Kafalah Program: Financing of SAR 14.68 billion for 4,385 establishments in the third quarter
The latest statistics released by the Small and Medium Enterprises Financing Guarantee Program (Kafalah) reveal significant growth in financing provided during the third quarter, with the total value of guaranteed loans reaching approximately SAR 14.68 billion, benefiting 4,385 businesses across various sectors. These figures reflect the substantial momentum witnessed by the SME sector in Saudi Arabia and the pivotal role the program plays in removing financing obstacles for entrepreneurs.
Strategic support in line with the Kingdom's Vision 2030
These figures cannot be viewed in isolation from the broader economic context of the Kingdom under Vision 2030. The small and medium-sized enterprises (SMEs) sector is a key driver of targeted economic growth, and the Vision aims to increase its contribution to GDP from 20% to 35%. The injection of over 14 billion riyals in a single quarter underscores the commitment of financial and governmental entities to accelerating this growth and empowering the private sector to lead economic development, moving away from total dependence on oil.
The program's mechanism and its impact on financial sustainability
The Kafalah program acts as a vital bridge between financing entities (banks and finance companies) and businesses that may lack sufficient traditional collateral to secure loans. By providing financial guarantees to these entities, the program reduces lending risks, encouraging financial institutions to expand credit facilities. This support extends beyond simply providing liquidity; it also enhances the financial sustainability of businesses, enabling them to expand their operations and increase their competitiveness in the local and regional markets.
Expected economic and social impact
The provision of funding to 4,385 establishments directly translates to preserving thousands of existing jobs and creating new employment opportunities for Saudi youth, thus contributing to reducing unemployment rates. Furthermore, the diversity of the beneficiary establishments, spanning the industrial, technological, tourism, and retail sectors, strengthens the foundation for economic diversification. The continued flow of funding at this pace also bolsters the confidence of local and international investors in the Saudi business environment and underscores the resilience of the financial system and its ability to support growth under varying economic conditions.
The future of finance and digital transformation
These positive results also indicate the success of the digital transformation in financing procedures. Automation and electronic linking between Kafalah and financing entities have expedited the review and approval of applications, facilitating the delivery of support to eligible recipients in record time. This momentum is expected to continue in the coming quarters, with the introduction of innovative financing products targeting promising new sectors that align with modern global trends.
