Real Estate - Updates
Several economic sources projected that the volume of investments in small and medium-sized enterprises in the Kingdom would reach more than $70 billion by the end of 2015, funded by the state budget and loans provided by certain banks.
These projects could contribute more than 37% of Saudi Arabia’s gross domestic product (GDP) by the end of that year, compared to 35% at the end of last year, according to an analysis by Zawya Economic Research.
As of January 2014, the number of small and medium-sized enterprises (SMEs) in the Kingdom stood at approximately 1,975,022 million companies, with projections indicating that this number will rise to more than 2.5 million enterprises by the end of 2015, according to some statistics.
According to the Center for Small and Medium-Sized Enterprises at the Council of Saudi Chambers, the number of small and medium-sized enterprises in the Kingdom has risen recently, but only % 71 of those enterprises are operational, and 29% of them are closed due to financial problems.
The number of sole proprietorships among all active businesses stands at 688,000, or about 85% of the total active businesses, The city of Riyadh accounts for % of small and medium-sized enterprises, followed by the Makkah region with 24%.Saudi commercial banks have recently taken steps through the Kafalah program to finance small and medium-sized enterprises, amid growing calls for them to play a more active role in supporting these enterprises by providing financial facilities. The report noted that some banks remain hesitant and wary of financing SMEs due to a lack of adequate collateral, such as market and feasibility studies for these projects or the absence of entities to guarantee their loans, which leads to the failure of some of these projects.
More than 4.5 million workers are employed by these enterprises, most of whom are expatriate workers, and financial investments in these enterprises are estimated at approximately 250 billion riyals, employing 82% of the Kingdom’s workforce, according to a 2013 report by the Gulf Organization for Industrial Consulting (GOIC).