Small and medium-sized enterprises (SMEs) could be set for a much more prominent role in Qatar, with the government stepping up efforts to collaborate with local companies as part of broader diversification plans.
Local SMEs were presented with a series of potential business opportunities at the third annual Government Procurement and Contracting Conference & Exhibition (Moushtarayat), held in Doha this April.
Coordinated by the Public Works Authority, Ministry of Finance and Qatar Development Bank (QDB), the event brought together small companies, large firms and government agencies, allowing the public and private sectors to interact while also providing a platform for state entities to showcase projects open for tender or direct assignment.
Moushtarayat 2018 saw more than 2000 business opportunities with a combined value of around QR6.5 billion ($1.8 billion) presented to SMEs, while 57 different state agencies were represented, covering most areas of public sector activity.
Among the state agencies taking part was the Supreme Committee for Delivery & Legacy (SC), the authority tasked with delivering infrastructure requirements for the 2022 FIFA World Cup.
In an effort to boost involvement of domestic SMEs in the World Cup, SC announced it was making available QR700 million ($192.3 million) worth of opportunities for local companies to provide services in preparing the main stadiums and training facilities for the event.
While only a fraction of the estimated QR60 billion ($16.5 billion) total value of projects showcased at the event was dedicated to SMEs, with most being directed to large entities, the SME-focused component represents a significant increase in terms of value when compared to previous years.
In 2017 SMEs secured QR700 million ($192.3 million) in public procurement contracts out of a total of QR2.5 billion ($686.8 million), more than double the QR300 million ($82.4 million) posted in 2016.
Expanding SMEs a priority
The increased focus on SMEs highlights the important role they play in the national economy. Of the 25,000 private sector businesses currently registered, more than 96% are classified as SMEs, Abdulaziz bin Nasser Al Khalifa, the CEO of QDB, said during a recent speech at Carnegie Mellon University in Qatar in January.
In light of this, expanding the segment and providing greater opportunities for smaller firms to take part in state-backed projects is seen as a significant source of employment and growth for local businesses.
According to Ministry of Finance forecasts, local firms could provide up to 90% of supplies for state projects in the coming years, with the authorities looking to improve the capacity and diversification of services offered by SMEs.
Role of private sector
Increased activity for local businesses and efforts to develop SMEs align with a broader national strategy aimed at boosting the private sector’s contribution to the economy.
The country’s second National Development Strategy (NDS2) 2018-22, launched in March, sets the agenda for economic, social and human development for the next five years, building on the first NDS, while also dovetailing into the broader goals of the Qatar National Vision 2030, the blueprint for broader growth unveiled in 2008.
While there is a strong emphasis on building the state’s capacity to deliver services and achieve financial sustainability, much of the economic focus of NDS2 is on growing the private sector by developing the tools needed to broaden its base and contribution to GDP, according to Prime Minister Sheikh Abdullah bin Nasser bin Khalifa Al Thani.
The increased focus on the private sector comes amid national plans to diversify the economy away from a reliance on hydrocarbons earnings. The economic blockade imposed on Qatar in June last year by Saudi Arabia, the UAE, Bahrain and Egypt has also led to a renewed pivot towards local industry.
Key to achieving private sector growth will be collaboration with the state, Saleh bin Mohammed Al Nabet, the minister of development planning and statistics, said upon the release of the NDS2.
“The interaction and partnership between the public and private sector needs to be increased, and the role of civil society organisations in the implementation of this strategy needs to be expanded,” he said.
PPP legislation aims to boost growth
To encourage private sector development, the government has sought to improve the regulatory environment by outlining proposed new legislation governing public-private partnerships (PPPs).
Government officials have told local media that new legislation, currently in the draft stage, will outline the terms and conditions for those taking part in PPPs, with regulatory certainty expected to encourage both local and foreign companies to take part in major projects.
This Qatar economic update was produced by Oxford Business Group.