Iran Allocates $2.4bln to Funding Small Enterprises

Governor of the Central Bank of Iran Abdolnasser Hemmati said that Tehran is serious to support small and medium-sized enterprises (SMEs), adding that the government will fund SMEs with more than $2.4 billion by March 2020.

“The amount of credit paid to the manufacturing sector would increase this year while up to 300 trillion rials worth of credit would be earmarked to the SMEs,” Hemmati said on Sunday.

Another Iranian official said earlier in the day that the government would use resources from the country’s sovereign wealth fund to finance the SMEs.

Deputy Minister of Industry and Chief Executive of Iran Small Industries and Industrial Parks Organization (ISIPO) Mohsen Salehinia said that SMEs active in the manufacturing sector would receive up to $1.6 billion from the government in the form of loans.

The official said half of the budget would be financed through the Iranian banking system and the rest would come from the National Development Fund of Iran, a mechanism which is independent of the government budget and seeks to channel oil and gas revenues to the productive industries.

Reports have shown that SMEs accounted for around 10 percent of Iran’s non-oil exports last year as they managed to export $400 million worth of goods and services in the 12-month period ending on March 20.

Unverified estimates also suggest the SMEs, which have a limited number of personnel compared to large companies, make up more than 90 percent of businesses and enterprises across Iran.

Feeling the impacts of US’ unilateral sanctions since last year, the Iranian government has sought to diversify the economy and empower businesses that can boost export and reduce the country’s reliance on oil revenues.

Back in early March, Salehinia announced that Iranian SMEs, with majority of them active in the field of food, dried nuts, stone and garment industries, had exported $3 billion worth of products in an 11-month span between March 21,2018 - February 21, 2019.

He put the current number of industrial areas in the country at 983, of which 561 and 412 are related to the industrial towns and industrial parks respectively.

Salehinia further said that some 147,000 hectares of land have been provided for the SMEs, adding, "59,000 hectares has so far been registered and granted to the enterprises.”

This comes, while about 22 percent of industrial and production units in the country have faced recession during this year, he noted.

Creating necessary conditions for SMEs to develop and promote their products has been cited as one of the main aims of ISIPO, he reiterated.

Attracting financial resources and liquidity is one of the major requirements of these economic enterprises, he said, adding that “in this way, internal resources of banks and the National Development Fund of Iran (NDFI) will be used optimally.”