Small and Medium-sized Enterprises (SMEs) in the GCC have the potential to employ up to 22m people, according to the findings of a new study by MENA Research Partners (MRP).

It predicts that the value of SMEs could reach US$920bn per year, with growth of 156 per cent expected over the next five years.

The GCC region currently accounts for around 34 per cent of SMEs in MENA, and is worth US$360bn a year to the economy, but the study found that it has the largest potential for SMEs regionally as it is growing from a relatively small base.

“Most of this growth is expected to come from key geographies such as the Kingdom of Saudi Arabia and the UAE, which are giving high priority to SMEs across many new regulations, policies and initiatives with the aim of boosting their share in the national economy,” said Anthony Hobeika, chief executive of MRP.

“For example, in its Vision 2030, KSA has set a target to increase the share of SMEs in its GDP from a current 20 per cent to 35 per cent. The UAE, in its Vision 2021, set a target to increase the share of SMEs in its non-oil GDP from a current 60 per cent to 70 per cent,” he said.

SMEs are the main engine for job region in the GCC region, said Hobeika. Current SME employment is estimated at around 17m people, but MRP believed this could increase by another five million over the next five years – a rise of 30 per cent, or the equivalent of 55 per cent of the total active population.

The sector is also viewed as a key way of absorbing the large number of young people entering the labour market over the next decade, according to MRP. The GCC population is growing at a rate of 2.9 per cent annually, “with the young tranche accounting for 73 per cent of the total”.

“Such a positive outlook for SMEs and entrepreneurship in the GCC is clearly reflected by the enthusiasm of private and institutional investors gearing up their funding into the sector,” added Hobeika. Venture capital firms have invested around $1bn into SMEs and start-ups in the past five years.

“Looking forward, governments acknowledge the role that entrepreneurs and SMEs can play in leading economic transformation, where special focus is given to high growth sectors like technology,” he added. “We have already seen many success stories in the regional tech startups, which are key to promoting competitiveness, innovation, productivity and unlocking economic growth.”

In June, an initiative was launched in Oman to encourage the creation of new SMEs and reduce joblessness among young people. The government gave its backing in the form of an OMR70m fund available to young entrepreneurs wanting to start a business.