Small ventures aiming high

January 19, 2013 - 2:29:54 am

To diversify the national economy away from oil and eventually turn it into a knowledge-based one, Qatar has taken a number of steps to promote small and medium-sized enterprises (SMEs).

Some organisations, like the Social Development Centre affiliated to the Qatar Foundation for Education, Science and Community Development, have also come forward with a helping hand to encourage entrepreneurs.

Many schemes have been launched by public and private organisations to facilitate growth and development of SMEs, but insiders say they still face some difficulties. 

The challenges faced by SMEs suggest that a lot of obstacles remain in transforming the energy-rich country into a diversified, knowledge-based economy. Entrepreneurs are being encouraged by the government, but some of them complain about finance-related problems and about the prolonged and time-consuming licensing process.

The state-owned Qatar Development Bank (QDB) has launched a special scheme and a huge fund under Al Dhameen to develop local industries by supporting the SMEs. Al Dhameen (which means guarantee in Arabic) is a scheme that provides financial assistance to the SMEs. 

But some entrepreneurs say there are at times lack of transparency and indefinite delays in processing loans and the absence of a clear definition of SMEs. Private businesses also complain about the problem of collateral to get their projects financed by banks, as lenders do not consider the land allotted to them by the government as collateral for mortgage purposes.  

“Things are not very clear. The processes involved are still bureaucratic and time-consuming, said Mahmoud Younes, owner of an SME. Under Al Dhameen, the QDB does not directly finance SMEs, but instead offers the business owner facilities to get funding by issuing guarantees for 85 percent of the value of a project, not exceeding QR15m.

The scheme does not cover projects related to agriculture, fishing and livestock, non-oil mining and quarrying, wholesale and retail trade, finance, insurance and real estate.

Most banks and other lending institutions cite the absence of a clear definition of SMEs as the main cause of delay in project financing. 

The Social Development Centre has several projects to support SMEs, but the support is not sufficient to expand their business say owners of small enterprises. 

Many SMEs face difficulties in finding a place to set up their business. As a result they are unable to get their business registered, since a permanent business address is required for registration of a small enterprise.

Lack of training in managing and developing a business is another hurdle faced by owners of small enterprises. Some have received training or support in starting their business, but not enough to expand it. 

The Ministry of Social Affairs, which supports small enterprises, agrees with some of these complaints, but claims to help small enterprises through all possible channels. 

According to a prominent Qatari CEO, Nasser Al Khaledy, the proxy businesses run by expatriates in the name of Qatari citizens should be streamlined if small businesses are to be promoted in the country.

He said mega projects succeed tremendously in Qatar because the Emir H H Sheikh Hamad bin Khalifa Al Thani, follows up on them, while small businesses are looked after by various ministries and other state agencies.

Observers said the government’s plans to curb monopolistic trade practices through legislation is also a key step forward in helping SMEs.

However, one problem that young Qatari entrepreneurs talk of is lack of low-rent commercial space where they can market their products or services.

The Peninsula interviewed a number of young Qatari exhibitors at the Made in Qatar Exhibition, which concluded yesterday, and most of them said government real estate companies should build some premises where they could be given space on subsidised rents so that they can promote their products and their businesses can prosper.

“Shop rents are very high, so we run our businesses from home. If the government can help us by allotting or building low-rent shops, that would be a welcome step,” a young Qatari entrepreneur said.