Kafalah’s role focus of Riyadh conference

The vital role of Saudi banks is one of the main themes to be discussed at the Saudi International SME Forum, which will be held with the support of Finance Minister Ibrahim Al-Assaf, on May 28 and 29 in Riyadh.
The event is organized by the Saudi Industrial Development Fund-Kafalah program, and the Saudi Credit and Savings Bank, in collaboration with Al-Iktissad Wal-Aamal Group.
The forum will discuss the implications of financial services provided for the small and medium enterprises (SMEs) sector and how best to implement them, in addition to reviewing appropriate funding programs offered by Saudi banks to support and develop the sector.
Saudi banks are among the main sources of financing for the Kingdom’s SMEs sector and their highly important role has been significantly enhanced by success of the Kafalah program, which was introduced by the Industrial Development Fund seven years ago.
The purpose of the Kafalah program is to provide a real and effective form of guarantee for those funding or lending to SMEs. The program’s success has resulted in the establishment of an increased number of SMEs, which in turn has created new jobs and reduced unemployment in the Kingdom.
Highlighting the activities of Kafalah, Osama bin Abdelrahman Al-Mubarak, chairman in charge of the program to finance SMEs, confirmed that since the start of the program in 2006 up to the end of Q1 2013, the program management adopted 5,253 Kafalah contracts, of which 3,159 beneficiaries were SMEs, with the total value amounting SR 2.56 billion, compared to loans offered by banks participating in the program which is worth SR 5.28 billion.
Al-Mubarak pointed out that there is a tremendous interaction from participating banks as evidenced by the rise in the value of funding by banks, from SR 1.28 billion in 2011 to SR 1.77 billion in 2012, a 38 percent increase.
He added that the forum is being held to keep pace with the tireless efforts made by the government of Custodian of the Two Holy Mosques King Abdullah to support and develop the SME sector and to enhance its role in providing new business opportunities, achieve economic and social development in less developed areas, and broaden the base of the national economy, through the launch of initiatives and development programs.
National Commercial Bank (NCB) will be participating in the forum as a diamond sponsor, stemming from the bank’s dedication to serving Saudi society and its commitment to supporting important economic activities and developing solutions to strengthen the financing methods for SMEs.
In its capacity as leader of the Islamic finance industry, NCB offers a range of Shariah-compliant financing solutions that are the most innovative and advanced in the banking market today. Special services for SMEs are provided through NCB’s Kingdomwide network of branches and funding programs include murabaha, Tayseer Alahli, and Kafalah program with the cooperation of the Industrial Development Fund.
As for Riyad Bank, it has launched several programs to support and stimulate SME and provide the possibilities for the advancement of the 'emerging business' concept by providing financial solutions, and distinctive banking, financial, investment, and advisory services to the owners of these establishments. The bank began establishing a unit for emerging business in 2007 to support SME and strengthening the presence of emerging business in the general economic landscape of the Kingdom, in addition to providing the necessary credit and investment guidance, and educating and bringing awareness to owners of SME with methods to ensure the success of their projects.
The bank also established an integrated electronic portal via its website that contains all the data and instructions for all the requirements needed by the owners of the SME in managing their business from a feasibility study, marketing, financing, operation and financial and administrative management, which is known as the (emerging business bag/ SME TOOLKIT) which helps SME owners in the establishment of their project in accordance to solid and successful foundations.
Samba Financial Group is another sponsor of the forum. An official of the group, Khaled Al-Anezan, stated that Samba’s sponsorship reflects its keenness to support and promote the SME sector in the Kingdom by participating in an international event that provides the opportunity to review the mechanisms of successful experiences and discuss the development of constructive ideas to develop promising new programs for the SMEs sector.
Al-Anezan believes that Samba’s in-depth experience in supporting SMEs helps in motivating their owners to direct their objectives toward innovation in order to improve the performance of their businesses in accordance with the highest professional standards and professionalism. He emphasized that Samba plays a vital role in supporting expansion of the base of SMEs in the Kingdom by providing financing and credit advisory services that enhance the SMEs sector’s contribution to the national economy. He also praised the active role of the Kafalah program as model of fruitful cooperation between the Saudi Industrial Development Fund and Saudi banks in order to create a favorable environment for the growth of the SMEs sector.
More than 500 participants are expected to participate in the forum, including ministers and senior government officials, specialized institutions, banks, and representatives of local and international companies, along with international experts in the SMEs sector, owners of SMEs and emerging young entrepreneurs.