Key figures from public and private sector discuss developments in SME sector at Euromoney Saudi Arabia Conference 2012
Riyadh: During last year's Euromoney Saudi Arabia Conference, Khaled Al-Gosaibi, Minister of Economy and Planning, announced that the Kingdom aims to achieve an annual average growth rate in the non-oil producing sectors of seven percent. All indicators were set for the SME sector to be an engine of growth for the private sector.
"Saudi Arabia is actually among the most competitive countries in the G20 group of nations and the most competitive rapid-growth market in the G20," said Richard Banks, Director of Euromoney Saudi Arabia Conference. "As if on cue, the Purchasing Managers' Index (PMI) unveiled that growth in business activity in Saudi Arabia's non-oil private sector rose to a nine-month high in April 2012. Nonetheless SMEs are not playing their perceived role and are still facing many challenges, despite them having the most positive outlook in terms of local economic growth, capital investment plans and recruitment."
During this year's Euromoney Saudi Arabia Conference which will be held in Riyadh on 22-23 May 2012 in partnership with the Ministry of Finance, key figures from the public and private sector will discuss what policy developments are needed to stimulate growth of the SME sector in order to improve the employment situation in Saudi Arabia, and equally what is the role of multilaterals, private equity and venture capital in aiding growth of SMEs.
The government has undertaken many steps to boost the SME sector including cutting down on the cost and time to set up a business. Further the plans to establish a General Authority for SMEs is currently under study by the Shoura Council.
Mr. Banks went on to say: "Access to liquidity has been a key issue for SMEs and is one of the main impediments for this segment to flourish. The volume of loans by Saudi banks to the SME sector is less than 4 percent of the GDP and represents 2 percent of total loans. The government tried to tackle that issue by establishing the Kafalah program in association with local banks in order to grant SMEs access to private loans by means of a government guarantee. The program however, has only reached a penetration that is less than 1.5 percent."
The government has set a clear goal to reach 10,000 SMEs through the Kafalah system over the next 10 years. In the period 2006-2010 only 1,113 SMEs have received loans worth 247 million US Dollars from Saudi banks. It is expected that more than half of the SME firms will require additional loans ranging between 50,000 - 150,000 US Dollars.
Mr. Banks concluded his comments by stating: "Saudi Banks could play a vital role in absorbing this demand. With many sectors highly consolidated and most of the largest companies already fully leveraged, banks are left sitting on excess lending capacity that remains underutilized. This in turn depresses profits. Banks are expected to gradually move down the credit ladder to make their money work harder, creating new products aimed specifically at SMEs.
"Access to liquidity is only one of many obstacles the SME sector is confronted. Another is the absence of a regulatory environment that would allow registering of guarantees, application of regulations for those who fail to pay back loans. Other obstacles are the absence of financial statements, skilled manpower and shortage of data on markets. Further, SMEs still continue to lose out in the competition for megaprojects, which are usually awarded to the big contractors and developers."
The SME sector and its role in the overall economy will be under close scrutiny at Euromoney Saudi Arabia Conference 2012. Key entities from the public and private sectors such as lead sponsors Bank Albilad, Albilad Investment Co., BNP Paribas, Gulf International Bank, HSBC, Mobily, NCB, Samba, SambaCapital and Saudi Fransi Capital and Banque Saudi Fransi will be participating at Euromoney Saudi Arabia Conference 2012, which is now firmly established as the most influential financial conference in Saudi Arabia.
Another key debate at the 2012 conference will be on the importance of investor relations in the Saudi equity market and this is an area of important focus for Mobily. Khaled Al-Kaf CEO & MD for Mobily said: "Since its listing on the Tadawul, Mobily, the fastest growing telecommunications' company in the region, has achieved a noteworthy record of significantly enhancing shareholder value - a direct result of the company's impressive product offering and an extensive, country wide, state-of-the-art stable network infrastructure backed by a talented management team dedicated to driving the company's solidly based Saudi focused growth program". Mobily is proud to be an Exclusive Telecommunications Partner for the Euromoney Saudi Arabia Conference for the last three years.
Please visit www.euromoneyconferences.com/saudi for more details.
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For more information, please contact:
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© Press Release 2012
