Kafalah: SAR 12.1B loan guarantees extended to SMEs in 2023

Small and Medium Enterprises Loan Guarantee Program (Kafalah)

Small and Medium Enterprises Loan Guarantee Program (Kafalah) issued loan guarantees worth more than SAR 12.1 billion until the end of December 2023, benefiting 5,476 micro, small, and medium enterprises (MSMEs) with financing exceeding SAR 15.6 billion.

In a statement carried by the Saudi Press Agency (SPA) today, Feb. 4, the program explained that it agreed to guarantee 7,178 funding requests in 2023, compared to 8,216 in the year before, down 13%. Nearly 1,076 businesswomen benefited from the program's services during 2023, with their loan guarantees exceeding SAR 1.7 billion.

Kafalah added that the growth rate in the value of guarantees for establishments in promising regions such as Aseer reached 66%, followed by Al-Jouf, (45%) and Tabuk (42%), stressing that the program aims to accelerate the pace of economic growth in promising regions, create new and diverse opportunities, provide jobs for Saudis and exploit the comparative advantages enjoyed by each region, which in turn will boost the Kingdom’s competitive capabilities.

The total value of guarantees provided by Kafalah in 2023 increased by 11% year-on-year (YoY) for each of Riyadh, Eastern Province and Makkah. As for promising regions, the value of guarantees advanced by 19% YoY during the same year.

The effective role of Kafalah program was reflected in the growth of establishments and the total number of employees by 20% after six months of obtaining guaranteed financing. This was driven by the rise in employment among Saudi males and females by 7% and 9%, respectively, a year after obtaining Kafalah loan guarantees, before rising to 17% two years later.

The statement added that the transfer of Kafalah program to the SME Bank’s scope of work supported harmonization efforts between both parties to develop a financing guarantee product for the advisory sector with a capital of SAR 300 million, alongside a financial leverage of up to five times. This is in addition to launching a financing guarantee product for the health sector, represented in dentistry, to provide entrepreneurship opportunities for industry-specific cadres.