Small and medium enterprises (SMEs) play a pivotal role in any economy, generating jobs and contributing to growth. Saudi Arabia has long realized the importance of providing a nurturing environment to these entities. A key objective of the Vision 2030 reform plan is to make SMEs an economic driver. The government plans to raise the contribution of SMEs from the current 20 percent of the gross domestic product (GDP) to 35 percent, mainly by facilitating their access via different initiatives and encouraging financial institutions to allocate up to 20 percent of overall loans to SMEs. The first initiative is the Small and Medium Enterprises General Authority (Monshaat), which has been supporting SME financing via its indirect lending initiative. With Saudi Arabian Monetary Authority (SAMA) approval, at least 17 financial organizations have become partners in this initiative, helping to raise funds for SMEs. The indirect lending initiative, launched by Monshaat in cooperation with the Social Development Bank, aims to provide low-cost loans for SMEs and entrepreneurs in the Kingdom. The Public Investment Fund, the Kingdom’s sovereign wealth fund, is also supporting SMEs via a SR4 billion ($1 billion) fund that will give them access to capital. The Fund of Funds, as it is known, will invest mainly in venture capital and private equity funds for SMEs. Another key initiative is the Kafalah program, which enables SMEs to get funding from banks, and encourages local banks to fund SMEs that have viable business plans and feasibility studies. Wearing my investment banking hat, with a special focus on medium-size family businesses, Kafalah is a very useful element in the financial structure of medium-size businesses. It should be considered by families who are planning to list on the Nomu market. Not only will Kafalah support their expansions, but it will also improve their cost structure, which will make their financials fitter. SMEs are considered incubators for larger firms of the future. They are the next important step up for expanding microenterprises, and contribute directly and indirectly to the GDP of any nation. Basil M.K. Al-Ghalayini is the Chairman and CEO of BMG Financial Group. Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News" point-of-view