KUWAIT CITY, Nov 13: In September 2024, local banks in Kuwait observed a notable shift in financing trends for the industrial sector, reports Al-Seyassah daily. Monthly financing dropped by 11.4 million dinars, or 9.5 percent, settling at 107.4 million dinars, down from 118.7 million dinars in August. However, on an annual scale, financing surged by 50.2 million dinars, or 87.7 percent, compared to 57.2 million dinars in September 2023. Over the first nine months of 2024, the cumulative financing for the industrial sector totaled approximately 680 million dinars. The accumulated balance of industrial financing experienced a significant monthly decline of 42 million dinars, falling from 2.629 billion dinars in August to 2.587 billion dinars in September. On an annual basis, the decline reached 5.6 percent, or 156 million dinars, compared to 2.743 billion dinars in September 2023. Notably, the financing balance peaked in August 2024, with 118.7 million dinars, while the lowest point was in April at just 25.3 million dinars.

The Central Bank of Kuwait highlighted a downward trajectory for industrial financing in 2023, with a 31 percent annual decline, equating to a 466 million dinar drop. Financing fell from 1.499 billion dinars at the end of 2022 to 1.033 billion dinars in 2023. The highest monthly financing in 2023 was recorded in December at 198.9 million dinars. Over the past three years, the industrial sector has grappled with a multitude of challenges. The COVID-19 pandemic disrupted operations, with bans and supply chain breakdowns compounding issues. Demand dropped, and new projects were scarce, leaving local industrial projects struggling.

Challenges
The key challenges include limited availability of developed industrial plots, bureaucratic hurdles in industrial transactions, low reliance on national products, inadequate export facilities for Kuwaiti goods and dependence on imports and rising factory rents. These hurdles significantly impacted the sector’s ability to secure financing, as evident in 2023’s declining figures compared to 2022. Despite challenges in the industrial sector, overall loan growth was observed in Kuwait. Between January and September 2024, local banks granted 2.27 billion dinars in new loans to residents and non-residents, raising the cumulative credit balance to 55.83 billion dinars by September, a 4.2 percent growth from December 2023’s 53.55 billion dinars. Loans to residents grew to 48.86 billion dinars, up by 1.18 billion dinars (or 2.5 percent) over nine months, while loans to nonresidents rose by 1.09 billion dinars, reaching 6.97 billion dinars (an 18.6 percent increase). Personal loans, particularly housing loans, saw growth.

By September, housing loans amounted to 16.32 billion dinars, reflecting a 1.9 percent increase from December 2023. Consumer facilities grew by 4.1 percent, totaling 2.05 billion dinars, while personal facilities overall reached 19.12 billion dinars, marking a 1.9 percent growth. Loans for purchasing securities rose by 4.8 percent in 2024, reaching 3.67 billion dinars by September. Meanwhile, financing for the oil and gas sector declined by 5.4 percent, falling to 2.37 billion dinars compared to 2.51 billion dinars in December 2023. While loan growth in some areas indicates resilience, the industrial sector’s persistent challenges underscore the need for reforms. Addressing structural inefficiencies, improving access to industrial plots, and fostering reliance on local products could help revitalize this critical sector. For now, financing figures reflect both the challenges and opportunities that define Kuwait’s broader economic landscape