SMEs , IN GCC PROSPECTIVE

To some they are the catalysts of economic growth, the backbone of the private sector; to others they empower people, drive creativity and encourage specialization.The are the small and medium enterprises (SMSs).SMEs small and medium size enterprises are very heterogeneous group of business usually operating in the service,trade,agribusiness and manufacturing sectors.

They include a wide variety of firms such as handicrafts makers, small machine shops and computer software firms that posses a wide range of sophistication and skills. SMEs usually work in the formal sector of the economy and employ mainly daily wages workers. SMEs often categorized by its number of employee and the value of its assets.As, the globalization proceeds, transition and developing countries and their enterprises face major challenges for the strengthening their human and institutional capacities to take advantage of trade and investment opportunities.While Government make policies in trade and investment area, it is enterprises that trade and invest.SMEs play a key role in transition and developing countries.These small firms actually account for more than 90% of all firms outside the agriculture sector constitute a major source of employment and generate appreciable amount of earnings through local exports.As such SMEs development emerges as a key instrument in poverty reduction efforts.

SIGNIFICEINCE OF SME TO ECONOMY-GCC SPECIFIC

SMEs are a dynamic and vibrant sector of the economy.They contribute prominently to GDP and provide jobs for the majority of private sectors employee, an important asset in the the GCC where most countries have employee nationalization programs like "EMIRATIZATION" in UAE. GCC Governments seeking ways to diversify their economy from oil and gas have opted to boost their important sector. In Bahrain it is estimated that SMEs contribute 25 percent of total nominal GDP and employs around 75 percent of private sector employee.In United Arab Emirates, it is estimated that SMEs contributed 60 percent of GDP in 2011.

Banks in GCC now awake through the mist of financial crisis and increasingly focusing on lending to SMEs opposed to personal or large corporate lending because of SMEs form a booming market and provide an opportunity to diversify from concentrated lending.

CHALLENGES TO SMEs

SMEs has challenges that are general with other entities within the company and outside too. Due to their nature of work and size. Especially in the time of global financial crisis whose effects still present.SMEs mostly involved in trading , service, manufacturing and construction operate in highly competitive market with tight rules and regulation  with thin profit margins. Financial and technical restrictions are notable issues faced by SMEs along with technology and human resource limitations.

GOVERNMENT STANDING

Governments of GCC countries recognized timely the importance of SME sector and its diversity within economy they make bodies and developed regulations and programs to support and nourish them.This support comes from initial creation of SME and expand to providing technical assistance, financial lines, development of human capital and access to local and global market.As, an example Bahraini Government established "Tamkeen" in 2006 to support the private sector and position it as the key driver of economic growth. In 2002 the Mohammad Bin Rashid establishment for SME development (Dubai SME) incorporated into the Department of Economic Development (DED)as an agency with a vision to nurture business leadership through entrepreneurial spirit. Dubai SMEs also launched Dubai SME 100, a premier ranking of Dubai's 100 top performing SMEs. In Qatar, the Qatar Authourity for the development of SMEs was established by an EMIRI decision in 2011.

Thanks,



Muhammad Anas
Business Consultant
muhammad.anas@adamadvisors.com
+971 50 70 45 733

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