BUSINESS – Exciting times for GCC entrepreneurs

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By Peter Feuilherade

The lure of entrepreneurship is growing in the GCC countries, as the region plans ahead for when oil and gas run out. Diversification plans for the Gulf economies involve not only investing in the growing non-oil sectors but also getting people back into business activities.

Dubai is counting on its successful bid to host the World Expo 2020 to stimulate growth in the UAE’s non-oil sector, including increased spending on construction, tourism and hospitality.

These sectors are also booming in Qatar, where growth in the non-oil sector is predicted to increase by more than 10% in 2014, generated by major infrastructure projects like the Doha Metro and Hamad International Airport.

The economy of Saudi Arabia, largest in the countries of the GCC, continues to diversify too. Non‑oil sector growth is strong and is forecast to average 4.7% in 2014-2017.

a survey of young Arabs in the Gulf region found that they viewed government regulations as an obstacle to business creation

In 2009, a survey of young Arabs in the Gulf region found that they viewed government regulations as an obstacle to business creation. But since then, growing calls for entrepreneurial freedom have produced an increased willingness among GCC governments and policy makers to support private sector expansion by actively promoting small‑to-medium sized enterprises (SMEs). Dedicated bodies and centres have been set up to assist the growth of SMEs, which are seen as one of the fastest growing sectors in the GCC.

One of the first business development services was Sharakah, set up by royal decree in Oman in 1998. It also offers technical and management consulting and financial assistance, such as equity investment and loans.

Saudi Arabia, where investments in SMEs are expected to grow to more than $70 billion by the end of 2015, launched the Development Centre for Small and Medium Enterprises in 2003 to educate Saudis about the importance of entrepreneurship.

in April 2014, the UAE, which has been the most dynamic of the GCC states and driving forward small business initiatives, announced that 10% of all future government tenders had to be awarded to SMEs, making it easier for all potential entrepreneurs to gain access to the lucrative public sector market

In January 2014 Kuwait’s National Assembly approved amendments to a law on the establishment of a National Fund for Small and Medium Enterprises, which aims to invest about $7 billion in the SME sector.

And in April 2014, the UAE, which has been the most dynamic of the GCC states and driving forward small business initiatives, announced that 10% of all future government tenders had to be awarded to SMEs, making it easier for all potential entrepreneurs to gain access to the lucrative public sector market. UAE entrepreneurs can turn to the Khalifa Fund for Enterprise Development, an independent agency of the Abu Dhabi government, which offers a range of training and funding programmes for Emirati entrepreneurs and small businesses. Meanwhile, Dubai SME, a division of Dubai’s Department of Economic Development, includes a business incubation centre for local entrepreneurs to develop their small and medium‑sized projects or businesses.

Enterprise Qatar was established in 2011 with the support of the Ministry of Business and Trade to promote entrepreneurship and boost the SME sector by offering training, advisory, consultancy and financial services, as well as free office space for SMEs owned by Qatari nationals. And the Qatar Business Incubation Center, established in March 2014 as a joint venture between the Qatar Development Bank and the Social Development Center, part of the Qatar Foundation, says it aims to become “the largest mixed business incubator in the Middle East”.

New businesses need access to early stage seed funding to get started, and adequate supplies of investment finance to help them grow. As well as these government seed funds and public support programmes, young entrepreneurs are turning to sources of independent support for mentorship programmes and start-up funding.

Peter Hiscocks, who teaches innovation management and entrepreneurship at Cambridge Judge Business School (CJBS) in the UK and has worked with organisations encouraging entrepreneurs in the GCC. lists retail, fashion, fast food (with a “cultural dimension”) and high‑tech companies as among the exciting growth areas for business start‑ups. The indispensability of using social media and having website content in Arabic for any new business starting up in the GCC has opened up vast opportunities for technology entrepreneurs.

“High smartphone penetration rates and a growing e-commerce sector have made MENA a hotbed for tech start-ups, bringing a surge of investors in their wake eager to tap into the promising new business potential,” according to Mary Sophia of the Gulf Business website.

The UAE in particular has seen a surge in start-up accelerators and incubators for technology companies. The Dubai Technology Entrepreneurship Centre, which will be launched in 2015 within Dubai Silicon Oasis, is being billed as the largest entrepreneurship hub in the MENA region and will complement Silicon Oasis Founders, another high-tech incubation centre currently up and running in Dubai.

ENDS

 

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