IMF's suggestions to boost Saudi SME sector

SMEs form 97 percent of businesses in the Kingdom of Saudi Arabia, yet contribute only 22 percent to the GDP — slightly below average in the region, ahead of only Kuwait and Oman.

In most countries, SMEs contribute to a significantly large chunk of the GDP. In the UAE for example, SMEs make up 53 percent of the GDP; however this figure is on the higher side as the UAE is amongst the leading countries in the MENA region for SMEs. The European Union sees SMEs accounting for 55 percent of its GDP.

However, because the KSA heavily depends upon oil, its SME sector is only recently starting to grow. The IMF said that Saudi Arabia's earlier introduction of economic reforms are starting to yield positive results. Non-oil growth saw a rise of 2.9 percent this year.

In a new report, the International Monetary Fund (IMF) has suggested ways in which Saudi's SMEs could get the support they need. Their major hinderance to growth lies in getting financing, including bank loans, as well as having a supportive business environment. Reforms for these will see the sector consolidate.

IMF said that reforming the financial landscape for SMEs is key to capitalising on the economic potential of the Kingdom and supporting its Vision 2030.

It also suggested boosting entrepreneurship, which Saudi is already working towards with its new funds and accelerators.

The KSA has launched a number of new initiatives in the recent past that includes funds, regulation reforms and tax reimbursements. Their new public law will focus on strengthening the SME sector.

It is already commissioning tourism projects on the Red Sea coast, which is expected to boost the sector even further. It is also about to start issuing tourist visas which could strengthen the tourism SME sector.