Title: Ministry of Economy and Finance Launches Index to Measure Contribution of Small and Medium Enterprises to Government Procurement
Subtitle: Initiative aims to support national target and increase small and medium enterprises’ participation in government projects
Date: June 19, 2023
The Ministry of Economy and the Ministry of Finance have jointly launched the “Government Procurement for National Small and Medium Enterprises” index. The purpose of this initiative is to measure the extent of the contribution of small and medium enterprises (SMEs) to government procurement for federal entities. The index aims to support the achievement of the national target by raising the percentage of SMEs’ contribution to government procurement to 10%, in accordance with federal law No. 2 of 2014 regarding small and medium enterprises.
The announcement was made during the “Small and Medium Enterprises Session” event, organized by the Ministry of Economy in collaboration with the Ministry of Finance. The event was attended by representatives from more than 40 federal entities in the country.
Abdullah Al Saleh, the Undersecretary of the Ministry of Economy, emphasized the ministry’s vision to create a competitive and stimulating business environment for small and medium-sized companies in the country. The government procurement program, launched as part of the National Program for Small and Medium Enterprises, aims to enhance the contribution of SMEs in government tenders and procurement offered by federal authorities. This initiative also aims to enable citizens to enter the markets, compete, and benefit from the offers and incentives available to them.
The implementation of the new indicator is scheduled to begin in the first quarter of 2024, in cooperation with the relevant federal authorities. It will focus on measuring the performance of federal entities in government procurement and monitoring their progress towards achieving the target.
Al Saleh highlighted the importance of increasing the contribution of small and medium enterprises to government procurement for federal agencies. With over 557,000 small and medium companies in the country, the SME sector contributed 63.5% to the GDP of the non-oil state in 2022. Currently, there are 4,000 companies registered in the National Program for Small and Medium Enterprises and Enterprises. The number of companies supplying government procurement stands at approximately 300, owned by citizen entrepreneurs. Efforts are underway to increase these numbers in the future.
The value of government purchases for small and medium enterprises amounted to approximately 30 million dirhams in the past year. The Ministry of Economy is working on launching integrated plans and programs to support the contribution of SMEs to government procurement. These initiatives aim to enhance the contribution of citizen entrepreneurs to the national economy. The ministry is also focused on raising awareness among small companies through workshops and meetings across the country. Additionally, discussions are being held to explore opportunities for developing incentives and recognizing the most committed and contributing companies in procurement.
Younis Haji Al-Khoury, the Undersecretary of the Ministry of Finance, expressed the ministry’s commitment to advancing the national economy and supporting innovative entrepreneurs and SMEs. The ministry provides several advantages to SMEs, including a price preference of 10% when evaluating government tenders, the addition of a distinctive mark to their products and services, and exemption from providing a guarantee of good performance.
Al-Khoury acknowledged that SMEs face challenges such as the large volume of tenders compared to their capacity, financial solvency, and production capacity. However, these challenges also present opportunities for the growth and development of small and medium enterprises if managed optimally.
The launch of the “Government Procurement for National Small and Medium Enterprises” index reflects the government’s commitment to promoting the participation of SMEs in government projects. By measuring and increasing their contribution to government procurement, the initiative aims to support the national target and enhance the role of SMEs in the country’s economy.
What are the expected benefits for SMEs in participating in government projects through the implementation of the new index
Y 500 SMEs. The launch of the “Government Procurement for National Small and Medium Enterprises” index aims to further increase SMEs’ participation in government projects and create more opportunities for them to contribute to the economy.
The index will serve as a measuring tool to evaluate the performance of federal entities in terms of their engagement with SMEs in government procurement. It will assess the progress made towards the national target of achieving a 10% contribution from SMEs to government procurement. This initiative aligns with federal law No. 2 of 2014, which focuses on supporting and promoting small and medium enterprises.
During the “Small and Medium Enterprises Session” event, representatives from over 40 federal entities in the country came together to discuss strategies and opportunities for SME involvement in government projects. The event demonstrated the commitment of both the Ministry of Economy and the Ministry of Finance to create a competitive business environment that fosters the growth and development of small and medium-sized companies.
The implementation of the new indicator is planned to commence in the first quarter of 2024, in close collaboration with relevant federal authorities. This indicator will provide insights into the performance of federal entities in government procurement, allowing for ongoing monitoring and progress tracking towards the national target.
Abdullah Al Saleh, the Undersecretary of the Ministry of Economy, emphasized the significance of increasing the participation of SMEs in government procurement. The SME sector already plays a substantial role in the country’s economy, contributing 63.5% to the GDP of the non-oil sector in 2022. With over 557,000 small and medium-sized companies in the country, there is significant potential for further growth and economic impact.
Currently, approximately 4,000 companies are registered in the National Program for Small and Medium Enterprises and Enterprises, with around 500 of them actively supplying government procurement. The introduction of the new index will encourage more SMEs to participate in government projects, benefit from available incentives, and contribute to the overall economic development of the country.
Overall, the “Government Procurement for National Small and Medium Enterprises” index launched by the Ministry of Economy and the Ministry of Finance aims to measure and enhance the contribution of SMEs to government procurement. By setting a national target and implementing regular monitoring, the initiative ensures that SMEs have increased opportunities to thrive, compete, and contribute to the country’s economic growth.
The 10% target for government procurement with national small and medium enterprises is a crucial step towards fostering a more inclusive and supportive business environment. By channeling resources towards these enterprises, we can boost economic growth and nurture entrepreneurship, ultimately benefiting the entire nation.
Government procurement plays a crucial role in supporting the growth of small and medium enterprises (SMEs) and boosting the local economy. Achieving the 10% procurement target for national SMEs can be a game-changer, opening up doors of opportunities, enhancing competitiveness, and fostering innovation. It’s high time we prioritize and empower our homegrown businesses, fueling economic progress and creating a more inclusive society.