Kuwait set for major overhaul of small projects fund to boost SME growth
The overhaul will move the fund from a traditional model of direct lending to a more flexible, indirect financing approach in partnership with banks and financial institutions, while also amending the governing law to enhance its role in fostering sustainable business growth and long-term economic development.
Thirteen years after its launch, Kuwait’s National Fund for the Care and Development of Small and Medium Enterprises is preparing for a major restructuring of its operations.
Officials say the plan goes beyond administrative streamlining to include amendments to the fund’s law and a new lending strategy aimed at boosting sustainable growth for entrepreneurs.
The fund, established with an authorized capital of two billion dinars, has historically focused on providing direct loans to small and medium enterprise (SME) owners, reports Al-Rai daily.
Loans were capped at 500,000 dinars per project, offered at a reduced interest rate of 2%, and over 1,040 loans were granted since inception. However, practical experience has shown that this model has not always translated into strong, productive entrepreneurship or sustainable business growth.
Under the proposed changes, the fund would shift toward indirect financing. Rather than directly lending to entrepreneurs, it would work in partnership with banks and other financial institutions to create specialized financing portfolios. These would provide loans while also managing risk, monitoring repayments, and safeguarding public funds.
Officials emphasize that indirect financing does not mean the fund will stop supporting SMEs. On the contrary, it aims to broaden the fund’s impact, enabling entrepreneurs to access innovative financial mechanisms that encourage long-term growth and job creation.
The revamp also involves amending the Small Projects law, which currently limits the fund’s ability to achieve strategic objectives. The new approach seeks to position the fund as a development enabler, supporting entrepreneurial activity while contributing to broader economic growth in Kuwait.
Experts involved in the discussions note that the strategy will address weaknesses revealed over the fund’s 13-year history. By leveraging indirect financing, the fund hopes to enhance financial discipline, improve the quality of funded projects, and maximize returns for both entrepreneurs and the state.
The plan includes creating strategic partnerships between the fund, banks, and entrepreneurs. These partnerships aim to help SMEs scale their businesses, access new opportunities, and participate in emerging sectors that offer sustainable growth potential.
Sources say the new financing model will be flexible, allowing the fund to test different mechanisms and gradually expand its support across various sectors. The goal is to move beyond a purely credit-based approach to one that strengthens the ecosystem for SMEs and fosters innovation.
Officials highlight that the reform aligns with Kuwait’s broader economic vision of promoting entrepreneurship and diversifying growth sectors. By supporting long-term projects and enhancing the role of small enterprises, the fund could become a central pillar in the national strategy for economic development.
The restructuring process is ongoing, with details of the indirect financing programs, their structure, and sponsorship still under discussion. Once approved, the changes are expected to mark a significant shift in how Kuwait nurtures its small and medium-sized enterprises.
