JEDDAH: The governor of the Saudi Arabian Monetary Agency (SAMA) on Sunday launched a new system to assess the performance of small and medium enterprises (SMEs) in order for banks to finance them with confidence and without hesitation.
"This is an important step toward encouraging banks to finance these enterprises," said Muhammad Al-Jasser while launching the system, one of the projects of the Saudi Credit Bureau (Samah). The system opens a big business sector for Saudi banks to finance.
"The assessment system that was launched today removes one of the major obstacles facing the development of SMEs," he said, adding that the system would help them receive necessary funds.
"It is wrong to believe that huge companies are the main driving force behind the economy. Actually, the SMEs play an important role in driving the economy in both advanced and developing countries because of their role in accommodating a large number of workers who do not require major educational qualifications or training," Al-Jasser pointed out.
The SAMA chief emphasized the ability of SMEs in boosting the Kingdom's economic and social development, especially in remote and underdeveloped areas of the country.
According to a study presented at the Riyadh Economic Forum, the average number of workers at a private Saudi firm is 8.4. It shows that about 90 percent of companies in the Kingdom are SMEs.
"The government has decided to provide all-out support to SMEs considering their important role in the economy, especially in creating jobs for Saudis," he said.
By 2009 there were more than 218,400 SMEs in Saudi Arabia and about 93.1 percent of these firms are owned by individuals. SMEs are engaged mainly in trade (34.3 percent), construction (32.3 percent) and downstream industries (14.6 percent). About 55.5 percent of SMEs have less than five employees while 42 percent of them have five to 59.
Al-Jasser said the contribution of SMEs to the Saudi economy is meager compared to other countries. He praised Samah for introducing the system and urged the support of all relevant parties to make it successful.
"It provides a scientific system to assess the performance of SMEs," he said, adding that it would contribute to avoiding the risks associated with financing such ventures. It will also help banks to diversify their portfolios, opening a major sector to finance, he added.
Al-Jasser also talked about finances being provided by banks to support businesses in the Kingdom, adding that it reached SR800 billion in the first half of this year. Bank loans given to individuals during the same period amounted to SR217.5 billion while financing given to the public sector reached SR250.5 billion.
He said the new assessment system would make SMEs one of the major sectors that receive bank loans, adding that it would boost the Kingdom's economic development.
"SMEs in the Kingdom still require greater support and care, providing them with a suitable atmosphere to play an important role in the economy," he said.
© Arab News 2011
