Financing SMEs Is A Must: Al Khaliji’s Hamad Bin Faisal

Lending institutions in the Middle East have been rather reluctant in extending loans to small and medium enterprises, Sheikh Hamad Bin Faisal Bin Thani Al-Thani, Chairman and Managing Director of Al Khaliji.

Finding the “shortfalls” of banks in financing SMEs, Sheikh Hamad said “the Middle Eastern banks’ portfolio of SME investments is less than 5%. In the developing world, this goes up to almost a quarter of total investments,”

“This number alone should be the impetus for financial institutions to re-focus their efforts on smaller enterprises rather than large corporate. I understand that the risk is higher, but it’s a risk worth taking,” he told the 2nd Middle East SME conference.

He said Qatar has taken a lead in this regard, reviewing its financing regulations, and opening up a secondary market specifically targeting SMEs.

“This will allow venture capitalists and SMEs to connect and effectively offer SMEs alternative lines of financing. Other countries are also looking at a secondary bourse as a viable option to finance SMEs with private sector money,” Sheikh Hamad said.

Stressing that the issue of supporting SMEs has never been as important as it is today, he said almost half of the Arab population is under the age of 25, and “it is our responsibility to create an environment where SMEs can grow. It is these small businesses that will spur employment for the next generation.

“We don’t have a choice in this matter – SMEs must be supported to the fullest extent possible, by both governments and financial institutions,” Sheikh Hamad added, Gulf Times reported.