The estimated 500,000 small and medium businesses in the Kingdom continue to face many problems, the least of which is low productivity, financial and administrative difficulties and marketing problems. They also suffer from the lack of trained low-cost Saudi workers compared to the readily available foreign work force.
A recent study of the problems facing these businesses showed that on average five small businesses are offered for sale every day in Riyadh — with the owners citing sustained losses that make them unable to operate or have any chance of being able to develop and expand further.
The study also concluded that for every 10 small and medium businesses that go out of business, only two new applications for investment are registered. If this is the picture in Riyadh, then we shouldn’t expect to find anything different in Jeddah and the Western Region or in other areas of the north and south.
We must expect a situation like this to worsen the problems of unemployment, causing jobless figures to rise to alarming levels. This of course will further aggravate the problem of poverty. This puts us into a very difficult situation; if we fail to act quickly and solve the problem by providing the necessary support to these industries, we may never be able to overcome the problem of poverty.
Last month, the Jeddah Chamber of Commerce and Industry (JCCI) signed an agreement with the National Small Industries Corporation of India that called for cooperation to improve and develop small and medium businesses in the Kingdom. We cannot say this will solve the problem but it is definitely a step in the right direction. India has a successful history of small and medium businesses and has, over the years, acquired a great deal of experience in dealing with such businesses and problems. This is done by local banks which provide cheap and easily accessible resources to finance the small industries. This in turn enables India to address the problem of poverty among its population of one billion.
At present, India’s small and medium businesses employ some 88 percent of the country’s total work force. This is the sort of solution we should seek since large firms in our country can only employ a small percentage of the work force. A company such as Saudi Aramco, for example, employs a mere 1.5 percent of the local labor force.
We hope to see other chambers of commerce following JCCI’s example and searching for creative solutions to problems facing small businesses. We also want to see continuity and close monitoring when addressing the problem. One of our main disadvantages is that we greet new and ambitious initiatives with much enthusiasm, only to allow the efforts to sink into oblivion after a short time.
