Qatar steps up support for SMEs

19 February 2014
A drive aimed at encouraging Qatar's citizens to set up in business is gaining pace, as the government moves to increase the private sector's contribution to the national economy through regulatory changes and stronger support for entrepreneurs.

The economy remains dominated by oil and gas, with the private sector making a relatively modest contribution to GDP, estimated at approximately 30%.

Strengthening the private sector and building a more diverse economic base forms a key component of Qatar's National Vision 2030, the state's long-term development plan. The strategy also sits well with the government's policy of Qatarisation, which looks to boost the role of nationals in the economic development of the country.

At present, most Qatari workers hold jobs in the public sector. Figures from the Ministry of Development Planning and Statistics showed that 84% of the almost 83,000 "economically active" Qataris were employed by the government, or one of its companies, in 2012. Around 7700 nationals were based in the private sector, compared to nearly 1m foreign workers. The construction industry provided employment for the majority of the international workforce.

Support for entrepreneurs

The country's leadership has begun pushing forward several initiatives in its efforts to encourage local entrepreneurship longer term, especially among the younger generation. Business development, in particular, has been targeted for investment, with training and related forms of support given a priority.

The focus on encouraging entrepreneurial growth will reach an important milestone this year with the opening of the Qatar Business Incubation Centre, which will have the capacity to accommodate around 300 workshops once operational. The facility is a joint venture between the Qatar Development Bank (QDB), a key pillar of support for small and medium-sized enterprise (SME) initiatives, and the Social Development Centre, part of the Qatar Foundation for Education, Science and Community Development.

QDB has also strengthened the financial services being made available to smaller businesses. Under its Al Dhameen programme, the bank guarantees up to 85% of commercial loans, limited to QR15m ($4.1m), for SME projects. Other banks have followed suit, including Qatar National Bank, which launched its Business Banking platform in October 2013.

Enterprise Qatar, another major player on the SME landscape, is set to offer additional support for businesses in the often challenging early phase of operations through its Jadwa programme. The organisation will subsidise consultancy services for audits and accounts, while covering 70% of feasibility study costs.

The government is taking another tack, meanwhile, by relaxing local ownership rules for foreign investors, with an eye towards the development of more private sector activity. Since October, non-Qataris have been allowed to hold a maximum 70% equity stake in a company, up from 49%. While exceptions for certain industries were possible under the prior system, including IT and industry, the new regulations are expected to boost the creation of businesses across a number of areas of the economy.

Focus on youth

Several of the government's programmes aimed at driving SME growth have a focus on encouraging entrepreneurship among younger Qataris. The Bedaya Centre, a joint venture between QDB and Silatech, an international organisation that supports the development of SMEs, aims to help young people identify their career path or guide them towards entrepreneurship resources. INJAZ, a private NGO operating in Qatar, also targets youth work placement with an emphasis on business start-ups.

Qatar reaffirmed its commitment to increasing SME growth in November 2013 when it hosted the 2013 Global Entrepreneurship Week, an international conference attended by representatives from 115 countries.

A 2012 report by Gallup, in conjunction with Silatech, indicates that entrepreneurial motivation among Qatar's younger generation is growing. In the poll, conducted in 2011, Qataris were found to have the highest business drive in the Arab world, with one third aged between 15 and 29 saying they planned to start a business within 12 months. The number sits well above the Arab League median of 9%.

While the poll has yet to translate into results, Gallup's findings suggest entrepreneurship is now viewed as an acceptable career path for young Qataris. This shift alone marks a key step forward for a government which faces the two-pronged challenge of putting support mechanisms in place for entrepreneurs and changing attitudes towards the idea of setting up in business.

© Oxford Business Group 2014


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