The Ministry of Finance signed on Monday, November 16, 2020, agreements with three local financial institutions to finance the ministry's supply chain. The signing event was under the patronage of H.E. Abdulaziz Alfuraih, Chairman of the Steering Committee at the Ministry of Finance and organized by the National Debt Management Center (NDMC) at the Ministry's headquarters in Riyadh.
The agreements were signed by Mr. Fahad Alsaif, CEO of the National Debt Management Center, Mrs. Rania Nashar, CEO of Samba Financial Group, Mr. Faisal Alsaqqaf, CEO of the National Commercial Bank, and Mr. David Dew, Managing Director of the Saudi British Bank.
Alfuraih explained that the signing of these agreements comes within the framework of enabling financial institutions to support the growth of the private sector, which is one of the pillars of the financial sector development program; to be a diversified and effective sector to support the development of the national economy.
Alfuraih added: "Given the changes in the global economy under the Covid-19 pandemic, we have reconsidered many supply chains, and during this exceptional period we have succeeded in creating our own effective and secure supply chains rather than importing them from abroad. Because many countries depend on supply chains, it is important to develop this sector and continuously work towards achieving the necessary streamlining of its role in the development of many industrial, commercial and service sectors."
With regard to the mechanism for implementing the agreements, Mr. Fahad Alsaif, CEO of NDMC, pointed out that these agreements are aimed at improving the level of cash flow and liquidity in the financial sector, indicating that it will be implemented in two phases. The first phase begins with the payment of government agencies clients' dues, after the NDMC and banks agreed on financial facilities through a quick payment system using "reverse factoring", which falls under the umbrella of the supply chain program. The second phase is more comprehensive as it includes the development of a full integrated program between the Ministry of Finance and the participating financial institutions to automate all possible mechanisms/products to finance the supply chain.
In this regard, Mr. Ahmed Alsuwayan, Deputy Minister for Technology and Development, explained that Etimad (the digital accreditation platform) will contribute to the development of the integrated program with the financial institutions in the second phase. He indicated that the development process will be done through the platform. Mr. Hamad AlKanhal, Deputy Minister for Financial Affairs and Accounts, confirmed that this product will help organize and accelerate payment processes and enhance partnership with commercial banks. Clients also will be able to submit their approved invoices to the funded bank through Etimad, at which point the amounts due will be deposited in their accounts and the Ministry of Finance will pay the value to the bank in the agreed period without any additional costs.