Saudi Arabia's Public Investment Fund (PIF) will create an SAR4 billion ($1.07 billion) "fund of funds" to help boost SMEs' access to capital.

Ankush is a journalist hailing from India, who has edited and written for publications in his home country, the UAE, US, and UK. Previously the editor of Gulf Business in Dubai and of Entrepreneur in India, Ankush is a keen student of economics, a follower of Manchester United since 1996 and a disciple of Archer.

Saudi Arabia has announced that it will create a mega-fund that will help support the growth of the country’s small and medium-sized enterprises (SMEs).

According to a statement, Saudi Arabia’s Public Investment Fund (PIF) will create an SAR4 billion ($1.07 billion) “fund of funds” to help boost SMEs’ access to capital by further investing in venture capital and private equity funds.

The PIF said that these investments are expected to create 2,600 jobs and contribute SAR400 million to GDP by the end of 2020—numbers that are expected to rise to 58,000 jobs and SAR8.6 billion by the end of 2027.

The PIF, the country’s sovereign wealth fund, is currently estimated to have about $180 billion in assets. The fund is spearheading the country’s reforms under the ambitious Vision 2030 plan, which is aimed at diversifying the economy away from oil.

Another key move by the PIF has been its partnership with Japanese investing giant SoftBank to form a mega-fund that will primarily make tech investments.

It was announced this year that the fund will be the lead investment partner and may invest up to $45 billion over the next five years while SoftBank will invest at least $25 billion.

Saudi Arabia has embraced other measures to push growth among its SME sector as oil prices have crashed over the last few years.

The Saudi Stock Exchange, also known as Tadawul, established Nomu, an equity market targeting SMEs.

In addition, Saudi Arabia plans to enhance the capital of the Saudi Industrial Development Fund (SIDF) by SAR6 billion ($1.6 billion).

SMEs in the Kingdom are not yet major contributors to its GDP. The World Bank put SME contribution to the GDP around 20%. Under Vision 2030, that contribution is expected to reach 35%.