Asad Ahmad, the General Director of Alvarez & Marsal in Dubai, highlighted that the United Arab Emirates serves as a leading example in supporting small and medium enterprises (SMEs). In the UAE, this sector represents over 95% of registered businesses, employs 86% of the private sector workforce, and contributes more than 64% to the non-oil GDP. He noted that SMEs are the driving force behind the economy in Gulf countries. For instance, Saudi Arabia’s Vision 2030 has set a strategic goal to increase the contribution of SMEs to 35% of the GDP.
Ahmad pointed out that despite the sector’s significance, it faces challenges in securing financing, which hinders its growth and development within Gulf states. There exists a gap between the needs of SMEs and the financing models offered by banks. For example, in 2024, total loans granted to SMEs in Saudi Arabia amounted to approximately 351.7 billion Saudi Riyals (93.8 billion USD), yet these enterprises received only 9% of the total loan value. Ahmad emphasized that this figure remains far from the target set in Vision 2030. This shortfall can be attributed to traditional lending models that require collateral and personal guarantees, often sidelining start-ups and tech-based companies.
He believes that traditional banking models for these companies have not seen significant global changes, with collateral-based systems still dominating conventional lending. Banks typically require guarantees in the form of fixed assets, such as real estate or equipment, with personal guarantees remaining an alternative option. Ahmad points out that this reality acts as a barrier for startups and tech companies, noting that even firms generating regular revenues encounter difficulties in obtaining funding due to unclear risk assessment criteria and complicated application processes.
Ahmad confirmed that SMEs have varying financial needs and risks, particularly micro-enterprises, compared to medium-sized companies engaged in international trade. Nevertheless, many banking institutions continue to apply standardized assessment frameworks that do not reflect this diversity.
He advocates for the development of a tailored banking model that aligns with the requirements of a service-based digital economy, rather than relying on traditional financing services. The first step toward this goal involves reassessing risk evaluation methodologies. Utilizing alternative data sources—ranging from point-of-sale transactions and e-commerce activities to payroll trends and utility payments—can provide clearer indicators of company performance compared to solely relying on traditional financial statements.
Ahmad noted that artificial intelligence is capable of processing such data and mentioned that adopting effective credit registration models that can adapt to performance in real-time, rather than depending on outdated historical indicators, could integrate previously excluded companies in line with traditional risk models.
He added that the success of digital banks reflects the demand for mobile-based digital procedures. Ahmad sees integrated financing as a smoother way to access credit, particularly for micro and small enterprises.
He highlighted the necessity of simplifying application processes, establishing centralized funding portals, and raising awareness about existing initiatives, such as the Kafalah program or economic support plans in the UAE, to ensure future success.