In a vigorous effort to reduce its oil dependency, Saudi Arabia is actively seeking diversification by tapping into potential opportunities both within its borders and overseas.
The endeavor led Saudi Investment Minister Khalid Al-Falih on a journey across various Latin American countries between July and August 2023, to discuss potential economic collaboration.
Highlighting its commitment to all business sectors, Saudi Arabia established a $5 million fund to aid small and medium-sized enterprises (SMEs) in Paraguay.
Paraguayan officials announced that the fund would be leveraged to create a guarantee fund capable of expanding up to tenfold the original investment, a move that Guillermina Imlach, head of an industrial SMEs association in Paraguay, believes is crucial for numerous local businesses.
Imlach explained that the vast majority of Paraguayan companies are SMEs with limited access to credit, which restricts their ability to invest and grow. For Paraguayan SMEs to tap into the Middle Eastern marketplace, enhancing productivity is a prerequisite, she added.
With the Saudi fund’s support, Imlach sees an opportunity for improvement by fostering collaborations among companies in similar sectors.
Despite the absence of a Saudi embassy in Colombia, the country managed to export goods worth approximately $80 million to the Kingdom from October 2022 to October 2023, with SMEs contributing significantly through products such as imitation jewelry and perfumes.
Cecilia Porras Eraso, president of the Arab Colombian Chamber of Commerce, stated that there is substantial scope for SMEs to expand into the Saudi market.
These companies are very diversified in terms of their fields of activity and certainly investments such as those sponsored by the Saudi funds could have a special impact on the commercial relationship between Brazil and Saudi Arabia.
Osmar Chohfi, president of Arab Brazilian Chamber of Commerce
The Arab Colombian Chamber of Commerce recently partnered with a firm that facilitates Arab businesses in setting up Colombian branches, which could include SME partnerships.
In countries like Argentina and Brazil, which are significant animal protein exporters to the Middle East, large firms dominate trade with Saudi Arabia. However, SMEs are beginning to play a larger role in this exchange.
In 2021, Argentine SME exports to the Middle East increased by 5 percent, totaling $247 million, with around 30 percent destined for Saudi Arabia. These exports spanned across agribusiness and industrial goods.
At a Brazilian SME event in August 2023, Tamer Mansour, CEO of the Arab Brazilian Chamber of Commerce, indicated the dawn of a new investment and partnership era between Brazil and Saudi Arabia.
Mansour emphasized the importance of medium and small businesses, including cooperatives and industries from diverse regions, to be considered for potential Saudi investments.
Osmar Chohfi, president of the Arab Brazilian Chamber of Commerce, conveyed the clear potential for Saudi investments in Brazilian SMEs, particularly those in apparel, footwear, construction materials, and food and beverages.
Walid Al-Kaddour, secretary-general of the Argentine-Arab Chamber of Commerce, observed that Argentine SMEs, especially in the food and beverage sector, are increasingly participating in international events and accessing the Arab market. He also mentioned potential in other sectors like pharmaceuticals, logging, and oil industry materials.
Al-Kaddour recommends that Saudi investors prioritize partnerships with private enterprises, aiming to establish joint ventures that include not just large firms but also smaller entities.
Alfredo Abboud, secretary-general of the Argentinian Chamber of Commerce and Services for the UAE, suggests that SMEs collaborate to scale up and attract Saudi investment or entry into the Saudi market. Through his own effort, Abboud, who spearheads an alfalfa company, joined forces with another business to foster a long-term partnership between Argentine alfalfa producers and Saudi irrigation companies.
Abboud’s strategy involves trading irrigation equipment from Saudi Arabia for nutritionally valuable products, thereby creating a mutually beneficial cycle. He believes that small producers can successfully cater to the Saudi market by working collectively and that SMEs from other sectors can replicate this model.