Bahrain SMEs sector 'vital to economy'
Manama, December 11, 2013
Bahraini small and medium enterprises (SMEs) contribute nearly 30 per cent of nominal gross domestic product and also provide jobs for nearly 73 per cent of private sector employees, said a top minister.
Stimulating entrepreneurial activity to develop a dynamic SMEs sector remains a strategic imperative for Bahrain, stated Industry and Commerce Minister Dr Hassan Fakhro.
He was speaking at the fourth SMEs Day conference and exhibition being held at the Crowne Plaza Hotel's Bahrain Conference Centre.
The conference was also attended by Council of Arab Businesswomen president Shaikha Hessa bint Saad Abdullah Salem Al Sabah, Saudi Arabian Princess Ameerah Al Taweel, Professional and Businesswomen Club Bahrain Chapter president Shaikha Hind bint Salman Al Khalifa and Bahrain SMEs Society president Dr Abdul Hassan Al Dairi.
Highlighting key challenges, the minister said the majority of enterprises in the region remain very small with micro-enterprises accounting for over 90pc of all enterprises in the region, reported the Gulf Daily News, our sister publication.
"This is not a healthy picture and serious thought must be given to create a viable 'middle' segment that can contribute to growth of economy in terms of productivity, exports and employment."
Access to finance was a key determinant of entrepreneurship, Dr Fakhro said.
"Adequate and timely finance is necessary for the growth of enterprises, said the minister.
"Commercial banks in the region adopt a cautious approach toward lending to SMEs due to associated risks and most of the burden for financing falls on development banks," he noted.
"As per a January 2011 report of World Bank and Union of Arab Banks, the average share of SME lending in the GCC region is only 2 per cent of total lending as against 8 per cent for Middle East and North Africa region.
"This indicates the overcautious approach of commercial banks in lending to the sector and the scope for considerable improvement even when one takes into account the structure of oil-based economies," he added.
According to the minister, indifferent attitude and approach to financial planning and book-keeping practices by business owners also contribute to difficulty in accessing finance.
"This is something internal to the entrepreneur and there is a need to create greater awareness in this regard.
Having a large number of start-up companies, by itself was no indication of development - new enterprises need to scale up and grow in order to survive and contribute to economy, he said.
"Our entrepreneurial ecosystem should ensure a balanced attention to all stages of the life cycle of an enterprise so as to encourage growth of an innovation and knowledge-driven economy," he added.
The minister listed out the key initiatives that have spurred the growth of entrepreneurial activity in Bahrain including the simplification of procedures to set up new businesses, an effective and transparent regulatory mechanism to foster competition, world-class industrial infrastructure in industrial parks, availability of industrial land at competitive price, maximising market access through multilateral and bilateral trade agreements and optimising use of technology to deliver services.
"The proposed changes would make it considerably easier to set up businesses," Dr Fakhro said.
The highlight of today's programme is a workshop by author and management consultant Ron Kaufman. The three-day event concludes tomorrow.-TradeArabia News Service