Startup MGZN

Shifting from a petroleum driven economy to a self-sustaining economy: Now or never

“The biggest risk is not taking any risk… In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks” -Mark Zuckerberg

80% of the businesses registered in Bahrain are SME’s and they are basically what drive our economy. We have other large corporations (petroleum based giants) and banks which are the main pillars that keep the country going. Without each other, the economy would fail. With the depletion of oil, our aim is to basically shift from being a petroleum driven economy to a self-sustaining economy focused on technology. The goal isn’t to increase startups, but to guide new companies into a direction that fulfills Bahrain’s vision to be a technological hub and producer of futuristic goods and services that compete globally. We’ve always had an entrepreneurial spirit as Bahrainis 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.

We can’t create entrepreneurs but we can help them. There is always demand for progress, innovation, technology, and better goods and services. 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 these government programs are start-ups themselves and need a lot of fine tuning because the people running them 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 as consultants but I think they need a bit more than that. The fundamental mistake is that money is thrown around in programs targeting any start-up as long as they can present a clear business plan. In my opinion a business plan is good for one thing: Recycling the paper it’s printed on.

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 way higher, and we won’t waste as much.

IT’S GREAT TO TRY AND HELP START-UPS BUT IN THE CURRENT SYSTEM THERE’S TOO MUCH WASTE, MANIPULATION, AND ABUSE OF THE SYSTEM.

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 to 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 turnover 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.

Furthermore, it may not be wise to encourage everyone to be an entrepreneur because we aren’t all built as entrepreneurs. Starting up 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 super-man/woman.

THE GOVERNMENT SHOULDN’T (AND CAN’T) BE DRIVERS FOR THE GROWTH OF SME’S. 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. So, what do we need to foster this growth and truly make SME’s an engine of growth? Three things:

1. Targeted education and training: 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 (BAPCO, GPIC, ALBA, etc.) so that graduates understand the fundamentals of these companies when they graduate and start companies based on that understanding.

2. Synergy: 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. Easy Clear Ecosystem: It’s not the government’s job to create SME’s, but it is their duty to assist their growth by making it easier for them to get access to funds. The Ministry of Industry and Commerce has already taken great strides by allowing approximately 30 commercial activities to work from home (photography, IT, marketing etc) which is amazing. What every startup really needs is access to funds. Although the BDB Bahrain Development Bank) has excellent programs for Bahrainis, other banks need to follow. I understand loaning startups is dangerous and can’t be insured (trust me, I checked there is no insurance on earth for startup loans) which is why conventional banks don’t loan. But I think programs like Tamkeen should add startup loans to their portfolio. They should assist PROVEN individuals with funds to grow their business, 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 it is when there are 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 silicone?

Hamed Fakhro

Hamed is a contributor, writer, inventor, and speaker. He is also the founder of Fakhro Properties, Seef Business Center, A’Ali Views Compound, Hack Arabia, and Wudu. Follow him at @fakhro1