In view of this, National Bank of Dubai (NBD) has asked the GCC governments to frame suitable policies to make SMEs a catalyst for economic growth and development.
“Around 70% of the 10,431 firms in the (GCC) regional industrial sector are small and more than 16% of them are medium,” said a report by NBD.
A small industrial enterprise is one with less than $ 2mn investments, medium enterprises with $ 2-6mn and large enterprises with more than $ 6mn.
Small industries accounted for 3.3% of the total $ 118bn investments in the regional industrial sector and the medium industries’ share was 5.1%, it said.
In terms of employment, SMEs absorbed 52% of the 815,000 workers in the industrial sector. Small industries employed 35% and medium enterprises 17%, the report said.
NBD said the wide variations in the size and economic role of SMEs in economies across the globe pointed to an important policy path for the GCC countries, among which, the UAE had the highest proportion of operating SMEs, followed by Bahrain, Kuwait and Saudi Arabia.
“The nature of SMEs must be clearly identified through their growth patterns, employment significance, financial requirements and other facts in order to set economic policies to support them,” the bank said.
Such an exercise, according to NBD, could increase the effectiveness of SMEs as catalysts to economic growth and development.
It said the definition of SMEs seemed to vary depending on the scale of the national economy and the size of the country’s labour force.
“For the GCC countries, which are considered small economies with small labour force, a definition of SME must take into account the scale and complexity of the regional economy,” NBD said.
Fabrication metal accounted for 96% of the SMEs; textile 90%; paper 86%; chemical 81% and food 79% in the GCC region, according to NBD.
According to General Secretariat for Development Planning (GSDP), Qatar’s favourable macroeconomic climate augured well for the SMEs but the country lacked institutional structure to support the sector.
A study by the Gulf Organisation for Industrial Consulting had said the SMEs faced challenges, including financing and marketing, despite their key role in absorbing local capitals, diversifying the production and covering a large part of the industrial needs.
Qatar’s small and medium enterprises (SMEs) have failed to provide impetus to the country’s diversification and localisation, thus requiring governmental intervention to support infant SMEs, especially in oil and gas, according to the United Nations’ Development Programme.
