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ANALYSIS

Ahmad Khamis and Iyad Abu Hweij

SMEs driving GCC economic and job growth: study

DUBAI, October 13, 2016

Ninety per cent of all companies in Kuwait, Oman and Saudi Arabia are SMEs, while the Qatari business ecosystem is 75 per cent composed of SMEs, a report said, adding that these companies are crucial to economic growth in GCC countries.

They employ 60 per cent of Saudi Arabia’s workforce, 43 per cent of Oman’s, 57 per cent of Bahrain’s, 23 per cent of Kuwait’s, and 20 per cent of Qatar’s, according to research by Bloovo.com, a leading recruitment website in the region.

Ninety-four per cent of all companies in the UAE are SMEs. Together, they contribute 30 per cent of the country’s GDP, and employ 72 per cent of the country’s working population, the study said.

SME activity accounts for 30 per cent of the UAE’s GDP, 28 per cent of Bahrain’s and 22 per cent of Saudi Arabia’s. Kuwait’s GDP is 20 per cent composed of SME activity, with Oman’s GDP relying on SMEs for 17 per cent of its total.

“We’ve always known SMEs to be powerful drivers of economy but our new research shows just how crucial they are to economic and prospects throughout the GCC,” said Bloovo.com CEO and co-founder Ahmad Khamis.

“Not only do they contribute very significantly to GDP but also generate high job numbers. Yet they still don’t have the same significance, or play the same role, as their counterparts in the EU, for instance. So there’s certainly room to evolve and grow, and this should be a region-wide priority.”

All told, these SMEs currently employ around 17 million people in the GCC. Bloovo.com research predicts this number rising to 22 million by 2020 in a positive scenario. Even a more neutral scenario shows that 20 million people across the region will be employed by SMEs by 2020 – still a job growth rate of 2.5 per cent.

SMEs’ capability to generate jobs is crucial not just for economic progress but also social stability. With GCC population growth rates ranging between 0.5 per cent (UAE) and 8.1 per cent (Oman), and around 40 per cent of the population being under the age of 25, thousands of young GCC nationals are expected to be looking for gainful employment every year. With government sector employment reaching saturation, SMEs will play a crucial role in generating job opportunities for this new generation.

“Historically, we’ve seen governments absorb young nationals into rewarding jobs. But the public sector is reaching saturation,” said Iyad Abu Hweij, Bloovo.com’s other co-founder.

“And in this new era of cost-cutting and streamlining, SMEs are going to have to take centre-stage in generating viable employment opportunities that attract young national talent throughout the GCC. And to do so, they’re going to have to overcome key challenges, where they’ll need the support of governments, regulators and the financial sector to reach an adequate stage of maturity,” he added.

GCC countries are aware of creating effective support systems for SMEs to thrive. For instance, the UAE established Federal Law No 2 of 2014 to categorise SMEs, establish a dedicated council and determine incentives to be offered to small business owners.

Bahrain set up its Tamkeen body to support SMEs in 2006. In 2013, Kuwait established a USD 7 billion National Fund for Small and Medium Enterprise Development from government coffers. More recently, Saudi Arabia has formed its Public Authority for Small and Medium Enterprises (PASME) in 2015. – TradeArabia News Service




Tags: GCC | SME | Tamkeen | Bloovo.com |

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