The status of bank lending to SMEs in the Middle East and North Africa region: Results of a joint survey of the Union of Arab Bank and the World Bank

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Between Trend and Necessity: Top‐Down Entrepreneurship Promotion in Oman and Qatar

“…78 percent of GCC banks indicate that their collateral requirements are higher for SMEs than for larger corporations and claim that SME lending is 82 percent more risky than large corporate lending. 68 Problems financiers point to include weak educational preparation, inadequate business planning, a lack of commitment, and "part-time" entrepreneurship. 69 Possibly even more problematic, funding programmes claiming to target youth entrepreneurs in practice do not.…”

Enterprises Funding Institutions: Does it Matter for Saudi Economy?

“…They recommend that the government of the East African countries should adopt some reform policies that supporting and enhancing government and private banks to provide loans to fund SEs which will be reflected on rising the number of direct and indirect job opportunities and increasing the standard of living. Rocha et al (2011) investigate the status of bank financing to SEs in the Middle East and North Africa based on a survey of 139 banks in 16 countries. They find that although there is a positive perception of the attractiveness of the segment, the SE sector in the region remains largely underserved.…”

Background Report on Private Sector Development in Latin America, the Post-Communist Countries of Europe and Asia, the Middle East and North Africa

“…Given that, as we have seen ( Figures 20 and 22), the region does well in terms of credit to the private sector as a percentage of GDP, it is clear that the lending activity of banks in the region is strongly focused on a narrow, privileged group of customers. In addition to the low level of competition, some factors indicated as underlying the low level of lending to the SME sector by Rocha et al (2011) include: poor registries of movable assets that could be used as collateral, poor public credit registries, and the scarcity of private credit bureaus that could improve the availability of credit information (Figure 24). …”