(MENAFN - Arab News) The Kafala program has approved 670 guarantees for small and medium enterprises (SMEs) in 2012 valued at SR 4.8 billion, a senior official of the Saudi Industrial Development Fund (SIDF) said.
The Kafala program is run by SIDF, an affiliate of the Ministry of Finance, in coordination with a group of Saudi banks. Their major concern is to fund small and medium sized enterprises in the Kingdom.
Director of SIDF Ali bin Abdullah Al-Aid said some 918 firms benefited from the program in 2012 compared to 742 firms in 2011, an increase of 24 percent.
Meanwhile, the volume of funding offered by the participating banks in the program stood at SR 1.78 billion in 2012 compared to SR 1.28 billion in 2011, an increase of 38 percent, he said.
Since the launch of the program in 2006 until the end of 2012, the program has approved 765 guarantees for 909 SMEs valued at SR 2.30 billion, where banks and other financing institutions provided funding facilities worth SR 4.83 billion, he pointed out.
He said the program has recently launched intensive awareness campaigns destined for the owners of SMEs, especially in the least developed areas, by explaining funding facilities guaranteed by the program.
The program has effectively contributed in the creation of an appropriate funding instrument for SME owners where it used to guarantee 80 percent of the funds offered by the participating banks, the value of a guarantee sometimes going up to SR 1.6 million, he said.
The SIDF chief said that an investor who owns and runs more than one business could obtain more guarantees at a value exceeding SR 5 million. For legally-established companies, they can also get more than one guarantee of no more than SR 10 million, he said. Firm owners could repeatedly obtain guarantees but must conditionally re-pay pending funds, with the possibility of giving them a grace period for repayment depending on the nature of business, he said.
According to program officials, the role of the program is not limited to the issuance of guarantees but extends to covering other areas such as training and launching of awareness campaigns and workshops for young entrepreneurs in cooperation with World Bank (WB), Institute of Banking, Saudi Chamber of Commerce and Industry, and other banking institutions.