The Small and Medium Enterprises Financing Guarantee Program (Kafalah) announced a new milestone in its ongoing support of the national economy, having issued financing guarantees worth SAR 14.1 billion during 2024. This enabled more than 5,463 micro, small, and medium enterprises (MSMEs) to obtain total financing exceeding SAR 19.7 billion. This figure represents a 5% increase compared to 2023, when financing reached SAR 18.7 billion, reflecting the program's growing role in bolstering this vital sector.
General context: “Kafala” as a tool to enable the Kingdom’s Vision 2030
The Kafalah program was established in 2006 as an initiative of the Saudi Industrial Development Fund, with the participation of Saudi banks. Its primary objective is to overcome the obstacles to financing small and medium-sized enterprises (SMEs), which form the backbone of the economy. The program acts as a bridge of trust between financing entities and these enterprises by providing financial guarantees that reduce lending risks and encourage banks and finance companies to provide the necessary liquidity for the growth and expansion of these projects. This pivotal role aligns with the objectives of the Kingdom's Vision 2030, which aims to increase the contribution of SMEs to the GDP from 20% to 35% and diversify national income sources away from oil.
The importance of support and its impact on the national economy
The impact of the Kafalah program extends far beyond financial figures, reaching deeper economic and social dimensions. By facilitating access to finance, the program directly contributes to creating new job opportunities for Saudi youth, supporting innovation and entrepreneurship, and enhancing the competitiveness of local products and services in regional and international markets. Furthermore, the program's success boosts investor confidence in the Saudi business environment and provides a successful model of effective public-private partnerships that can be emulated across the region.
Cumulative achievements and a future vision
The CEO and board member of the Kafalah program, Humam Hashim, stated that “small and medium-sized enterprises (SMEs) are a fundamental pillar in driving the national economy and a pivotal element in achieving sustainable development and diversifying income sources, in accordance with the Kingdom’s Vision 2030.” He praised the program’s experience as a successful model of integration between the public and private sectors.
The cumulative figures confirm this success. Since its launch in 2006 until the end of 2024, the program approved more than 73,000 guarantees, benefiting over 27,000 establishments, with total financing approaching SAR 131 billion, against guarantees valued at more than SAR 93 billion. One of the most significant outcomes of this support is enabling 46 establishments to transition and grow to the point of listing on the parallel market, Nomu, demonstrating the program's effectiveness in nurturing promising companies. Currently, Kafalah is working in conjunction with the Small and Medium Enterprises Bank, under the umbrella of the National Development Fund, to consolidate these gains and provide a supportive environment that ensures the continued growth of this vital sector.
