Interview: Abdulaziz bin Nasser Al Khalifa

In what ways is Qatar’s entrepreneurial ecosystem receiving institutional support?

ABDULAZIZ BIN NASSER AL KHALIFA: The Qatari entrepreneurial ecosystem has been evolving over the years, and thanks to a number of government reforms, we are becoming an environment that will help entrepreneurs excel and unlock their potential. QDB has embarked on a mission to enlarge and strengthen the private sector to contribute to the diversification of the economy. Since this mission began, the local entrepreneurial ecosystem has made leaps in development.

With government support, the local market has the necessary dynamics to stimulate and encourage new start-ups, and allow for the further growth of existing ones. According to The Global Entrepreneurship Monitor’s “2018/2019 Global Report”, Qatar ranked first out of 54 countries in the entrepreneurship context index. This demonstrates how needs and obstacles are being addressed positively and efficiently, and how the ecosystem is becoming friendlier to small and medium-sized enterprises (SMEs). QDB has been at the forefront of enabling entrepreneurs and SMEs, thanks to a number of programmes and initiatives.

How can banks encourage the further development of local SMEs, which currently account for 15-20% of the country’s GDP?

AL KHALIFA: The banking sector’s contribution to the growth of SMEs begins with understanding the challenges they face starting out or getting established in the local market, and in being able to provide innovative services to assist them in this regard.

Funding should be differently structured when the beneficiary is an SME as opposed to an established corporation or organisation. Smaller companies and start-ups cannot shoulder high interest rates on loans or limited repayment and settlement terms. Banks need to understand the risk that entrepreneurs face in the market when they try to launch a new product or service, and the fact that it is a risk the investor chooses to share with them. Younger businesspeople need a bank to be more of a business partner than a disengaged third-party financier. Lower-risk loans and collaborations with key stakeholders create winwin situations for financial institutions. QDB thus created a direct lending programme that has offered QR6.7bn ($1.8bn) as of early 2020. QDB has also established an equity fund as well as seed funding mechanisms to facilitate access to finance through equity ownership. Additionally, our Al Dhameen programme offers guarantees to partner financial institutions to encourage them to finance SMEs and start-ups with the support of QDB. Through the programme we have provided cover of up to QR1bn ($274m) to local companies.

Where is Qatar channelling efforts to promote itself as a centre for financial technology (fintech)?

AL KHALIFA: According to KPMG, global investment in fintech in 2018 hit $111.8bn across 2196 deals. In 2018 we also saw global cross-border fintech mergers and acquisitions activity reach $53.5bn, up from $18.9bn in the previous year, and investment in regulatory technology more than triple, from $1.2bn in 2017 up to $3.7bn in 2018.

At such a scale, the fintech industry cannot remain detached from national ecosystems. Moreover, fintech firms facilitate structural changes in the market, open-up opportunities for greater segments of the population, strengthen the position of small businesses and democratise the financial services industry by boosting institutional efficiency.

Following the guidance of the Qatar Central Bank, QDB has thus developed a comprehensive fintech initiative with the aim to leverage the power of local fintech companies to transform the financial services sector and enable Qatari financial institutions to compete at a global level and attract top talent.