In Saudi Arabia, the total amount of loans secured through crowdfunding platforms hit $206 mn in 2022. According to the annual FinTech report of the Central Bank of Saudi (SAMA), this marks a nearly triple increase from 2021’s $79 mn. It also reflects an exponential growth from 2019’s approximately $373,200.
The phenomenon of crowdfunding began to flourish in Saudi Arabia in 2019. In 2021, SAMA introduced measures to regulate the activity in Saudi.
Crowdfunding is a mechanism through which several investors offer capital to borrowers via a regulated platform.
Crowdfunding figures in Saudi
In terms of the number of transactions, figures surged from 422 in 2021 to 1,260 in 2022. Meanwhile, the number of active investors also witnessed a remarkable increase, rising from 47 in 2019 to 27,000 in 2022. Additionally, their average investment has grown from $5,300 to $9,600.
On the other hand, the number of registered borrowers increased from 297 to 729. Many of which have secured multiple loans. While loan approval rates experienced a temporary decline during the COVID-19 pandemic, they rebounded in 2022. It surpassed 66 percent in the said year. Furthermore, the average loan term extended from three months in 2019 to 11 months in 2022.
SAMA’s newest report did not specify the exact number of crowdfunding platforms operating in Saudi Arabia. However, it noted that the total number of licensed fintech companies last year, including debt crowdfunders, reached 30.
Read: Saudi Central Bank licenses 3 new fintech companies
Crowdfunding in GCC
In other Gulf Cooperation Council (GCC) countries, crowdfunding has also been gaining attention as a way to get funding. For instance, in the United Arab Emirates (UAE), Statista estimates that the crowdfunding market’s transaction value will expand at a compound annual growth rate of 3.67 percent by 2027.
In May last year, Dubai’s Crown Prince Sheikh Hamdan bin Mohammed Al Maktoum introduced Dubai Next. It is a digital crowdfunding platform that aims to foster “positive competition and encourage young people to come up with innovative ideas.”
Meanwhile, Oman’s Capital Market Authority (CMA) has granted licenses to nine firms to operate crowdfunding activities as of the first quarter of 2023. According to CMA, at least 21 companies have already secured financing from these crowdfunding platforms.
By the end of last year, two major crowdfunding-facilitating entities, namely Ethis Investment Platform (based in Malaysia) and Beehive Financial Technology (UAE), had collectively extended $4.64 mn in financing.
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