Interview: Mohammad Al Zuhair
How is The National Fund helping to promote growth of small and medium-sized enterprises (SMEs)?
MOHAMMAD AL ZUHAIR: The government began supporting SMEs in 1997, when it started a portfolio under the Kuwait Investment Authority. That initiative provided limited support and conditional financing. After 15 years we realised there was a huge market gap that the private sector was not interested in filling due to the elevated business risk of such enterprises, with global average failure rates of 80-90%. As such, in 2013 the government introduced a draft law to establish an independent organisation, now known as The National Fund for Small and Medium Enterprise Development, which placed everything SME-related under one umbrella.
We are essentially the regulator – Kuwait’s SME agency, with financing capability. According to our review of government organisations in other countries, the equivalent of our mandate is usually covered by multiple entities. Kuwait is unique in the breadth of service and support offered by one organisation.
I am proud to say that Kuwait was the first country to introduce a comprehensive initiative to support SMEs – from idea inception to enterprise growth, regionally and globally – with the largest committed capital to finance them. Neighbouring countries are looking at this model with interest and plan to emulate it.
What sectors does The National Fund focus on?
AL ZUHAIR: We took a hybrid approach in The National Fund’s strategy. Due to the limited data available, and considering the fields we believe that youth are most engaged in, we decided on four main areas. The first will serve the ICT sector, encouraging tech-enabled products and services with high added value; the second is light manufacturing, to serve larger industries and some import substitutes, starting with the oil-industry value chain; the third is media and creative design, including fashion, media production and social media; and the fourth is “generic”, to serve all other ideas and initiatives that accomplish the objectives of The National Fund’s law and Kuwait’s development plan. It is worth emphasising that businesses must aim to be competitive from the start. As Kuwait is small, we should at least consider the Gulf part of our market in order to realise our SMEs’ growth potential. As these are all pilot programmes, we are planning to carefully measure their progress and impact, and be ready to revise our strategy accordingly to serve Kuwait’s youth.
How important is cross-sector collaboration?
AL ZUHAIR: Our main goal is to work as closely as possible with the private sector, as we do not want to turn into a huge bureaucratic entity. Additionally, and in line with the Council of Minister’s instructions and Kuwait’s development plan, we are trying to encourage and incentivise the private sector to lead the way. If we can create 1000 jobs in SMEs, this will indirectly facilitate 1000 additional jobs via growth in other parts of the private sector. We have a strategy based on our vision and mission, and a five-year action plan to implement it. Our first scheme is a debt programme in collaboration with local banks, which is an example of partnering with the private sector on what they do best. Our other programmes will launch in 2015 or later.
After students graduate, there is huge pressure to find jobs, which leads them to take government posts. This has to change – I want to see graduates searching for more exciting options. For this to happen, we must create the proper ecosystem to provide them with these opportunities. We are partnering with Kuwait University and private universities to provide training and incubation to encourage this and prepare our youth to take the lead in deciding their own future.
The government, the private sector and the youth share an unwillingness to take risks. To develop the proper ecosystem in Kuwait, the start-up scene has to be fuelled. This means taking risks and celebrating unsuccessful initiatives as learning opportunities. As a state agency, we are willing to take that risk and create an environment for others to adopt this mindset.
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