Posted on November 09, 2015

Having recognised the role SMEs play in the economic development of the region, Qatar banks are continuing to create specialised solutions, offering a wide range of banking and financial services, from bank accounts to loans, with the aim of helping SMEs grow beyond their potential. In the past, the SME sector in Qatar has been historically under-served by the banking sector and growth has subsequently been very slow. This comes as little surprise taking into consideration the multitude of large hydrocarbon projects in existence, which are seen by the banks as not only more reliable, but also the most direct route to profit.

However, momentum in the drive to boost the private sector and, more specifically, SME’s in Qatar is gathering pace. The Government is determined to create a more balanced economy, something which became more apparent following the appointment in January this year of the minister of economy and commerce, Sheikh Ahmed bin Jassim bin Mohamed Al Thani, as the new chairman of the Qatar Stock Exchange, integrating the stock market more closely with the ministry. Along with this came the launch of a new $27.4m Qatar Business Incubation Centre; which is the largest mixed-business incubator in the MENA region to date.

In addition to this, there is push for more funding of SMEs coming from Qatar Development Bank (QDB), which guarantees up to 85 per cent of commercial loans, limited to QR15m ($4.1m), for SME projects, under its Al Dhameen programme, Qatar Foundation and Qatar National Bank, which launched its Business Banking platform in late 2013. Jon Richards is CEO of compareit4me group, who operate finance comparison websites across the Middle East enabling users to compare all the banks in one place and offering guides and advice for managing money. He will be in Qatar on November 10th 2015 to speak at a gathering hosted by ICT Qatar around the subject of raising money and the challenges involved with being a young start-up.

Speaking ahead of the event, he said: “Cash flow is the life blood for any business and this is particularly true for a small start-up, where revenues are in their infancy and the business requires a lot of investment to grow.” He added: “Given the importance of SMEs in any market, it’s essential the local banks and government support their development and create banking products designed around the needs of start-ups. It’s these businesses that are creating jobs and opportunities, which in turn helps the economy as a whole. So it’s a win-win situation for the banks.”

In economies across the globe, SMEs make significant contributions in areas such as innovation, efficiency, job creation and international competitiveness. Even in mature economies like the US, the impact of SMEs is huge. It was reported that 98 per cent of the 302,000 companies which exported goods in 2011 were SMEs with fewer than 500 employees, while small firms accounted for 63 per cent of the net new jobs created between 1993 and mid-2013.

Currently in the UAE, SMEs contribute an estimated 40-46 per cent of nominal gross domestic product (GDP) in Dubai, and host the majority of employment opportunities in the country, providing an impressive 86 per cent of all private sector employment. Dubai based SMEs represent 95 per cent of all firms, accounting for 42 per cent of the workforce and contributing around 40 per cent to the GDP generated. This is in the most part, down to the support of the UAE banks, with many offering a wide range of products and services, including loans and overdrafts, trade finance products and foreign exchange solutions. 

With the SME sector in Qatar presently only contributing 10 per cent to GDP, it’s clear there is a long way to go to match the figures of firstly the UAE, and secondly the more established economies. But with continued support from the banks, the same impact on the economy is in the foreseeable.