The small and medium enterprises (SMEs) can help to create millions of jobs needed in this part of the world as well as helping a sustainable economic development, according to experts.
Experts from the Arab Monetary Fund, the International Finance Corporation, Central Bank of Bahrain and Bahrain-based the MENA Center for Investment told the one-day conference that SMEs would help in creating millions of jobs in the Arab world.
“The CBB is highly aware of the needs of small to medium-sized companies for dependable and affordable finance to facilitate economic growth in the private sector, and therefore the CBB is delighted to be associated with this event,” Khalid Hamad, Executive Director of Banking Supervision at the Central Bank of Bahrain, said.
Held at the Thalassa Sea and Spa, Sofitel Hotel, Bahrain, the IFC and AMF MENA Conference on Increasing Access to Credit in MENA through Effective Financial Infrastructure attracted 80 bankers, experts and regulators.
“In fact this event provides an opportunity to update the business community on the initiatives by the CBB to improve the availability and access to finance for small to medium-sized companies. As some of you are probably aware, the CBB has already licensed two providers of microfinance in the past three years,” he said.
“These are Ebdaa Bank and Family Bank. These two institutions are specifically aimed at the provision of finance of up to BD3000 to single person companies or small businesses. These banks are providing working capital and asset-based finance to allow SMEs to expand,” he added.
“The CBB has supported Tamkeen initiatives through the relaxation of the risk weighting of lending by banks to SMEs from 100% to 75% in 2008. Also the CBB, in realizing the paramount importance of microfinance, has started the development of a specific regulatory framework for such business and it is expected to be issued next year after the necessary consultation,” he added.
“The CBB has also worked with the Benefit Company to widen the scope of the Bahrain Credit Reference Bureau to include SMEs and larger companies. Lenders will therefore have access to credit information on not just consumers but also on companies. This initiative should widen the availability of credit to smaller businesses and should also help improve the credit quality of banks’ credit portfolios. The CBB is also looking at setting a lower fee for enquiries to the Credit Reference Bureau in respect of SMEs in order to keep down borrowing costs for such businesses. But overall we have already advised banks not to increase charges on companies as a result of this initiative,” Khalid Hamad explained.
“The CBB is planning to include the single person companies under the umbrella of the CBB’s conduct of business requirements applicable to consumer finance so that they will enjoy greater protection,” he added.
I would emphasise, he said, the CBB does not have any direct supervisory responsibility for smaller businesses. “Nonetheless the CBB recognises the importance of SMEs to the economy and therefore we have sought to provide what measures we can to ensure that their financing needs are met efficiently.”