Supporting Small Businesses in the GCC
The Gulf Cooperation Council (GCC) GCC is seen as a hub for business innovation and growth. Since various countries within the region are implementing plans for economic diversification, the region has become home to several small and medium enterprises (SMEs).
However, according to research, despite SMEs comprising 90 percent of all businesses in the GCC, these enterprises only contribute 20 percent to 30 percent of their countries' GDPs.
These numbers are lower compared to the SMEs in emerging markets globally, which contribute 40 percent of their countries' national income.
These statistics emphasize that the GCC needs to develop various initiatives to help boost the SME sector in the region, which will allow small businesses to contribute to the diversification and growth of the economies in the GCC.
Policies for SMEs
GCC countries need to develop and implement policies and legislation that will help with the growth of SMEs within their countries.
The UAE issued Federal Law No. 2 of 2014 on Small and Medium Enterprises to protect, promote, and regulate SMEs in the country.
The country also established the UAE SME Council, which develops strategic plans and policies for SMEs.
The regulations and council have led the SME sector in the UAE to contribute 63.5 percent to the non-oil GDP of the country recently.
In Saudi Arabia, SMEs contribute 30 percent of the GDP of the Kingdom and they have done so because of various reforms including the New Companies Law of 2015, which simplified the procedures and requirements for establishing and operating new companies.
SME Development Programmes
The UAE has developed a national SME programme to provide entrepreneurs within their countries with the skillset to establish, run, and expand SMEs.
UAE's National SME Programme provides entrepreneurs with important expertise, training, and technical and administrative support in different fields to develop and expand SMEs.
These programmes provide entrepreneurs access to the skills and knowledge required to run SMEs, which makes them crucial for the SME sector in the GCC.
Therefore, more development programmes like the National SME Programme should be launched in the GCC to help small businesses grow.
Loans and Funds for SMEs
Another important factor which will boost the SME sector in the GCC is the right amount of funding, which will support small businesses in their operations, important projects, and expansion.
The Crown Prince of Dubai Sheikh Hamdan bin Mohammed recently launched an AED 500 million initiative to help SMEs in Dubai expand in Middle Eastern and international markets.
Likewise, Saudi Arabia has launched various financial initiatives to support SMEs in the Kingdom including:
- Kafalah programme: This is a loan guarantee program that provides SMEs loans and the authorities running the programme provide the bank guarantee on behalf of the entrepreneurs.
- Tamweel platform: This online platform connects entrepreneurs with potential investors and financiers to secure financiers for their enterprises.
- Indirect Lending Initiative: This programme provides loans to SMEs through intermediaries like microfinance institutions and non-bank financial institutions.
- The Saudi Venture Capital Company: This is a state-owned company, which invests in SMEs with high growth potential.
These initiatives help recognise and prioritize high-potential SMEs, which is important for the success of these enterprises.
Focus on Technology and Social Media
Technology is an important factor for the growth of SMEs in the GCC because it provides entrepreneurs with various tools that can help with the establishment and growth of their businesses.
Also, social media provides consumers with easy access to small businesses, which might otherwise be hard to discover.
Likewise, entrepreneurs are easily able to keep up with the ever-changing consumer demand through social media, which is also vital for their growth.
These factors should help GCC countries support the advancement of small businesses within their countries, therefore advancing the diversification and flourishing of GCC economies.
This article was previously published on UAE Moments. To see the original article, click here