The business landscape for micro, small, and medium-sized enterprises (MSMEs) in Saudi Arabia has experienced significant expansion in 2023, according to statistics from the Saudi Central Bank (SAMA). Financial accommodations from banks and finance companies to the sector have risen to SAR 276 billion, marking a substantial increase from SAR 229 billion in 2022, which translates to a yearly growth of 20.5% or an increment of SAR 47 billion. By the end of 2023, the total number of MSMEs surpassed 1.3 million, as reported by the General Authority for Small and Medium Enterprises, reflecting the government’s efforts to empower the sector and boost its contribution to the Saudi gross domestic product (GDP), aiming to raise SME participation to 35% of the GDP through supported government programs including credit cards for enterprises, e-commerce store financing, working capital loans, microfinancing, revolving credit facilities, and term financing. These initiatives have encouraged MSME owners to expand and enhance their business operations.
When examined by size, the MSME sector in the Kingdom saw the following changes in 2023 compared to 2022:
- Micro-enterprises increased by 170,323 to 1,138,588, a growth of 17.6%
- Small enterprises decreased by 5,068 to 150,788, a decline of 3.3%
- Medium-sized enterprises grew by 1,111 to 18,723, an increase of 6.3%
- The total sector saw a growth of 166,366 to 1,308,099, an overall increase of 14.6%
The banking sector provided 93.7% of the total MSME financing in 2023, a slight increase of 0.6% from the previous year. Bank financing rose to SAR 258.3 billion from SAR 213.2 billion, a yearly increase of 21.2% or SAR 45 billion. Meanwhile, finance companies contributed 6.3% of the total financing, a slight decrease from 6.9%, with their funding reaching SAR 17.4 billion in 2023, up from SAR 15.8 billion, reflecting a growth of 10.1%.
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The medium-sized enterprises garnered the largest share of financing at 57.4%, amounting to SAR 158.4 billion, compared to SAR 138.2 billion in 2022, which is a growth of 14.6%. The banking sector accounted for 95.9% of this segment’s financing, reaching SAR 151.9 billion, an annual increase of 14.3%. Finance companies held a 4.1% share, with their contribution increasing by 22.6% to SAR 6.5 billion.
Small enterprises received 33.4% of the total financings, which amounted to SAR 92.3 billion, up from SAR 72.5 billion in 2022, indicating a 27.3% annual growth. Banks contributed 91.1% to this segment’s financing, totaling SAR 84.1 billion, a year-on-year increase of 29.2%. Finance companies provided 8.9% with a value of SAR 8.2 billion, marking an annual growth of 10.8%.
Micro-enterprises were ranked third, with financing reaching SAR 24.9 billion, up from SAR 18.3 billion in 2022, representing a 36.1% growth rate. The banking sector’s share was 89.6%, with financing amounting to SAR 22.3 billion, a significant annual growth of 46.7%. Finance companies accounted for 10.4%, with their funding decreasing by 16.1% year-on-year to SAR 2.6 billion.
