LNDDO Digital Lending Ltd is the region’s first ADGM-licensed Fintech digital lender for SMEs, offering quick and easy financial support for SMEs across the UAE

SMEs are the backbone of the Middle East – they represent about 96% of all registered companies in the region and employ half the total labor force. However, they are grossly underrepresented when it comes to access to finance. The average share of SMEs in total bank lending in the MENA and CCA regions (Middle East and Central Asia) is about 7% and is as low as 2% in certain GCC countries. In contrast, the SME loan share is around the 20% mark in countries like Canada, France, United States and over 70% in Korea, Portugal, Switzerland.

Closing this SME Financial Inclusion Gap will have a significant socio-economic impact as per the International Monetary Fund:   

  • It can help increase annual economic growth in some MENAP and CCA countries by up to 1%. Productivity and employment gains are much higher for SMEs versus larger firms with increased access to financing. Getting access to capital will help SMEs unleash their untapped potential and help grow the entrepreneurial spirit in the region.  
  •  It could help raise the employment rate in the region, potentially creating about 16 million jobs by 2025. SMEs with less than 100 employees are a key provider of employment in the region, employing about 50% of the workforce in the region, however smaller and younger firms, with fewer than 20 employees are the biggest contributor to employment growth. Since smaller firms are typically the most credit constrained, they see the largest employment gains once they get access to capital. They can eventually turn into larger employers with access to sustained growth capital.  
  •  Greater financial inclusion also has significant benefits for implementing a more effective fiscal policy through better tax collection.  SMEs that can generate better cash flows through increased access to finance are able to then contribute positively towards tax payments in geographic regions that have an income tax regime.
  •  Monetary policy transmission and price stability also get enhanced in countries with higher SME financial inclusion. As a greater number of SMEs have access to formal lending, the role of interest rates in the economy has greater efficacy, improving monetary transmission and price stability. Inflation in such economies is also more stable leading to increased investment in the region. 
  • Increased financial stability provided strong risk management and financial supervision are in place. Providing SMEs with credit can help contributto financial stability because lenders can then diversify their credit portfolios and risk exposures. Growing an SME credit portfolio rapidly could potentially be a problem without proper risk management strategies since they are inherently a riskier asset class. Strong supervisory frameworks, credit discipline on exposures, and risk management are required to make sure that default rates remain reasonable.

Increased financial inclusion and reduced information asymmetry in the SME credit market is a huge opportunity for both banks and alternate lenders in the region with significant socio-economic benefitsHowever, a measured approach with proper risk management and credit discipline is required to avoid asset bubbles and make sure that default rates remain in check.   


Financial Inclusion of Small and Medium-Sized Enterprises in the Middle East and Central Asia – International Monetary Fund 

Financing SMEs and Entrepreneurs 2019: An OCED Scoreboard