The percentage of loans provided by banks to the Small and Medium Enterprises (SMEs) does not exceed 8 per cent of total lending operations in Mena region, said a financial expert citing a recent study.

The study entitled "SMEs Bank Loans in the Mena," was conducted by Union of Arab Banks in association with the World Bank.

It covered 139 banks in 16 countries including six from the GCC, and 76 national banks and 34 foreign banks, as well as 29 banks belonging to the state and 110 private banks.

"The SMEs are not provided funds for many reasons, and therefore they lose great opportunities to boost their market share," said Zed Ayesh, the general manager of Flagship Consultancy, commenting on the study.

"These companies have enough management and marketing capabilities to enter foreign markets if only they were supported through appropriate loans from the government and private banks," Ayesh added.

The study, he said, clearly showed that the share of loans for this type of companies in the GCC does not exceed 2 per cent, at a time when other companies in the region have a share of 14 per cent.

Ayesh urged Arab banks to raise the ratio of lending to SMEs in order to revitalize the economic movement in Arab countries which are largely driven by this sector.

"The Arab economies should unify their administrative and economic criteria when dealing with SMEs but the truth is that Arab countries lack the kind of unity seen in Europe or North America," he added.

"Strengthening the relationship which governs between SMEs and the banks is part of the solution to increase the quantum of loans granted to these companies," said Ayesh. "This will promote their integration with the international financial organizations and create a sense of trust between the two parties."

Ayesh warned that the growth of SMEs in the Gulf region was dependent on the willingness of banks to financially support these companies.

"Our SMEs are among companies that are playing a pivotal role in accelerating the pace of recovery from the recession. The US, which is the world largest economy, built its economic system through 75 per cent contribution of SME companies," he added.

According to Ayesh, the best way to promote the Arab economy was to open new financing plans and make the credit mechanism easier in addition to strengthening relations between banks and SMEs and enhancing transparency of these companies.

"The recession has seriously hit large companies, while SMEs have shown stronger immunity, an indication of the critical role these companies can play in strengthening Arab economies," he added.-TradeArabia News Service