Microlending is a service that provides modest loans to individuals and microenterprises that typically aren't able to get credit from traditional banks. It provides easily available credit to entrepreneurs who are launching or growing their enterprises, mostly in developing nations. Since microlending is a component of fintech platforms, its applications and dissemination have become more rapid and efficient. This will improve many people's quality of life and boost local economies by encouraging entrepreneurship and financial inclusion.
Saudi Arabia Microfinance Market Driving Factors and Challenges
Driving Factors: The main factors driving the expansion of the Saudi Arabian microfinance market are the increased use of microlending in developing countries to improve lifestyles and the lower operating and low market risk of microlending. Additionally, the expansion of the Saudi Arabian microfinance sector is positively impacted by the increased capacity of entrepreneurs to establish more enterprises and do so from the ground up with less funding. Microfinance platforms help lower operating costs by lowering the cost of physical branches, staffing, and branch maintenance, which is expected to create profitable opportunities for the Saudi Arabian microfinance sector in the years to come. This is due to the growing adoption of advanced technology in microfinance.
Challenges: The high interest rates that microlenders and microfinance institutions charge for different loan sizes are the primary barrier to market expansion. Microlenders put increasing their profits first, which leads to a short payback time and exorbitant rates. Microfinance organizations offer high interest rates and short payback periods that hinder market expansion since they borrow large amounts of money from banks and other institutions. Furthermore, many microfinance institutions raise cash through private equity because they are not allowed to gather savings like traditional banks do in order to fund loans, which negatively impacts market growth. Market expansion is further hampered by the government's tightening of rules on microfinance organizations.
Impact of COVID-19 on Saudi Arabia Microfinance Market
Microfinance market participants and microfinance institutions have faced many hurdles as a result of the COVID-19 pandemic, including issues with disbursements, reimbursement collection, in-person client meetings, and rearranging internal systems and workflow. Thus, the Saudi Arabian microfinance industry is greatly impacted by all of these issues. Furthermore, during COVID-19, microfinance providers are anticipated to have a severe liquidity shortage, as the gap between revenue and operating expenses widens while reserves are being depleted. For large MFIs or those with robust, steady backups, this declining liquidity might not be an issue, but it is enough to plague small and mid-sized MFIs.
Saudi Arabia Microfinance Market Key Players:
Alinma bank, Al Rajhi bank, ANB, Bank Albilad, Banque Saudi Fransi, Gojo & Company, Inc, Kiva, Riyad Bank, SABB, Saudi Arabia, and SNB are just a few of the major market players that are thoroughly examined in this market study along with revenue analysis, market segments, and competitive landscape data.
Saudi Arabia Microfinance Market Segmentation:
By Provider: Based on the Provider, Saudi Arabia Microfinance Market is segmented as; Banks, Micro Finance Institute, Non-Banking Financial Institutions, Others.
By End-User: Based on the End-User, Saudi Arabia Microfinance Market is segmented as; Small Enterprises, Micro Enterprises, Solo Entrepreneurs or Self-Employed.
By Region: This research also includes data for Eastern Region, Western Region, Southern Region, Northern Region.
This study also encompasses various drivers and restraining factors of this market for the forecast period. Various growth opportunities are also discussed in the report.