Banking & Finance Saudi crowdfunding takes off as loans double in 2022 By Andrew Hammond September 19, 2023 Shutterstock/diplomedia Nearly 75% and 90% of unemployed Saudi females and males were ready to accept work for eight hours or more per day $206m of loans in 2022 729 borrowers, up from 279 Active investors up to 27,000 from 47 in 2019 The number of new businesses taking on debt through crowdfunding platforms has soared in Saudi Arabia. The value of loans raised has more than doubled to SAR771 million Saudi riyals ($206 million) in 2022, the Saudi central bank (Sama) said in a new report. Crowdfunding is a process in which multiple investors lend money to startups through a regulated platform, offering businesses easier loans at better terms than traditional banks. The phenomenon took off in Saudi Arabia in 2019, prompting Sama to issue regulations in 2021. Dubai SMEs turn to banks as VC funding declines Could crowdfunding seed the Gulf’s next Unicorn? Saudi SMEs look to sharia funding to balance cash flow Total loans through crowdfunding have risen from SAR1.4 million in 2019 to SAR296.5 million in 2021 and SAR771 million in 2022, Sama said in its annual FinTech report. The number of transactions rose from 422 in 2021 to 1,260 in 2022. The number of active investors have risen sharply from 47 in 2019 to 27,000 in 2022, and their average investment has gone from 20,000 riyals to 36,000. The number of registered borrowers has risen from 297 to 729, with many of them taking up to four separate loans. Loan approval rates dipped during the Covid-19 pandemic but rose during 2022 to 66 percent, it said, and the average loan period has risen from three months in 2019 to 11 months in 2022. The report did not say how many crowdfunding platforms were operating in Saudi Arabia, but Sama said in its annual financial stability report for 2023 that it had licensed the first three dedicated debt-based crowdfunding companies in 2022. It said the total number of licensed fintech companies in 2022 – which would include debt crowdfunders – was 30. Sama says it encourages crowdfunding as a form of finance sector diversification and an innovative funding option for smal- and medium-sized enterprises. The government wants to grow fintech and SMEs as part of its strategy to diversify the economy away from oil.