WASHINGTON, D.C., August 4, 1999 ---
Small and medium enterprises (SMEs) in Saudi Arabia will have greater access
to long-term financing with an investment by the International Finance
Corporation, which has just approved a project to help establish the country's
first joint venture leasing company, Saudi Orix Leasing Corporation (SOLC).
The project supports the government of Saudi Arabia's program to diversify
its economy and to meet the financing needs of domestic private sector
SMEs, which make up about 87 percent of all enterprises in the country.
The project will help build up Saudi Arabia's financial sector by enhancing
access of SMEs to financing and developing nonbank financial institutions.
SOLC will offer asset-backed financing to SMEs. Leases worth over US$100
million are expected to help finance the expansion and modernization of
SMEs in the first five years of operation.
In conjunction with the
project, IFC advised the Saudi Arabian Monetary Agency on leasing regulations,
which is helping to develop a regulatory framework for the industry.
Mohsen Khalil, IFC director for Central Asia, the Middle East, and North
Africa, noted that the expansion and modernization of SMEs will help boost
economic growth and create jobs. He added that the project will stimulate
competition in the financial sector by bringing in new players, skills,
IFC's equity investment of $1.6 million (SAR 6 million equivalent), represents
10 percent of the share capital in SOLC. The project sponsors include the
Orix Group (including Orix Corporation of Japan and Orix Leasing Pakistan);
Saudi Investment Bank, a leading local financial institution; and Trade
Development and Investment Group, a local group of Saudi private investors.
The mission of IFC, part of the World Bank Group, is to promote private
sector investment in developing countries, which will reduce poverty and
improve people's lives. IFC finances private sector investments in the
developing world, mobilizes capital in the international financial markets,
and provides technical assistance and advice to governments and businesses.