Value of small companies will more than double in the Gulf

01 de dezembro de 2017

A study shows that the Gulf’s small and medium enterprises should go from a value of USD 360 billion to USD 920 billion in five years. Saudi Arabia and the UAE are giving priority to these types of enterprises.

São Paulo – The value of small and medium enterprises (SMEs) in the countries of the Gulf Cooperation Council (GCC) is expected to climb 156% in five years, going from the current USD 360 billion to USD 920 billion in 2022. The forecast was based on a study by Mena Research Partners (MRP), a consulting and research firm focused on the Middle East and North Africa.

“Most of this growth is expected to come from key geographies such as the Kingdom of Saudi Arabia and the UAE, which are giving high priority to SMEs across many new regulations, policies and initiatives with the aim of boosting their share in the national economy,” said the CEO of MRP, Anthony Hobeika, in a news feature by Gulf News.

He mentioned as an example Saudi Arabia’s Vision 2030, a development plan for the country for the next 12 years, which has as a goal to expand from 20% to 35% of the Gross Domestic Product the contribution of the small and medium enterprises. The United Arab Emirates also has its expansion plan until the year 2021 and it plans to increase the contribution of the SMEs in the non-oil economy from 60% to 70% until the target year, according to Hobeika.

According to the study, the small and medium enterprises are the engine behind job creation in the GCC. Estimates show that these companies employ 17 million people, but carry the potential to reach 22 million employees in five years. “A rise of around 30%, or the equivalent of 55% of the total active population,” said Hobeika.

According to the CEO, the venture capital companies have been an important investment source for SMEs and entrepreneurs in the Gulf, with USD 1 billion allocated to them in the last five years. According to Hobeika, this funding fills the gap left by regional banks and the capital market, which are not able to meet completely the sector’s demand.

The study shows that banks direct only 2% of its loans to small and medium enterprises in the Gulf Cooperation Council (GCC), against a 13% in the region of the Middle East and North Africa. MRO’s CEO says, however, that local governments are taking action to create and promote the SME business ecosystem.

*Translated by Sérgio Kakitani