Small and medium-sized enterprises have helped in employing 23 percent of the total workforce in Kuwait, yet they offered a marginal contribution of 3 percent to the country's GDP, Trade and Competitiveness Global Practice at World Bank Senior Director Anabel Gonzalez said here on Wednesday.
In a World Bank Group press conference that took place on the fringes of the First Forum of the National Fund for SME Development, Gonzalez said that there was an increasing recognition of the importance of SMEs in supporting overall economic growth.
According to a recent survey of nearly 50,000 firms in 104 countries, SMEs provide as much as two-thirds of all employment, with small firms contributing more to employment in low-income countries than high-income countries, she explained. She added that both business environment (the regulatory environment that governs the cost of doing business) and firm-specific factors (entrepreneurship, skills, access to credit and markets) tend to affect the life-cycle growth profiles of firms in different countries.
As an example, over a life cycle of 40 years, an average firm in the US grows by 7 times its initial size, it grows only 2 times its initial size in India. Gonzalez explained that this difference in growth and productivity translates into missed opportunities in increasing the GDP per capita in countries where SMEs face growth constraints.
The World Bank Group has been closely following the Government of Kuwait's efforts to address some of these constraints by supporting the diversification of the local economy and promoting the growth of an SME ecosystem, she said. She pointed out that these efforts have led to the establishment of the National Fund for SME Development. The Bank Group is privileged to work with the National Fun to supporting its vision of supporting youth, combat unemployment and enable the private sector to drive economic growth.
Having a healthy, vibrant, barrier-free SME ecosystem is critical to economic development. The private sector is anticipated to provide employment opportunities for a rapidly growing Kuwaiti labor force and to lead economic activities in various sectors to reduce the country's heavy reliance on oil resources, she noted.
She added that this aligns closely with Kuwait's vision 2035 which envisages a revival of the entrepreneurial spirit of its people. On his part, the National Fund's chairman Dr. Mohammad Al-Zuhair said that the Fund has completed its infrastructure and set up a five-year strategy; however, it still needs support from both public and private sectors as well as civic communities to achieve its comprehensive vision.
Businesses grow in a nurturing and supportive environment, he said, stressing the importance of providing all facilitations and eliminating all obstacles in the face of SMEs development.