Entrepreneur Ecosystems

Driving Opportunity: Three Recommendations To Help Spur Entrepreneurship In Kuwait

Driving Opportunity: Three Recommendations To Help Spur Entrepreneurship In Kuwait
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Guest Writer
General Manager, Berkeley Research Group (Kuwait)
5 min read
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In recent years, there has been a strong trend amongst oil-rich nations in the Middle East to diversify their economies in order to reduce dependence on oil and its cyclical swings. This policy is presented in Abu Dhabi’s Vision 2030, which aims to create a secure, open economy through sustainable diversification, as well as in Saudi Arabia’s Vision 2030, unveiled by HRH Prince Mohammed bin Salman in 2016. In Kuwait, Vision 2035 aims to transform Kuwait into a commercial and financial hub, and among other targets, aims to create 3,500 small businesses.

The concept of diversification in this context goes beyond simply increasing the number of sectors taking part in economic activity- it also involves fostering innovation and encouraging entrepreneurs, small businesses, as well as foreign direct investment (FDI). The opportunity for a country such as Kuwait is clear. There is a homegrown phenomenon of local concepts in food & beverage (F&B) and retail, often taking advantage of avid use of social media amongst Kuwaitis to promote and distribute products and services.

The innovation is not just in the creativity behind the businesses, but includes finding unique workarounds to the challenging bureaucracy and business environment dominated by international brands and large conglomerates. Kuwait’s extreme connectivity enables firms to sell and promote their products and services through innovative mediums such as Instagram and WhatsApp. 

Berkeley Research Group (BRG) recently studied the entrepreneurial ecosystem in Kuwait to explore ways the government can better align its support of SMEs to the aspirations and strategic goals of Kuwaiti entrepreneurs. Our study noted that due to the relatively high purchasing power of Kuwaiti nationals, subsidies, and other government programs to support the private sector, many of these F&B and retail businesses are highly profitable in Kuwait but their business models are not duplicable elsewhere. Our study also looked at the phenomenon of Kuwaiti businesses that aim for global markets from the outset. Many of these find Dubai a more suitable business environment, because of its easier (albeit more expensive) and more open regulatory environment, and larger talent pool.

Our study concluded that Kuwait’s support of entrepreneurs risks failing to achieve the country’s ultimate economic goal of diversifying sources of income, as many of the small businesses in F&B and retail are not scaling up into global businesses. As a result, oil earnings remain the most dominant driver of revenue into the country. In addition, many of the high value and scalable businesses are relocating out of Kuwait, and so, the country is losing out on the value, either in jobs or spillover effects, created by their innovations.

Nevertheless, by drawing on lessons learned from other “clusters of innovation” such as those in smaller European countries or Singapore, we found that Kuwait has an opportunity to be strategically focused on areas of local strength– the country’s economic vision can be accomplished by properly capitalizing on these phenomena, and aligning government support with the needs and aspirations of local entrepreneurs. One key source of income is Kuwait’s budding reputation as an F&B and retail cluster.

Large numbers of GCC nationals and expats could be attracted to visit Kuwait by leveraging Kuwait’s existing reputation and marketing it in target markets, as well as by providing incentives. Examples of this include discounts on Kuwait Airways for weekend trips to Kuwait, and establishing a website (e.g. www.visitKuwait.com) that organizes information on local festivals and activities, promotes Kuwait’s traditional restaurants and coffee shops, as well as pop-ups of Kuwaiti retail stores that may be Instagram-based and managed from home. A small and coordinated investment could go a long way towards encouraging visits by high-spending tourists to increase the country’s revenue and bolster the energy and investment in small businesses.

A second way to capitalize on the homegrown F&B and retail phenomenon in Kuwait would be to encourage large Kuwaiti conglomerates to identify and partner with SMEs to help them expand into regional and global chains in the Middle East and beyond. The possibilities are worth exploring as an investment and partnership of this nature would merge the key strengths of the Kuwaiti private sector.

A final recommendation involves implementing protocols to create and retain high-value and high-risk entrepreneurial ventures in Kuwait. This is more complicated as not only do the business and regulatory environments have to keep up with global competition, but it has also become easier for other countries to attract Kuwait’s top talent through their economies of scale. To combat these issues, Kuwait needs to better coordinate its strategic efforts around education and R&D in areas it thinks it can add value. An overhaul of the entire ecosystem is required, from primary education to extracurricular activities, from universities to scientific research bodies, all supported by the presence of multinational corporations.

The seeds of success are already in place, yet it will take strong leadership, a sense of urgency to act, an appetite for risk-taking, and a coordinated effort for the current initiatives to bear fruit. Fortunately, Kuwait has a relatively small population, and the resources are in place that will allow it room to maneuver. In a region filled with so much hype and cynicism, Kuwait has an opportunity to set an example of how a country can overcome the “resource curse,” and combine its historic reputation as a hardworking and innovative business community with its natural resources to both maintain its high standard of living, and support the needs and aspirations of local entrepreneurs. 

Related: A Cultural Shift: Changes In Kuwait's Entrepreneurship Discourse As Seen At Nuqat's Human Capital Forum

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