Yet another boost for Saudi to expand businesses with a new framework agreement between The Saudi Export-Import Bank and the International Islamic Trade Finance Corporation (ITFC). The contract assigns lenders to offer financial services, insurance, and bank guarantee services to the clients.
The idea behind the agreement is to provide improved financial services in the export businesses by making the Saudi EXIM Bank a strong leader in financial infusion in the private sector and encouraging the exporters with the services required in trading.
The virtual meeting held for the agreement was with H.E. Eng. Saad Abdulaziz AlKhalb, CEO of the Saudi EXIM Bank, and H.E. Eng. Hani Salem Sonbol, CEO of ITFC. Exporters now have access to credit facilities such as Pre-Export Financing, Import Financing, Buyer’s Credit, Supplier’s Credit, and Line of Credit from international and local banks to complete transactions.
In addition to oil exporters, the agreement provides direct and indirect credit facilities for financial institutions in the kingdom and abroad. The recent reports of the total exports in Saudi show an increase of 3% YoY in Feb 2021, and imports recorded gains of 20.7 % year on year. The primary exports of Saudi fuel and oil, chemicals and plastics, and the top three importers from Saudi are China, United Arab Emirates, and India.
Saudi Arabia imported goods worth an estimated US$131.3 billion from all over the world in the previous year.
Saudi Exim mandated financial services to boost non-oil sector exports last year, allowing the country to diversify away from oil as an export from its territory.
The Saudi Vision 2030 defines objectives to enhance the SMEs. The idea is to strengthen the SMEs targeting to improve their share in overall GDP growth from 20 percent to 35 percent. Other initiatives from The Public Investment Fund (PIF), the country’s sovereign wealth fund, with a $1.07 billion ‘Fund of Funds’ to offer capital support to SMEs.
SME gross domestic product (GDP) grew by 45 percent following Vision 2030, and the number of SMEs increased from 447,000 to 614,000 since the launch of Vision 2030 five years ago. Their loan share also surged 2% to 8% in the 2016-2018 period, compared to a target of 11% by 2025.