Qatar’s industrial base is strong, there has been progress in diversification with the state home to some of the largest manufacturing enterprises in the region. Much of Qatar’s industrial strength comes from the government and the investments of big international players and well-placed citizens, including the royal family, leaving ordinary Qataris hoping to make a mark in business feel they are out in the cold. 

Not really. Two initiatives operating with government blessings could change the situation radically for aspiring SMEs and enable Qatar to come closer to SME levels in some of the leading GCC states. 

The SME issue is significant as economies anywhere in the world need to supplement the contributions of big business with those from less privileged citizens who make up an overwhelming portion of the populace.

Qatar’s Social Development Centre (SDC) has taken up the challenge, coming to the assistance of new graduates with aspirations to start and build a business. Abdulla bin Ibrahim Al Ajail, its executive director, was quoted by an Oxford Business Group survey as saying that encouraging entrepreneurship among young people  could help make them ambassadors for private sector development.

SDC offers financial and technical support ranging from promotion and consulting to marketing and training at its Tanmia for Small and Medium Enterprises facility. The organisation is going to the root of the problem. It seeks to assist, albeit on a small scale, ambitious youths just out of their academic studies and businesses already functioning with interest-free loans of up to QR500,000 ($137,400).

The second initiative comes from the Qatar Business Incubation Centre (QBIC), co-founded with Qatar Development Bank and the SDC. The incubation centre offers assistance from workspaces to training, marketing and follow-up guidance. Business ideas revealed by candidates have been broadbased, ranging from digital solutions to tourism, and are “a huge positive for broader SME development in the country,” Aysha Al Mudahka, chief executive of QBIC, told OBG.  

The Qatar Aluminium (Qatalum) plant

The SDC has financed more than 100 projects since 2009 and QBIC has incubated 52 start-ups since its launch in 2014. 

Al Masah Capital, a Dubai-based alternative asset management and advisory firm, noted in its latest analysis of the SME sector and venture capitalism, that SMEs’ weight in global economies has risen with larger firms downsizing and outsourcing more functions. The company’s founder Shailesh Dash was quoted in the Qatari press as saying “SMEs have become important in promoting competitiveness and introducing new products or techniques to the changing market dynamics around the world.” He added that they were responsible for increasing productivity, mostly through expansion and inorganic strategies.

“The performance and development level of the 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 are important to an accommodative market environment.”

In a situation where high-capital manufacturing companies have dominated Qatar’s economy, the time has come for government to look to small enterprises to spur further growth, business circles feel. The efforts of SDC and QBIC should in course of time greatly help that objective and create a culture where ordinary Qataris with very limited means believe they have the opportunities to become entrepreneurs.

SMEs can also entertain the hope they will have a role with large companies increasingly outsourcing, as Dash pointed out. What could come in the way is a lack of confidence among the big business guns. But with training and financial support, SMEs can be equal to the task.

There will be no dearth of opportunities as Qatar, despite a tough situation from falling oil prices, is still on the move and investing and building infrastructure from railways to ports and stadiums. The coming soccer World Cup will certainly give a boost to small enterprises as major contractors subcontract their work.

HIGH SPENDING

Qatar could be spending around $70 billion to $80 billion a year between 2015 and 2017, according to Qatar National Bank group CEO Ali Ahmed Al Kuwari. Making up the largest projects are real estate developments and rail, road, airport and port projects in the transport sector, Al Kuwari remarked at a Meed Qatar Projects conference. The Lusail mixed-use development is the largest in the list of major projects at $45 billion and is expected to be completed in 2022 while the Qatar Integrated Rail project has an investment of $40 billion (completion in 2026). Big investments are also going into the Ashghal Expressway Programme, $20 billion (2018), the Hamad International Airport, $15.5 billion (2020) and Ashghal Local Roads and Drainage, $14.6 billion (2019).

According to QNB forecasts, the state’s real GDP will grow from 3.3 per cent in 2016 to 3.9 per cent next year and 4.2 per cent in 2018 thanks to continued investment spending and initial production from Qatar’s new $10 billion Barzan gas project.

Sheikh Ahmed bin Jassim Al Thani, Minister of Economy and Commerce, has stated that non-oil economic growth has been expedited, negative costs have been contained and new legislative reforms introduced to increase private sector participation including the New Companies Law to create an investment environment enabling investors to participate in all aspects of Qatar’s economy.

While Qatar has companies with multi-billion-dollar investments in such non-hydrocarbon fields as chemicals, fertilisers, steel and aluminium, a local company has covered much ground in the diversification path. Aamal Company, a diversified firm, was recently in the news for achieving 23.5 per cent growth in net profit year on year to QR305.5 million for the first half of 2016.

Amaal has interests in sectors ranging from readymix and cement blocks to pipes, electrical cables and maritime transportation. 

In its economic commentary, QNB stated that the non-hydrocarbon sector’s GDP share grew to 63.8 per cent in 2015 from 48.9 per cent in the previous year. While non-hydrocarbons continued to be the engine of growth, hydrocarbon production remained broadly stable. The bank highlighted that year-on-year growth in non-hydrocarbon GDP was 7.8 per cent in 2015 with the building and construction sector contributing 2.2 per cent to non-hydrocarbon growth. Manufacturing contributed 0.7 per cent.

Media attention on Qatar’s building and construction industry is currently focused on infrastructure for the forthcoming soccer World Cup. Qatar will find it a lot easier to replenish its stock of building materials for World Cup-related and other construction projects following the lifting of a ban by Saudi Arabia on cement exports. Qatar will need some 5.7 million tonnes of cement in 2017.

The UAE’s Oryx Industries will supply two million tonnes of quarry products to Qatar Primary Materials Company to meet demand from the construction sector. The football tournament and the Doha Metro scheme are among major construction projects whose demand for cement and other building materials will stay high in coming years. 

The run up to the construction of World Cup stadiums is gathering pace. It was announced recently that Larsen & Toubro, one of India’s biggest industrial groups, will serve as a contractor to build Al Rayyan Stadium.

L&T is involved in the construction of a metro line in Doha and several other projects in the Gulf.