As part of its role in activating monetary policy tools and enhancing financial stability, SAMA continues to enable the financial sector to support the growth of the private sector in order to play its role in promoting economic growth in Saudi Arabia through a package of measures. This comes as part of supporting the government efforts to mitigate the expected financial and economic effects on the private sector under the COVID-19 pandemic. On 14 March 2020, SAMA launched a program to support the private sector with a total amount that reached SAR 51.749 billion by the end of June, exceeding the allocated amount of SAR 50 billion. This program includes four main initiatives: Deferred Payments Program, Guaranteed Facility Program, Loan Guarantee Program, POS and E-Commerce Service Fee Support Program. These programs aim at mitigating the effects of precautionary measures on the MSME sector by reducing the burden of cash flow fluctuations, supporting the sector’s working capital and enabling it to grow during the ensuing period in addition to contributing to maintaining employment in the private sector.
Value of Contracts of Enterprises Benefiting from the Deferred Payments Program Reached SAR 50 Billion
SAMA stated that the number of contracts of MSMEs, which have benefited from the Deferred Payments Program for the financial sector (banks and finance companies) since its launch in mid-March, was more than 71 thousand with a value exceeding SAR 50.3 billion. Of these contracts, about 26 thousand contracts were for micro enterprises including individuals from productive families and craftsmen, 18 thousand for small enterprises, and 27 thousand for medium enterprises. In addition, creditors were directed to cooperate with the groups affected by the COVID-19 pandemic, whether individuals or from the private sector, and provide the necessary support by deferring their payments and restructuring their loans. It is worth mentioning that SAMA has allocated an amount of SAR 30 billion for the Deferred Payments Program at the time of its launch; however, the increased number of entities wishing to benefit from the Program has led to raising the amount to match the size of deferred amounts. This would enhance the private sector stability and enable it to overcome the crisis.
Value of Loans from the Guaranteed Facility Program Reached SAR 1.1 Billion
SAMA stated that the number of financing contracts granted under the Guaranteed Facility Program (previously known as Funding for Lending) reached 1,197 with a total value of about SAR 1.1 billion. 809 of financing contracts were for micro enterprises (with a value of SAR 333 million), 217 for small enterprises (SAR 369 million), and 169 for medium enterprises (SAR 296.6 million). SAMA, in cooperation with the SME Financing Guarantee Program “Kafalah,” has launched the Guaranteed Facility Program under which 95% of total finance granted is guaranteed according to the Kafalah program procedures.
Financing Contracts Provided to Beneficiaries of the Loan Guarantee Program Reached 2000
SAMA noted that the number of financing contracts provided to beneficiaries of the Loan Guarantee Program exceeded 2,092, with fees provided by creditors (banks and finance companies) totaling SAR 22.8 million.
According to SAMA breakdown, 153 financing contracts were for micro enterprises benefiting from the Program with an amount of SAR 588.5 thousand. 1,619 contracts were for small enterprises with an amount of SAR 12.4 million, and 320 for medium enterprises with an amount of SAR 9.8 million. It is well known that the Program aims at enabling creditors (banks and finance companies) to relieve SMEs from the finance costs of the Kafalah Program for the purpose of minimizing finance costs for entities eligible for guarantees during the fiscal year 2020.
Support for Service Fees of POS and E-Commerce Amounted to SAR 327 Million
Through the POS and E-Commerce Service Fee Support Program, the payment fees of all stores and entities in the private sector participating in the national system are supported by SAMA (i.e. SAMA will pay fees for payment service providers). SAMA stated that, since its launch in mid-March to the end of June, the number of stores which benefited from the Program amounted to 130 thousand merchants with POS and 3,600 electronic stores. The number of transactions exempted from fees reached 248 million for POS and 25 million for e-commerce. The value of these transactions exceeded SAR 36 billion for POS and SAR 5 billion for e-commerce. The amount of fees supported by SAMA totaled SAR 327 million.