Arab area’s function quickly growing in a altering world: IMF chief 

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SAO PAULO: Saudi Arabia is in overdrive to diversify its financial system away from oil by exploring all obtainable alternatives obtainable domestically and overseas.

This very quest took Saudi Funding Minister Khalid Al-Falih to a number of nations in Latin America between July and August 2023. The goal of the tour was to discover avenues for financial cooperation.

The Kingdom doesn’t appear to be centered solely on forging nearer ties with massive companies, as is obvious from the institution of a $5 million fund to help small and medium enterprises in Paraguay.

In response to the Paraguayan authorities, the assets might be used to type a assure fund with as much as 10 instances the preliminary funding. The cash could also be vital to spice up many companies within the nation, affirmed Guillermina Imlach, who heads an affiliation of commercial SMEs in Paraguay.

“Within the nation, about 98 % of all firms are small or medium-sized. Most of them don’t have entry to credit score, to allow them to’t make the mandatory investments,” she instructed Arab Information.

So as to have the ability to attain the Center Jap markets, Paraguayan SMEs want to enhance their productiveness first, Imlach mentioned.

“That may very well be potential with the affiliation of quite a lot of firms that function in the identical phase,” she mentioned. The Saudi fund might assist them in that route.

Colombia, a South American nation the place Saudi Arabia doesn’t have an embassy, exported items value about $80 million to the Kingdom between October 2022 and October 2023. The vast majority of the objects have been produced by SMEs, akin to imitation jewellery and jewellery, millinery, and perfumes.

“There’s a lot room for smaller firms to develop and enter the Saudi market,” Cecilia Porras Eraso, president of the Arab Colombian Chamber of Commerce, instructed Arab Information. 

These firms are very diversified by way of their fields of exercise and positively investments akin to these sponsored by the Saudi funds might have a particular impression on the business relationship between Brazil and Saudi Arabia.

Osmar Chohfi, president of Arab Brazilian Chamber of Commerce

The chamber just lately grew to become related to an organization that assists companies from the Arab world that need to set up a department in Colombia.

“That may be made by means of partnerships with Colombian firms, together with SMEs,” Porras Eraso mentioned.

In Argentina and Brazil — two main animal protein exporters to the Center East — many of the commerce with Saudi Arabia is carried out by massive firms, however SMEs are progressively growing their participation in that trade.

In 2021, the variety of Argentinian SMEs exporting to the Center East grew 5 % and reached a complete quantity of $247 million, with some 30 % of it going to Saudi Arabia. Most of these exports concerned agribusiness merchandise, however industrial objects have been additionally a part of that checklist.

Throughout an occasion for SMEs in Brazil in August of 2023, Tamer Mansour, CEO of the Arab Brazilian Chamber of Commerce, affirmed {that a} new cycle is starting within the relationship between the 2 nations by way of funding and partnerships. 

“I see (Al-Falih’s) go to as an ideal signal that Saudi public funds need to come and make investments right here. Because of this medium and small firms, cooperatives, and industries exterior of hubs akin to Rio Grande do Sul, Santa Catarina, and Sao Paulo have to be on the radar,” he mentioned.

In response to Osmar Chohfi, president of the chamber, the nice potential of Saudi investments in Brazilian SMEs is “evident.” 

“These firms are very diversified by way of their fields of exercise and positively investments akin to these sponsored by the Saudi funds might have a particular impression on the business relationship between Brazil and Saudi Arabia,” he instructed Arab Information.

In Chohfi’s opinion, Brazilian SMEs working in segments like clothes, footwear, building supplies, and meals and drinks are among the many most promising ones to obtain Saudi funding.

In Argentina, a number of small firms have been collaborating in worldwide occasions and gaining access to the Arab market, particularly these within the subject of meals and beverage, Walid Al-Kaddour, secretary-general of the Argentine-Arab Chamber of Commerce, instructed Arab Information.

“There’s an ideal potential not solely from SMBs within the agribusiness, but additionally for firms within the pharmaceutical and medical merchandise phase, within the logging business, metallic tubing, and supplies for the oil business,” he mentioned.

Al-Kaddour argues that Saudi buyers ought to privilege non-public companions and look to determine joint ventures with native companions.

“That ought to not contain solely massive firms, but additionally smaller companies,” he mentioned. 

HIGHLIGHT

Colombia, a South American nation the place Saudi Arabia doesn’t have an embassy, exported items value about $80 million to the Kingdom between October 2022 and October 2023. The vast majority of the objects have been produced by SMEs, akin to imitation jewellery and jewellery, millinery, and perfumes.

Alfredo Abboud, secretary-general of the Argentinian Chamber of Commerce and Companies for the UAE, argues that SMEs ought to collect so as to have the ability to acquire scale and affiliate with Saudi buyers or get into the Kingdom’s market.

That’s one thing that he himself completed. Abboud, who owns the alfalfa firm Cadaf, and his affiliate Gabriel Osatinsky, proprietor of one other enterprise, Calif, which additionally produces the crop, gathered in a mission to advertise a long-term partnership between a bunch of Argentine alfalfa companies and Saudi irrigation firms.

“Our concept is to deliver irrigation gear to Argentina from Saudi Arabia and trade it for merchandise of human or animal diet,” he instructed Arab Information.

Over the previous three years, Argentina confronted lengthy intervals of drought, which affected its rural manufacturing, together with alfalfa. 

“We couldn’t meet your complete demand of exports and wanted irrigation gear. That’s when Osatinsky got here up with the thought of engaged on that partnership,” he mentioned.

The duo has been gathering different alfalfa producers with the aim of accomplishing 100,000 hectares of irrigated fields. A Saudi irrigation firm will set up a department in Argentina to produce the gear and accompany the manufacturing.

“Paying the Saudi funding with a commodity they want generates a virtuous cycle. It’s extra than simply promoting and shopping for,” Abboud added.

He mentioned that it might be tough for a small alfalfa producer to cater to the Saudi market alone. However, by associating with different producers, it’s potential. 

“SMEs from different areas of exercise can actually do the identical,” he concluded.