Public and private sectors partner to support SME growth in Bahrain's ICT sector

As the country’s population continues to grow, the government is increasingly focused on fostering entrepreneurship as a strategy to reduce unemployment. The nation’s open, diversified and advanced ICT sector has created a supportive environment for new start-ups, despite ongoing challenges presented by regional political instability, unemployment and sluggish economic recovery from the global financial crisis.

The kingdom has committed to sustainable diversification under its Vision 2030 economic development plan, which has included the launch of important initiatives aimed at improving the start-up landscape. Two main public and private sector players are now working to increase the participation of start-ups and small and medium-sized enterprises (SMEs) in the economy, with tech entrepreneurs benefitting as a result.

Public Sector Programmes

According to the World Trade Organisation, SMEs account for over 90% of Bahraini companies and 75% of private sector employment. As such, policy initiatives are increasingly focusing on enabling SME growth in areas such as exports and innovation. The Bahrain Economic Development Board (EDB) has been active in supporting SME growth, while institutions like the Bahrain Development Bank (BDB) and the government’s Tamkeen fund also play a crucial role in supporting SME development.

Tamkeen, which was established in August 2006 as part of the kingdom’s national reform initiatives and the Vision 2030 economic development plan, is tasked with supporting the private sector and positioning it as the key driver of economic development.

In late 2011 the government reported Tamkeen had injected an estimated BD166m ($439.9m) into the private sector through its programmes, with another BD166m ($439.9m) made available in its enterprise financing portfolio. Tamkeen helped over 3000 Bahrainis find employment and facilitated the promotion of more than 1000 businesses through participation in regional and international trade fairs and conferences. The programme launched 20 new initiatives in 2012, with a focus on human capital development, enterprise support, and business planning and development.

Training

In March 2014 Tamkeen announced it had trained over 7200 Bahrainis through its Professional Certification Scheme, launched in November 2011. More than 4000 Bahrainis obtained internationally accredited professional certifications in 212 subjects, 29% in ICT, 18% in finance and accounting, 13% in health and safety, and 8% in human resource management.

Total financial support for the programme reached BD4.9m ($12.99m) by March 2014, although Tamkeen simultaneously announced that it had suspended applications while the organisation undergoes a restructuring process, with a renewed focus on serving the 3160 Bahrainis already registered in the programme.

Angel Investors

Within the private sector, Bahrain’s first ever group of angel investors, a seed fund called Tenmou, was formed in the kingdom in September 2011, in part as a response to youth unemployment. The company was launched with initial start-up capital of $2.7m in partnership with the EDB and BDB, as well as Aluminium Bahrain, Unisono, EY, BDO Jawad Habib and the Capital Club.

Today, Tenmou offers entrepreneurs start-up capital for their businesses, in exchange for a share of the company. Investments typically range from BD20,000 to BD30,000 ($53,000 to $79,500) with Tenmou taking a stake of 20-30%. Tenmou also offers a mentoring and incubation programme to guide entrepreneurs through the ups and downs of growing their young businesses. In an effort to scale its model, Tenmou is also working to build a regional angel network, hosting its second MENA Angel Investor Forum in 2012.

One year after the successful graduation of its first four start-ups from an incubation programme in February 2012, Tenmou reported that all four remained cash flow positive, with one already expanding to Saudi Arabia and Qatar. In January 2013 the fund announced a second round of graduates, with three start-ups selected from an initial pool of some 72 applicants.