Call to raise lending to SMEs in Mena

An international financial expert has urged Arab banks to raise the ratio of lending to Small and Medium Enterprises (SMEs) in order to revitalise the economic movement in Arab countries which are largely driven by this sector.

According to a study conducted by the Union of Arab Banks in association with the World Bank on 'SMEs bank loans in the Middle East and North Africa', it has been revealed that the percentage of loans provided by banks to the SMEs does not exceed 8 per cent of total lending operations in Middle East and North African (Mena) region.

Zed Ayesh, the general manager of Flashship Consultancy, commenting on the study, said: "SMEs are not provided funds for many reasons, and therefore they lose great opportunities to boost their market share." This study covered 139 banks in 16 countries in the Mena, including six from Gulf Cooperation Council (GCC), and 76 national banks and 34 foreign banks, as well as 29 banks belonging to the state and 110 private banks.

"These companies have enough management and marketing capabilities to enter foreign markets if only they were supported through appropriate loans from the government and private banks," the general manager of Flashship Consultancy added. The study clearly showed that the share of loans for this type of companies in the GCC does not exceed 2 per cent, at a time when other companies in the region have a share of 14 per cent.

Ayesh added: "The Arab economies should unify their administrative and economic criteria when dealing with SMEs ."