QDB has signed agreements with local banks making them partners in the Al Dhameen programme
By Pratap John/Chief Business Reporter
Local banks have scaled up their assistance to small and medium enterprises in a big way as the country looks to engage SMEs actively in nation-building and enhance private sector involvement in the economy.
The state-owned Qatar Development Bank (QDB) is the catalyst to SME development by designing a programme - Al Dhameen, which encourages banks to extend financial assistance to promising SMEs, which otherwise would have gone largely non-funded due to limited credit history, or insufficient collateral.
QDB has signed agreements with local banks making them partners in the Al Dhameen programme, an industry source said yesterday.
“Al Dhameen came a long way since it was established three years ago, when it had only one partner,” said Abdulaziz bin Nasser al-Khalifa, QDB chief executive officer at a recent dialogue session with partner banks in Doha.
“The programme managed to achieve huge success in a relatively short period of time, with the support of its 14 partners,” he said.
Local banks have equipped their SME units with trained personnel so that the small and medium enterprises development programme achieves the desired national objectives.
Bankers said SME development would be top on their priority along with infrastructure financing in the years ahead.
Al Dhameen guarantees banks’ risk-sharing in case the financed project fails partially or fully. It also encourages banks to finance small and medium enterprises that are promising but cannot provide the required collaterals or accounting documents that prove their eligibility to receive finance.
QDB said Al Dhameen reflects its commitment to assist start-ups and existing companies with a lack of collateral to obtain access to funds for growth in their businesses.
Qatar-based private sector companies are eligible for guarantees of up to 85% of the loan amount, but not exceeding QR15mn.
Through Al Dhameen, QDB aims to support private and SME sectors in line with its efforts to achieve economic diversification in Qatar and lower dependency on hydrocarbons sector as a major source of income.
All main sector business activities are eligible for support under Al-Dhameen with the exception of the following sectors: agriculture, fishing and livestock, non-oil mining and quarrying, wholesale and retail trade, financial and insurance activities and real estate activities.
Al Dhameen is not intended to provide direct finance to SMEs, but rather offers the business owner facilities to receive the required finance for their project from a partner bank, through issuance of guarantees in favour of the bank, under which the programme guarantees a portion of the finance.
Any Qatari project - SMEs or joint ventures (including foreign investors) whose annual turnover does not exceed QR30mn can apply for finance from banks under the Al Dhameen programme.
Existing companies are eligible for guarantees of up to 75% of the unsecured outstanding principal and financing limits of up to QR15mn under Al Dhameen. Although QDB guarantees the loan to the partner bank, the sponsors are liable for the full loan amount.
Al Dhameen can be either in the form of project financing loans for manufacturing, where the maximum tenor is eight years including a two-year grace period. Financing for services will have a maximum tenor of five years, including a one year grace period.
