SMEs lead post-Covid recovery in Bahrain

The number of individual commercial registrations in Bahrain is up by a staggering 109 per cent in June, as the SME sector leads the kingdom’s post-Covid recovery.

The development comes as the Bahrain government announced plans to subsidise electricity bills for SMEs to the tune of BHD24m ($63.7m) to help bolster national economic growth.

In August, the Bahrain Tender Board also announced it had awarded 47 public tenders worth a combined USD$21.8 million to SMEs in the Kingdom in the first half of the year, following a Cabinet decision to boost public spending in the sector.

“In Bahrain, SMEs have proven to be a key pillar in the economic diversification strategy, and also play a major role in job creation and have emerged as an increasingly significant contributor to national GDP,” said Pakiza Abdulrahman, manager of business development – startup at Bahrain’s Economic Development Board.

Read: How digital transformation enabled Al Salam Bank Bahrain to weather the Covid-19 storm

The Bahrain boom is reflected across the region, with 99 per cent of businesses in Saudi Arabia considered as small and medium enterprises providing 64 per cent of total employment in the country.

Under Saudi Vision 2030, the kingdom plans to raise the contribution of SMEs from the current 20 per cent of GDP to 35 per cent by facilitating their access to funding and encouraging financial institutions to allocate up to 20 per cent of overall loans to them.

As of last year, the UAE’s Ministry of Economy estimated that the SME sector represents more than 98 per cent of the total number of companies operating in the UAE and contributes towards 52 per cent of non-oil GDP – a figure the ministry wants to increase to 60 per cent by 2021.

“Across the region, governments are putting startups and SMEs front and centre as they seek to regrow and diversify their economies, and this new era of startup growth is only set to increase post-Covid,” said Abdulrahman.

“Unprecedented, targeted support packages are indicative of governments prioritising small business as being the engine of the Gulf’s post-lockdown recovery, and we are already seeing the results of this SME boom,” he added.

Areije Al Shakar, fund director at Al Waha Fund of Funds, the government fund established in Bahrain to catalyse the growth of a VC community across the region, observed that governments are doubling down on their support post-Covid for what was already a priority segment for most major GCC economies.

“Despite startup funding globally dropping to an all-time low in the first half of this year, the MENA region saw a record-breaking $659m raised during that period – already at 95 per cent of total venture investments in 2019, itself a record-breaking year. A renewed government focus on the sector will drive growth even further,” Shakar said.