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Saturday , October 1 2022

75 SMEs owners fail to pay dues to national fund

This post has been read 13700 times!

KUWAIT CITY, Jan 9: According to informed sources, the National Fund for the Development of Small and Medium Enterprises recently recorded an exposure to irregular debts of 75 entrepreneurs, after they failed to pay the installments of the financing they obtained from the fund, out of a total of nearly 1,000 entrepreneurs who signed contracts with them, reports Al-Rai daily. The sources explained that the management of existing projects in the fund has finally addressed the situation of 40 entrepreneurs through a set of different solutions that include increasing the financing payments for some of them, and submitting special proposals to others that guarantee increase in their revenues and reduction in their expenses, as well as increasing the payment period for some others, taking into account their market conditions that have arisen. The final settlements with defaulters are pending approval of the board of directors. Work is currently underway to settle the situation of 34 defaulting entrepreneurs.

The officials of the fund referred an entrepreneur to the prosecution, after it was proven that he had obtained funds using forged documents, and he refused to return the sums he had unlawfully obtained. Although the number of entrepreneurs who failed to pay their installments constituted approximately 8.55 percent of the total contractors with the fund so far, this percentage does not show any real indications that the fund is exposed to a payment crisis among its entrepreneurs. The true indicator of the safety of the fund’s financing will become clear after the entrepreneurs start to pay their due installments starting from next April. It is worth noting that the Cabinet had taken a decision to postpone the installments due from the owners of projects financed by the fund for a period of one year starting from March 2020 and continuing until March 2022. The sources expected that the fund would face more exposure to defaulting entrepreneurs in the coming period, specifically with the return of installment entitlements.

They said, “According to the analytical studies prepared by the fund officials, the repercussions of the COVID-19 pandemic do not count as all of the challenges facing the entrepreneurs. There are other pressures on them and they are related to the spread of the business model, of which some began to face real competition from similar entrepreneurs and others, which reduced their returns to levels threatening their viability”.

On a related level, the sources highlighted that the Kuwait Investment Authority continues to implement the austerity policy with the fund, as the decision to stop granting new funds to new entrepreneurs is still in place for more than one reason. They said, “On one hand, the decision is consistent with the general measures taken by the government in the face of a deficit liquidity achieved in the General Reserve Fund.

On the other hand, resuming financing of new entrepreneurs and encouraging them to enter the investment market, with lines of credit that achieve new commitments before markets stabilize, poses high risks, whether on the capital of the fund or the entrepreneur himself”. The sources explained that those in charge of managing the general reserve do not see anything that has changed that calls for a return to financing new small and medium projects. They consider this move at the present time as an urgent matter, especially since the markets are still suffering from strong turmoil due to COVID-19 crisis, in addition to the economic closure, which is not consistent with the launch of any new investment ideas.

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