SMEs & The Future of Financing: What Has 2024 Taught Us?

From Challenges to Change – SME Financing in 2024

As 2024 comes to a close, I can’t help but reflect on the monumental strides we’ve made in SME financing this year. Small and medium enterprises (SMEs) are the backbone of our global economy, they drive growth, create jobs, and spark innovation. Yet, securing funding has always been their Achilles’ heel.

This year, though, felt different. We’ve seen shifts. Big ones. Driven by technology, evolving financial landscapes, and collaborative efforts. Let’s delve into what 2024 taught us about SME financing and where we go from here!

THE PERSISTENT FUNDING GAP

Despite progress, the SME funding gap remains enormous. The OECD - OCDE's "Financing SMEs and Entrepreneurs 2024" report highlights just how hard it’s been. The cost of financing for SMEs rose sharply, and lending to them declined—equity finance took a hit too. The SME financing gap remains a substantial global issue, estimated at $5 trillion annually according to the IFC - International Finance Corporation. In Saudi Arabia, Saudi Vision 2030 has been instrumental in driving SME contributions to the non-oil economy, with SMEs now accounting for 49.9% of GDP, up from 47% in 2022. The Saudi Central Bank – SAMA’s Financial Stability Report (2024) highlights the resilience of local financial systems, noting significant credit growth to SMEs, supported by government-backed initiatives. These numbers aren’t just stats; they represent missed opportunities for businesses and economies alike.

And it’s not just a global issue; it hits home too. In Saudi Arabia, we’re working tirelessly to bridge this gap. Programs like Kafalah | كفالة and our contributions at Abwab.ai have started to move the needle, but there’s still so much to do.

TECHNOLOGY & DATA AS GAME-CHANGERS

If 2024 had a theme for SME financing, it was technology. AI, data analytics, and automation transformed how we assess and process loans. I’ve seen it firsthand. At Abwab.ai, we’ve made underwriting not just faster but smarter. By leveraging AI, we’re helping bridge the $170 billion SME funding gap, empowering lenders to make decisions that are safer and more efficient.

Globally, this trend is accelerating. Digital platforms are reshaping lending, and it’s not just about speed. It’s about accuracy, reduced costs, and financial growth; both for SMEs and the institutions that support them.

These innovations echo broader trends, as noted in Arab News, where digital platforms expanded financial access and inclusion across the MENA region.

COLLABORATION IS KEY

One of my favorite lessons from this year is the power of collaboration. Banks, governments, and fintechs came together like never before. Look at the UK’s Help to Grow scheme: over 10,000 SMEs were enrolled by September, focusing on productivity and growth.

Closer to home, initiatives tied to Saudi Vision 2030 are changing the game. Programs that bring public and private sectors together aren’t just providing funding; they’re offering mentorship and resources. This is the future: working together to create ecosystems where SMEs can thrive.

2024 emphasized that partnerships between banks, governments, and FinTechs amplify results. Saudi Arabia's Kafalah | كفالة program extended SAR 11 billion in guarantees, benefiting over 9,000 SMEs this year alone. Similarly, the The World Bank highlights global efforts where public-private collaborations have significantly narrowed the financing gap for SMEs.

FINANCIAL INCLUSION IS NON-NEGOTIABLE

In 2024, financial inclusion became more than a buzzword, it became a necessity. Regulators worldwide focused on ensuring SMEs weren’t left behind, and in Saudi Arabia, the fintech sector is booming. It’s projected to grow from $64 billion in 2024 to greater than $100 billion by 2030.

This growth is intertwined with Saudi Vision 2030’s goals, including the “Circular Carbon Economy” approach for sustainability. For me, this is more than business, it’s about ensuring every SME has a seat at the table, contributing to both economic and environmental progress.

Moreover in Saudi Arabia, non-oil revenues grew by 11.4% in 2023, supported by SMEs’ increased access to credit. Regulatory sandboxes and programs like Saudi Central Bank – SAMA's National Financial Stability Committee foster innovation while ensuring stability. This collaborative approach has positioned Saudi Arabia among G20 leaders in financial inclusivity.

HOW ABWAB.AI FITS IN?

While 2024 was a transformative year for SME financing, platforms like Abwab.ai played a pivotal role. By simplifying loan processes and enabling faster decision-making, Abwab.ai has empowered lenders to serve SMEs more effectively. As the company continues its journey, the focus remains on creating a financial ecosystem that fosters growth and resilience for SMEs across the region.

SMEs accessing the funds they need, faster and with fewer hurdles. That’s why we do what we do.

WHAT LIES AHEAD?

The lessons of 2024 set the stage for what’s next. SMEs will continue to be the heartbeat of economies, but they need us. Governments, financial institutions, and fintechs—to keep evolving.

As I look to 2025, I see a future driven by technology, shaped by collaboration, and anchored in inclusion. We don’t just need promises. We need action. SMEs deserve solutions that unlock their potential and drive innovation.

And at Abwab.ai, we’re committed to making that happen.