The GCC small business ‘boom’ will drive the post-COVID economy, as commercial registrations have increased 109% in Bahrain amid a new wave of entrepreneurs. Moreover, the SME sector contributes 52% of non-oil GDP in the UAE and is set to rise to 60%. And 99% of businesses in Saudi Arabia are SMEs generating 64% of employment.
Experts and analysts are hailing the post-COVID economy as an “era of start-up growth” as governments focus on rebuilding their economies following months of reduced activity during the pandemic.
“Across the region, governments are putting start-ups and SMEs front and centre as they seek to regrow and diversify their economies, and this new era of start-up growth is only set to increase post-COVID,” said Pakiza Abdulrahman, manager of business development – start-up at Bahrain’s Economic Development Board, commenting on how the GCC small business ‘boom’ will drive the post-COVID economy.
“Unprecedented, targeted support packages are indicative of governments prioritising small business as being the engine of the Gulf’s post-lockdown recovery, and we are already seeing the results of this SME boom,” Abdulrahman added. “In Bahrain, SMEs have proven to be a key pillar in the economic diversification strategy, and also play a major role in job creation and have emerged as an increasingly significant contributor to national GDP.”
The comments come as the Bahrain government announced plans to subsidise electricity bills for SMEs to the tune of BHD24 million ($63.7 million) to help bolster national economic growth. In August, the Bahrain Tender Board announced that in the first half of the year, it had awarded 47 public tenders worth a combined $21.8 million to SMEs in the Kingdom, following a Cabinet decision to boost public spending in the sector.
In Saudi Arabia, under Saudi Vision 2030, the Kingdom plans to raise the contribution of SMEs from the current 20% of GDP to 35% by facilitating their access to funding and encouraging financial institutions to allocate up to 20% of overall loans to them.
As of 2019, the UAE’s Ministry of Economy estimated that the SME sector represents more than 98% of the total number of companies operating in the UAE and contributes towards 52% of non-oil GDP – a figure the Ministry wants to increase to 60% by 2021.
“In light of the global pandemic, governments are doubling down on their support for what was already a priority segment for most major GCC economies – and for a good reason,” stated Areije Al Shakar, fund director at Al Waha Fund of Funds, a government fund established in Bahrain to catalyse the growth of a VC community across the region. “Despite start-up funding globally dropping to an all-time low in the first half of this year, the MENA region saw a record-breaking $659 million raised during that period – already at 95% of total venture investments in 2019, itself a record-breaking year. A renewed government focus on the sector will drive growth even further.”