What role do SMEs play in the MENA region?

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The MENA region is currently witnessing a transformation into an active Small and Medium Enterprises (SMEs) structure. Developing the region’s SMEs has so far moved in a positive direction with every GCC country, including Qatar, by establishing specialised bodies and developing regulations and programs to support and nourish them.

According to the Peninsula, the SME industry in the MENA region is becoming an increasingly significant contributor to GDP but still lags behind developed nations regarding contribution to the economy. In the region, Egypt, Lebanon and UAE SMEs are important contributors to GDP, accounting for 80%, 99% and 60% respectively, but the contribution is significantly lower in Kuwait, Qatar and Oman.

Given that SMEs represent over 90% of the total registered companies in most of the MENA countries, their contribution to overall GDP remains substantially lower, with exception of a few like the UAE, Egypt and Lebanon, Al Masah Capital, one of the fastest growing alternative asset management and advisory firms focused on the Mena region, noted in its latest analysis of SMEs sector and Venture Capitalism.

The Al Mash report, which reviewed a rise in Venture Capitalism, noted the dynamic nature of SMEs and their significant role-play in fostering innovation and promoting global economies, suggested a robust growth to these sectors.

The weight of SMEs in global economies has been increasing, with larger firms downsizing and outsourcing more functions, observed experts at Al Masah Capital.

It is estimated that 90% of the world’s businesses are SMEs and it contributes to more than 50% of employment worldwide. For developing economies, SMEs contribute 50% of gross value add (GVA) and 60% of total private sector employment. According to the World Bank Group study, there are 420-510 million micro small and medium-size enterprises (MSMEs) worldwide of which 365-445 million MSMEs are domiciled in the emerging markets.

Highlighting the catalyst role SMEs have been playing in changing the face of developing economies, Shailesh Dash Entrepreneur and Founder of Al Masah Capital, said, “Technology adoption is ruling it all. SMEs have become important in promoting competitiveness and introducing new products or techniques to the changing market dynamics around the world. Moreover, they are also responsible for increasing productivity, mostly through expansion and inorganic strategies.

The performance and development level of a national economy largely depends on the willingness and ability of the government to create a fertile environment for SMEs, which can improve the quality of services and promote competitiveness that is important for an accommodative market environment.”

Source: The Peninsula

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