Saudi Arabia Microfinance Market Expected to Reach $1.68 Billion by 2031

According to a recent report published by Allied Market Research, titled, “Saudi Arabia Microfinance Market by Provider and End User: Global Opportunity Analysis and Industry Forecast, 2022–2031,” the Saudi Arabia microfinance market size was valued at $0.68 billion 2021, and is projected to reach $1.68 billion by 2031, growing at a CAGR of 9.4% from 2022 to 2031.

Microfinance is a type of financial service provided to people looking to lend money to earn potentially high returns and borrowers who have no access to financial services such as banks or credit unions. Microfinance can be done to single microloans, and to diversify risk exposure, others invest across a portfolio of microloans. The services in the market are designed to become more affordable to poor and socially marginalized customers, households to have a wide variety of high-quality financial products and services, and to help them become self-sufficient.

Furthermore, the major Saudi Arabia microfinance market trends include rise in adoption of microfinance in developing nations for improving lifestyle and lesser operating & low Saudi Arabia microfinance market risk of micro lending significantly boost the growth of the market. In addition, rise in potential of entrepreneurs, to bring in more businesses and to start from zero level with less capital support positively impacts the Saudi Arabia microfinance market growth. However, small loan amount and shorter repayment time for paying loans are expected to hamper the market growth. On the contrary, with an increased adoption of advance technology in microfinancing, microfinance platform help reduce the operational costs by decreasing the cost of physical branches, staffing, and maintenance of branches, thus expected to provide lucrative opportunities for the market in the upcoming years.

By provider, the banks segment acquired the major Saudi Arabia microfinance market share owing to growing adoption of microfinance platforms significantly across various banks to support the rise in consumer needs. The microfinance platforms have helped in filling existing gaps in financial services and increased efficiency for better customer experience, thus driving market growth.

The report focuses on growth prospects, restraints, and analysis of the market. The study provides Porter’s five forces analysis to understand the impact of various factors, such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the Saudi Arabia microfinance market share.

Furthermore, during the COVID-19 outbreak, the microfinance market experienced a massive decline in revenue. As various microfinance institutes in Saudi Arabia were stopped by the government owing to the growing number of COVID patients. In addition, various other digital platforms were adopted by microfinance companies to sell their products and attract their customers, which negatively impacts the growth of the market. Moreover, the COVID-19 pandemic has caused numerous challenges for the microfinance market players and microfinance institutes, which include difficulties in disbursements, collection of reimbursements and meeting with clients face-to-face, and reorganizing internal systems and the flow of work.

Key Findings of the Study

• By provider, the banks segment accounted for the largest Saudi Arabia microfinance market share in 2021.
• By end user, the small enterprise segment generated the highest revenue in 2021.

The Saudi Arabia microfinance industry is dominated by key players such as Alinma bank, Al Rajhi bank, ANB, Bank Albilad, Banque Saudi Fransi, Gojo & Company, Inc., Kiva, Riyad Bank, SABB, Saudi Arabia, SNB. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.