Another boost to the private sector

Saudi Arabia was the first ahead of other G20 economies to introduce stimulus packages to support the private sector, especially small- and medium-sized enterprises (SMEs), during the shutdown of business activities because of the coronavirus pandemic.
As I concluded my live interview last week on Al-Arabiya, discussing the impact of the latest financial stimulus packages, there was more good news for the private sector when it was announced that King Salman had ordered up to SR9 billion ($2.4 billion) to be disbursed to pay part of the wages of private sector workers to deter companies from laying off staff.
The government is reassuring business owners that, instead of terminating the employment of a Saudi citizen, the employer has the right to ask social insurance to disburse, as compensation, 60 percent of his or her salary over a three-month period, with a maximum limit of SR9,000 (per employee) and with a total value of up to SR9 billion.
SMEs are vulnerable to market cycles and in vital need of financial support to at least cover their monthly fixed costs. For many, the biggest challenge is the unknown fate of this shutdown phase. No one knows how long it will last. Most of those SMEs are in retail, hospitality, tourism, entertainment and other related sectors which have been heavily impacted by the pandemic’s repercussions. They are a vital part of the Saudi economy, especially since the launch of the Vision 2030 reform plan. And if the Hajj season is to be canceled for this year, a lot of companies will also be negatively affected by the cancellation, if it happens.
As part of its corporate social responsibility, BMG Financial Group has launched an initiative to provide free initial advisory services to those SMEs negatively affected during this crisis. BMG will assist them to identify which financial stimulus packages will apply to them and how to secure funding from different banks which have specialized units to support SMEs.
In my opinion, this challenging time facing SMEs is an ideal opportunity to explore consolidation with other firms in the same sector which offer synergies and economies of scale. Furthermore, this is also a good time for medium-sized companies to consider listing on the parallel market, Nomu. The Capital Market Authority, in association with the Small and Medium Enterprises General Authority, are offering incentives to encourage medium-sized companies to be listed “directly” on the Nomu market. BMG will assist these companies to explore this option.

Basil M.K. Al-Ghalayini is the chairman and CEO of BMG Financial Group.