New programmes and strategies are creating platforms for start-ups and SMEs in Qatar, Oxford Business Group (OBG) has said in a report.
Key to Qatar’s drive towards diversification in its economy is developing a thriving private industrial sector.
The most recent national development strategy has thus sought to encourage businesses, with a particular focus on small and medium-sized enterprises (SMEs), OBG said in ‘The Report: Qatar 2017’.
This support is also likely to continue in the National Development Strategy 2017-22. These are, however, challenging times for some businesses, with the decline in oil and gas prices of recent years affecting Qatar’s main economic driver and government expenditure.
Many businesses rely on contracts from major construction and development projects, and while some large-scale examples of both are still under way, presently there is little new business.
As such, SMEs may seek new markets or diversify their product ranges.
A key institution for SME support is the Qatar Development Bank (QDB). Established in 1997, the QDB promotes private sector projects, and has developed a range of financing schemes and programmes.
Principle among these is the Al Dhameen programme, which addresses a key challenge faced by many SMEs — difficulty in obtaining financing via mainstream banking channels.
Under Al Dhameen, QDB partners with Qatar’s financial institutions to facilitate funding. The bank underwrites up to 85% of facilities costs for new businesses, while the programme guarantees 75% of core capital for existing companies, with a limit of QR15mn on both guarantees.
In January 2017 QDB had announced a new scheme, Ithmar, to provide SMEs with financing of up to QR900,000 ($247,000) under a risk-sharing arrangement.
The bank has become a partner, rather than solely a financier.
In return, an SME has to mobilise 10% of the financing required itself. Ithmar will only be open to start-ups in their early stages, and QDB has set a target of funding 25 projects by the end of 2017.
QDB also provides SME Toolkit Qatar, an online resource for SMEs and start-ups that provides template business plans, as well as legal updates and guides to doing company accounts.
The bank also offers help from Isteshara and Jadwa, both consultancy services, to give new businesses advice at different stages of their development.
Furthermore, under the Tadqeeq programme QDB contributes up to 50% of the incurred costs for SMEs to receive administrative and auditing services, and under the Oqood programme firms can receive a similar cost-sharing deal for legal fees.
SMEs that are considering listing can also benefit from the Qatar Exchange Venture Market programme, under which the QDB covers up to 70% of listing costs.
QDB also works with the Qatar Foundation to run initiatives which encourage entrepreneurship, particularly among Qatari youth. These include the Bedaya Centre, which offers training and support for new start-ups, and the Qatar Business Incubation Centre (QBIC), which runs practical LeanStartup and LeanScaleup programmes.
By July 2017 the QBIC had incubated some 59 companies, OBG said.
Meanwhile, Enterprise Qatar (EQ) jointly operated by QDB, partners enterprises with educational institutions, and provides training, new technologies and innovation, while fulfilling the needs of industry through academia.
While many of these programmes have already proven effective, SMEs continue to face challenges. The financial and business support on offer is aimed at Qataris only, but despite efforts to ease financing, local press reported in November 2016 that of the country’s approximately 11,000 SMEs, around 50% still lacked active bank borrowing relationships, OBG said.
The business environment itself remains a challenge, as one effect of an industrial sector dominated by large, state-linked corporations is crowding out new or smaller players.
Furthermore, SMEs tend to be concentrated in the trading and contracting segments, limiting scope and diversity, and increasing risk.
“Nonetheless, with diversification still the number one priority for the government’s economic development plans, the country’s SMEs will likely remain at the forefront of much of its planning for many years to come,” OBG said.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Jet fuel price reaches nearly $85, highest level since November: IATA
US tells large traders to stop jet fuel trade with Venezuela: sources
Sterling slips as pressure mounts on PM May to step down
US weighs blacklist of up to 5 China surveillance firms
Airbus announces ‘performance improvement’ to latest single-aisle aircraft — the A220 Family
Three biggest Chinese airlines seek Boeing compensation
‘Black clouds’ hang over European skies
China is ready for further US trade talks, says ambassador
Prepare for difficult times, Xi urges as trade war simmers