Saudi Environment Fund, Kafalah Support Investments with Loan Guarantees
The Saudi Environment Fund and the Small and Medium Enterprises Loan Guarantee Program (Kafalah) on Sunday signed a new agreement to support environmental projects in the Kingdom, reported the Saudi Press Agency (SPA).
The agreement, signed in the presence of the Saudi Minister of Environment, Water and Agriculture (MEWA), Abdulrahman Al-Fadley, aims to launch a loan guarantee product to stimulate environmental investments in Saudi Arabia.
Promoting Environmental Sustainability
The partnership between the Saudi Environment Fund and Kafalah aligns with the MEWA efforts to promote environmental sustainability, encourage investment in the environmental sector, and support key environmental projects.
It also aligns with the continued efforts to achieve integration between the public and private sectors, further boosting innovation and financing in environmental projects and creating new opportunities for growth, in line with the objectives of Saudi Vision 2030.
Incentives and Grants Program Platform
Moreover, the agreement coincides with the launch of the Incentives and Grants Program online platform to support environmental projects in Saudi Arabia.
During the signing ceremony, Al-Fadley, chairman of the Board of Directors of the Environment Fund, launched the Program’s online platform. The Program aims to promote sustainability and encourage projects and initiatives, in line with the National Environment Strategy.
Partnership Objectives
The agreement between the Environment Fund and Kafalah aims to support the funding of economically viable micro, small, and medium-sized enterprises (MSMEs) which face challenges in providing the required guarantees to the financing entities.
In the light of this, Kafalah Program helps in providing financial guarantees that cover part of the funding provided to these MSMEs, encouraging financing entities to provide the needed support.
Under the agreement, both parties work together to achieve the National Environment Strategy by promoting environment protection projects in Saudi Arabia, financing environmental initiatives, and boosting investment in the environment and meteorology sectors through providing credit facilities in collaboration with the approved financing entities.
Moreover, the agreement aims to provide guarantees in return for the credit facilities offered to SMEs, stimulating investment in the environmental sector.
Bolstering Cooperation
The agreement aims to strengthen joint cooperation by supporting and developing the targeted category, enhancing the ecosystem of these entities and achieving their financial stability.
It also contributes to bolstering their credit capabilities through providing the necessary guarantees for the financing entities to encourage them to boost the funding proportion for economically viable SMEs within the targeted category.
Kafalah Support for SMEs
Kafalah Program plays a key role in supporting Saudi SMEs and increasing their financing. In 2024, it provided SAR 13.9 billion in loan guarantees.
The Kafalah Program has benefited a total of 5,346 small, medium, and micro enterprises, by issuing more than 7,000 guarantees and providing over SAR 18 billion in financing. This marks a 17% increase from 2023, according to SPA.
The program seeks to drive the national economy’s growth by offering financial guarantees that facilitate SMEs’ access to necessary funding while reducing lending risks to financial institutions. This effort involves strategic partnerships, innovative technological tools, and knowledge-based program frameworks.
In recognition of its efforts, the Kafalah Program received two platinum awards at the Global SME Finance Forum, in Sao Paulo, Brazil, in October 2024. The program earned the Product Innovation of the Year Award for the MENA region and the Product Innovation of the Year DFI, IFI, Guarantee Agency Award on the global scale.
