Contact us | info [@] emg-csr.com

Growing sustainable SMEs in the MENA

0

A typical SME in the MENA region:

  1. Has a simplified internal communication system that is usually informal
  2. Has control over business operations and decisions residing with one or two persons who are often family members
  3. Is privately owned

Globally, there are around 36-44 million formal SMEs, 65-70% of which are in emerging markets. In the MENA region there are 1.9-2.3 million SMEs, accounting for 20-40% of private sector employment. Around 20-39% of SMEs are considered to be in need of a loan or an overdraft. This indicates the proportion of SMEs in the region that are perhaps undersupplied with regard to the financial products and services that are necessary for their sustained growth.

Sustainable SMEs In Saudi Arabia:  SMEs contribute around 33% to GDP and comprise nearly 25% of the labor force, which is quite a modest contribution and explained by the reliance on oil and public sector activities. The greater part of the SME labor force in Saudi Arabia consists of migrant laborers.

SMEs in the region have strong roots in local communities and often grow within their community by purchasing raw materials from local businesses and employing known acquaintances.

The profile of SMEs management is changing as older generations hand businesses over to their descendants, many of whom are university educated, can often speak several languages and approach their work with flexibility being, themselves, more willing to adapt to new markets and trends.

The potential of the SME sector still remains relatively untapped, due to some of the challenges that constrain their capacity to grow. Some of the challenges facing sector-wide SMEs in the region include inadequate access to finance, lack of access to appropriate technology, low productive capacity and lack of government policy support.

Globally, SMEs account for a disproportionately large share of new jobs, especially in countries which have a high employment record. This demonstrates the capacity of SMEs in tackling low employment, which is a current challenge of Saudi Arabia.

Saudi Arabia has a handful of initiatives which seek to support and enhance the SME landscape, and it is important that these initiatives are strengthened and expanded.

RIYAD BANK’S KAFALA PROGRAM provides a wide range of financing solutions tailored to SMEs in the Kingdom. The Program is an initiative backed by the Ministry of Finance, represented by Saudi Industrial Development Fund (SIDF) which aims to promote economic growth and financing to SMEs within the Kingdom. The Program also guarantees finance for other purposes, such as; purchasing fixed assets, working capital and all types of contract businesses.

TAQEEM is a support program of the International Labor Organization and Silatech whose goal is to increase effectiveness of youth employment and enterprise interventions in the Middle East and North Africa (MENA) through improved results measurement and evaluation practices.

Share.

Comments are closed.