Bahrain’s shift from oil to silicon [Opinion]
Of the businesses registered in Bahrain, 80 percent are SMEs and they are basically what drive our economy.
We have other large corporations, such as petroleum-based giants, and banks which are the main pillars that keep the country going. Without these, the economy would fail.
With the depletion of oil, our aim is to shift from a petroleum-driven economy to a self-sustaining one focused on technology. The goal isn't to increase the number of startups, but to guide new companies in a direction that fulfills Bahrain's vision of becoming a technological hub and producer of futuristic goods and services that compete globally.
We can do it, we are doing it
Bahrainis have always had an entrepreneurial spirit and our location has been a strong contributor to that. The mix of cultures and nationalities has formed a unique society that provides a capable workforce. We have intelligent, hardworking people fluent in English in touch with modern technological and quality standards.
The government can’t create entrepreneurs, but we can help them. What the government is trying to do is create an ecosystem that helps entrepreneurs launch their business, and the crown prince even has an annual award to that effect.
Many of the government programs designed to help entrepreneurs are startups themselves. They need a lot of fine-tuning because those in charge aren't business people, and run these programs based on studies and/or assumptions. They've learned a lot from their mistakes and have begun to reach out to the private sector for consultants, but they need more than that.
The fundamental mistake is that money is thrown around targeting any startup as long as they can present a clear business plan. But business plans are good for one thing: recycling the paper it’s printed on.
The government needs to think like an investor
I would look at the matter in a different way: I would make it essential to evaluate each business as an investment, and make sure that the money spent is smart money.
Even though there is no return expected, I would calculate it as an anticipated return. If we spend smart money then the chances of success are much higher, and we won't waste as much.
The concept of smart money is simple: invest in people, and not only in their business plans. If a person has a clear track record of success, then they should have priority for governmental assistance. That's it.
It's not about discrimination, or not helping everybody out, but the goal is to succeed; and that is the way to do it.
If successful companies have growth they benefit the local economy with revenue and employment. That will in turn snowball into a successful economy of entrepreneurship, synergies, and more startups. Otherwise, it's just like throwing darts blindly and hoping to hit a bulls-eye.
Is everyone really an entrepreneur?
Furthermore, it may not be wise to encourage everyone to be an entrepreneur because we aren't all built as entrepreneurs.
Starting up a business is a lot of pressure, and it needs a large amount of discipline, hard work, and the ability to maneuver quickly and make difficult decisions. It needs social skills, money management, cash flow, marketing, understanding your product or service, team building, and knowing how to read (and respond to) the market. It needs a superman/woman.
The government shouldn't, and can't, be drivers for the growth of SMEs. The market decides who grows but we and the government can definitely help by creating a culture of belief. If we have clear success stories, then that's the best way for growth to follow.
Three things to make it work in Bahrain
So, what do we need to foster this growth and truly make SMEs an engine of growth?
1. Targeted education. Our future generations need to be fluent in technology, programming, and manufacturing and that begins in high school and university. Our educational system needs to focus on that, and we need to have strong training programs within our large institutions, such as BAPCO, GPIC and ALBA, so graduates understand the fundamentals of these companies when they graduate, and can start companies based on that understanding.
2. Collaboration. Startups can begin by catering to large companies that outsource goods and services to foreign companies. For example, GPIC buys screws from China. What if we start a small screw manufacturer that complies with the standards of GPIC, buys the aluminum from ALBA, and uses Bahrain Polytechnic engineers to design them? That screw manufacturer can grow its range as it expands and eventually may even compete internationally. The same applies for IT, security, tools, consultancy, and all sort of items needed on a daily basis.
3. Creating an easy, clear ecosystem. It's not the government's job to create SMEs, but it is their duty to assist their growth by making it easier to access funds. The Ministry of Industry and Commerce has already taken great strides by allowing about 30 commercial activities to work from home offices, including photography, IT and marketing. But what every startup really needs is access to funds. Although the Bahrain Development Bank has excellent programs for Bahrainis, other banks need to follow. I understand lending to startups is dangerous and can't be insured (I checked: there is no insurance on earth for startup loans) which is why conventional banks don't loan. But I think programs such as Tamkeen should add startup loans to their portfolio. They should provide funds to proven individuals, but they should also have the ability to lend money (with a one-strike policy) to help startups. If it's a loan and they only have one shot, I believe the money will be taken much more seriously as if there were no consequences.
We need to shift, and we need to shift now otherwise it may be too late.
When the petrol is gone, will we go back to tents, or will we celebrate our technology in high towers built by silicon?