reports said Goldman Sachs upgraded the retail broker’s stock to “neutral” from “sell.”

Goldman Sachs, however, cut rating on Coinbase Global Inc. to “sell” from “buy,” according to media reports, sending shares of the cryptocurrency exchange lower by 9.4 percent.

Declining issues outnumbered advancers for a 1.03-to-1 ratio on the NYSE and a 1.31-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 29 new lows, while the Nasdaq recorded 16 new highs and 41 new lows.