According to the report, SMEs have so far failed, especially in the oil and gas industry, to provide momentum to the country’s diversification plan to reduce the country’s reliance on oil and gas revenues. In addition to SMEs, the government has targeted the development of small- and medium-sized industries (SMIs) as a means of achieving its goal of economic diversification.
Milford Bateman, one of the report’s authors, said that the majority of SMEs are concentrated in low value-added sectors such as trade and retail, thus contributing insignificant amounts to the country’s GDP. The UNDP report stated that this is despite the fact that Qatar has the potential to develop a meaningful SME sector.
Misnad al-Misnad, director of Ras Laffan Industrial City, told OBG there must be a shift to more lucrative sectors. “In a nutshell, we want to see SME investment in areas where there are premium returns. That’s what interests Qatar. We’ve a small population so we don’t need labour-intensive industries that are low on returns but good for employment.”
Al-Misnad said he agreed with the UNDP findings and that he feels SME development represents an area of great opportunity for the private sector. He told OBG, “There are vast requirements to supply products and services to larger companies, and those companies providing this also need services provided for them. So what starts with large companies works all the way though the economy, so the SMEs have a large impact on the country’s overall development.”
According to the UNDP report, Qatar needs to create a more encouraging business environment for SMEs. Suggestions include the promotion of entrepreneurship in key technical knowledge areas, improved funding access for start-up businesses and enhanced land access for industrial development purposes.
The report also stated the government needs to bring together and coordinate the already existing and highly fragmented SME support initiatives. Additionally, there should be “pro-active sector orientated interventions by the government to support start-up SMEs in key growth potential areas – especially in oil and gas.”
Despite Qatar’s growing wealth, SMEs access to finance was another issue cited. Due to the country’s current economic expansion, commercial banks have other very profitable avenues to explore, like project financing and property, making it harder for SMEs to get funding.
On top of the funding issue there is also a lack of land access. The government is trying to allocate places where SMEs can thrive with the Qatar Science and Technology Park being one such idea for business development. However, only a few technology-based SMEs could locate there, while most others found it difficult to get started or expand, according to the report.
However, for SMIs, Qatar has a fairly transparent and clear-cut strategy, Mohammed al-Sada, minister of state for energy and industry affairs, told OBG that Qatar is looking to boost SMIs. He said that the government believes the best way for SMIs to flourish is for them to create joint ventures with international companies.
“SMIs are best suited to provide specialist services to the bigger industrial ventures. We believe the private sector is best suited to develop the SMIs. For this purpose, the government encourages the private sector to enter into joint venture partnership with sound international companies,” he told OBG.
These international companies bring knowledge and expertise that is expected to benefit Qatar’s industrialisation in the long run, said al-Sada. “We are aware that finding the right partner for the new projects to provide the technology, the required operations expertise as well as marketing experience, is extremely important to enhance and diversify Qatar’s industrial base and industrial structure.”
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