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“SMEs are the cornerstone for achieving a sustainable and diversified economy in Qatar”

Interview - June 26, 2016

What are the main strengths of the Qatari economy?

As you may know, Qatar is endowed with major oil and gas resources. Our country has the third largest gas reserves in the world, which are estimated at 866tn cubic feet. Moreover, our country is the world’s top LNG exporter after Russia. Indeed, development of hydrocarbon reserves has made Qatar the richest country in the world in terms of GDP per capita.

While our economy is benefiting from natural resources, our key enabler is prudent management and clear leadership vision. It is those two factors that made Qatar among the most financially secure economies, allowed for strong financial reserves and macroeconomic stability as well as one of the lowest unemployment rates - less than 1%.

Qatar is undoubtedly in a relatively good position to weather the recent fall in energy prices. Confidence in our economy was reflected in recent announcements made by major rating agencies - Standard & Poor's Ratings Services affirmed “Qatar’s sovereign credit ratings is 'AA' long-term and 'A-1+' short-term foreign and local currency and the outlook is stable” while Moody’s confirmed Qatar’s Aa2 rating on May 14, 2016.

What is the role QDB is playing in sustaining a sound growth through the promotion of SMEs and economic diversification?

Qatar Development Bank (QDB) is a financial entity fully owned by the government, set up by an Emiri Decree to invest in and develop local industries by supporting small and medium enterprises in Qatar. QDB aligned its strategy to correspond with the Qatar National Vision for the year 2030, to promote and facilitate development and growth of small and medium enterprises in core economic realms, resulting with long-term socioeconomic benefits to the people of Qatar.

In order to promote private sector development in Qatar, several impediments need to be addressed, including major hurdles that inhibit the establishment, growth and ultimately the sustainability and success of Qatari businesses.

With regard to our role, QDB adopted several initiatives capturing key elements of SME lifecycle. I am glad to note that in doing so we have pioneered several new financing products. Those products include conditionally repayable loans to local SMEs to become listed at Qatar Exchange Venture Market as well as holistic support for local growth businesses to become franchisors and grow their businesses internationally.

For the benefit of your readers, I would like to provide a bit of statistics. From 1998 to date, QDB has granted QR 4.85 billion (about $ 1.33 billion) in loans and advances to Qatari SMEs. Being a private sector support arm of the Government of Qatar we focus in market gap rather than market share. Therefore, in terms of the broader SME ecosystem, we focus on areas with great business needs, and also on areas where development will have a positive economic and social impact for Qatar. With this in mind, we have historically focused direct lending on industrial manufacturing, agriculture, education and health care. This approach has been our distinct feature.

What is the role of SMEs in the development of infrastructure and what will be the impact of the new law on PPPs to be implemented this year? How is your MoU with the Public Works Authority (Ashgal) benefiting SMEs willing to take part on the ongoing infrastructure developments?

I am a strong believer that SMEs can and should play a major role in development and, most importantly, maintenance of infrastructure in Qatar.

Our MoU with the Public Works Authority (Ashghal), which was signed on May 14, 2016, aims to establish a framework to support participation of Qatari SMEs in Ashghal’s infrastructure projects. We plan to do so through increasing awareness of local SMEs about such opportunities as well as providing them financial and non-financial support and guidance in order to enhance their capacity and improve capability.

Based on our MoU, Ashghal will include SMEs, which have successfully undergone the QDB’s rating and accreditation process, in its procurement process. Moreover, QDB and Ashghal will host regular meetings to publicize available opportunities among local SMEs and monitor their performance.

With regard to the new law on PPPs, I am confident that it will further boost participation of private sector in development of Qatar’s infrastructure. The law is in drafting stage at the Ministry of Economy and Commerce and QDB is ready to extend its full support to ensure its successful implementation, once approved.

What are the opportunities that the QE Venture Market development program presents for SMEs?

Qatar Exchange Venture Market (QEVM) Program is a joint initiative between QDB and Qatar Stock Exchange (QSE). Key objective of the program is to assist potential Qatari SMEs to list their businesses in the QEVM.

As part of the Program, QDB supports Qatari shareholding companies who meet QEVM’s minimum listing and regulatory requirements and is committed to list on the QE Venture Market. Program’s innovative structure reflects the challenging transformation that local SMEs have to go through in order to be listed at QEVM. As such, we have structured it through a conditionally repayable loan, which covers the fees of a Listing Advisor and is to be repaid only in case of successful listing of SME and, in case of failure, it will be written off.

Overall, Program offers a variety of opportunities for SMEs, including but not limited to the following:

  • Better access to capital, especially through equity infusion for growth oriented SMEs
  • Enhanced visibility and prestige. Successfully listed SMEs will benefit from greater credibility and enhanced financial status leading to demand in the company’s shares and higher valuation of the company
  • Strong growth opportunities through expansion as well as mergers and acquisitions

Two of the most successful programs of QDB Are the Al Dhameen’ And the Tasdeer’. How do they complement each other and what have been the main achievements so far? (Tasdeer and Al Dhameen)

In short, both programs have distinct mandate and features. While Al-Dhameen is a Partial Loan Guarantee Program which aims to ease access of Qatari SMEs to financing, Tasdeer’s objectives are to develop and promote local exporters.

Needless to say that QDB alone will never be able to carry a responsibility of financing the local entrepreneurs and SMEs. Therefore, one of the most important initiatives that we launched is Al-Dhameen Partial Loan Guarantee Program which aims to overcome financing barriers faced by economically viable Qatari SMEs. The program is designed as a partnership with Qatari banks to improve SME access to financing by covering a significant part of the credit risk. I am glad to note that Al Dhameen has been successful both in performance and in changing the culture of SME lending in Qatar, unlocking capital for small businesses. In terms of performance, the Program supported 255 SME projects through providing guarantees for 428 long-term and short-term loans worth QR 1.138 billion ($ 312 million).

Tasdeer’s role is to provide non-financial support for Qatari SMEs through developing their export capabilities and unlocking access of their products to regional and international markets. Such support includes a variety of services that aim to develop and promote Qatari exporters.

During 2015 alone, Tasdeer provided over 140 Qatari SMEs with various exporting opportunities while 8 Qatari SMEs have become exporters. Thanks to our support, Qatari SMEs had signed exporting contacts worth over QAR 285 million. During the year, we have supported participation of 103 Qatari SMEs in 8 international exhibitions.

What Countries are you targeting for Qatari exports?

Development and promotion of Qatari exporters in non-hydrocarbon industries are among key mandates of QDB. So far, we were able to support exports to 36 countries, including US and Mexico. I must add that given the nature of our non-hydrocarbon exports, our traditional markets are considered to be the countries in MENA region.

During 2015 alone, QBD provided over 140 Qatari SMEs with various exporting opportunities while 8 Qatari SMEs have become exporters. Thanks to our support, Qatari SMEs had signed exporting contacts worth over QAR 285 million.

In addition, to make Qatari exports more attractive to foreign buyers and to protect local exporters from potential risks, we have issued exports credit insurance guarantees for 156 (cover policies) Qatari SMEs with a total value of approximately QAR 55 million.

We have also extended a non-financial support to Qatari exporters. As such, we have supported participation of 103 Qatari SMEs in 8 international exhibitions.

How did your previous experience in the energy sector help you to foster opportunities for SMEs in the energy production chain?

Indeed, as a proud alumni of Qatar Shell, I am aware of localization opportunities available within the energy supply chain.

QDB and Qatar Shell strongly believe that local SMEs are the cornerstone for achieving a sustainable and diversified economy in Qatar, and key to facilitating a thriving private sector. Therefore, since 2014 QDB and Qatar Shell are working together to provide local SMEs access to specific business opportunities within the Pearl GTL plant, the world’s largest Gas to Liquids plant developed by Qatar Petroleum and Qatar Shell.

I must add that given the nature and sophistication of the industry, we are very careful at selection of business opportunities to ensure that they can be delivered by local SMEs while, at the same time, meeting Qatar Shell’s strict criteria and requirements.

So far, Qatar Shell awarded three opportunities to local companies through this initiative in addition to five local suppliers which were announced in 2014; and in 2015, six new Qatari SMEs joined the Pearl GTL supply chain. I’m glad to highlight that 6 new business opportunities will be announced on May 30, 2016 and I’m looking forward to another successful event with active participation of Qatari SMEs.

What are your future management strategies for QDB?

Today, QDB is better equipped and more ambitious than ever. Shifting its focus from a purely industrial manufacturing mandate to being a fully-fledged development bank, resulted in the State of Qatar increasing the Bank’s capital from QR 200 million to QR10 billion. The country is in commercial over-drive in preparation for the World Cup 2022 and there is ambition amongst all Qataris to maximize this unique opportunity
QDB is mindful of its responsibilities and has made bold strategic changes to align the Bank’s performance to the country’s 2030 Vision. At the same time, it remains committed to meeting the everyday demands of its customers and supporting the evolution of a thriving, diversified and sustainable Qatari economy.

It will be no exaggeration that QDB has been extremely successful in recent years, driving growth in diverse sectors of the economy. From providing finance for projects of national interest, to supporting the private sector with value-added services, the Bank has been a powerful catalyst for socio-economic development. Positive by-products of its strategy include the empowerment of the Qatari workforce, an increase in living standards and a raft of exciting investment opportunities for Qatari businesses.

Our vision is to be the primary enabler of Qatar’s private sector and economic diversification in line with Qatar’s National Vision 2030. As outlined in our strategy for 2015-2019 we aim to achieve our vision through providing direct financing for target sectors and enabling access to finance through our partner institutions as well as promoting and supporting exports. We will also work on enabling the creation of new knowledge-based industry verticals in the country and continue delivering housing development-related services and initiatives to citizens on behalf of the government.