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 Small & Medium Enterprises Loan Guarantee Program

 

Small and Medium Enterprises (SMEs) Loan Guarantee Program (KAFALH)

The SME Loan Guarantee Program (KAFALH) has maintained its ongoing key role in supporting small and medium enterprises Kingdom-wide. Such a role is based on the Program's status as a major player in the service and development of the community; expansion of the beneficiaries' base, and creation of new job opportunities that contributes to reducing unemployment rates in the Kingdom.

 

In the 9th year of its inception, the Program's performance was remarkably exceptional in the FY 1436/1437H (2015), during which KAFALAH Management approved 4,007 guarantees in contrast with 3,612 guarantees in the previous year, a growth at rate of 11%. Theses approved guarantees have benefited 1643 SMEs compared to 1,497 SMEs in the previous year, representing an increase of 10%. The value of these guarantees totaled SR 1,820 million compared to SR 1,688 in the previous year, representing a growth of 8%. Credits provided by KAFALAH's participating commercial banks to SMEs during the year amounted to SR 3,723 million in contrast with SR 3,462 million in the previous year, an increase of approximately 8%.

 

Construction/building and contracting sector led all other sectors in terms of total number of guarantees approved by KAFALAH, representing 59% of the total number of guarantees issued by the Program during the FY 1436/1437H (2015). The commercial sector came second accounting for 18%, followed by finance and business sector accounting for 8%, and the industrial sector representing 7%. The other sectors accounted for 7% of total number of issued guarantees.

 

In pursuance of its aim of achieving balanced regional development, the Program Management has been keen to ensure optimal use of KAFALAH guarantees by all administrative regions Kingdom-wide.  To this end the guarantees approved during FY 1436/1437 (2015) were intended to cover as much administrative regions as possible. Riyadh region comes first in terms of the number of guarantees issued by the Program, representing 47%, followed by Eastern region accounting for 20%; Makkah Al-Mukarramah region accounting for 15%;  Assir region accounting for 4%, and the other regions representing 14%.

 

As for KAFALAH participating banks, the National Commercial Bank (NCB) led all other participating banks in terms of total number of guarantees approved by the Program during the FY 1436/1437 (2015), representing 53% of total number of the approved guarantees. Second in rank comes Riyadh Bank representing 12%; Arab National Bank (ANB) ranks third representing 9%; while in fourth place comes Al-Rajhi Bank accounting for 8%. The Program issued to other banks guarantees accounting for 17% of total number of issued guarantees.

 

Since the Program's launch on 1426/1427H (2006) until the FY-end 1436/1437H (2015), KAFALAH Management has issued a total of 14,899 guarantees to 7,222 SMEs, at total value of SR 7,098 million in contrast with total approved financing of SR 14,371.

 

During the year 1436/1437H (2015), 37 guarantees were liquidated at a value of SR 20,1 million in favor of KAFALAH participating banks. Thus, the number of liquidated guarantees increased to 137, at total value of SR 70,4 million over the period from the Program's launch until the year-end 1436/1437H. Distribution of liquidated guarantees is as follows: 50 guarantees for NCB; 39 for Alrajhi Bank; 19 for SABB; 13 for Riyad Bank; 4 for Saudi Hollandi Bank; 3 guarantees for each of Bank Al Jazira, Al Bilad Bank, and Arab Bank; and one guarantee for each of Samba financial Group, Saudi Fransi Bank, and Saudi Investment Bank. The liquefied guarantees disbursed by the Program accounted for 0.92% and 0.99% of total number and value of the guarantees issued over the period from KAFALAH's launch until the FY-end 1436/1437H.  

 

The Table below shows the number and value of approved guarantees, value of financing, and number of beneficiary enterprises by commercial bank creditors:

 

Number and Value of Approved Guarantees and Number of Beneficiary Enterprises

by Commercial Bank Creditors

Bank Approved Guarantees 2015 GTotal Since Launch of the Program
Number of GuaranteesSR 000
Number of Beneficiary Enterprises
Number of GuaranteesSR 000
Number of Beneficiary Enterprises
Value of GuaranteesValue of FinanceValue of GuaranteesValue of Finance
National Commercial Bank (NCB)2138716,0421,707,0686196,4062,226,2134,753,4592,265
Riyad Bank494330,959658,1693012,7831,664,373  3,426,1201851
Arab National Bank (ANB)367166,638334,3282061,612710,764   1,868,855688
Al-Rajhi Bank330192,683327,7981641,577873,4281,534,859906
Al-Jazira Bank 119 79,088104,37067494282,406390,339232
SAMBA Financial Group16852,10190,25740596253,802469,712261
Saudi Hollandi Bank108101,728   159,440   89  508  492,481 735,906    420
Saudi Investment Bank8336,899   64,947   32203114,460214,686        96
Saudi British Bank (SABB)7030,814    55,120   28  240  131,852   249,525     163
Al-Bilad 7148,849  109,808  48299200,425  419,625      205
Saudi French Bank5964,618   111,976   49181147,435   308,157      135
TOTAL 4,007 1,820,419 3,723,281   1,643 14,899 7,097,639 14,371,243 7,222