GLOBAL INSIGHT / Bahrain report 2019

Maximizing the potential of people and businesses

Bahrain has put in place a network of organizations that are boosting the private sector and turning the kingdom into a hub for both entrepreneurs and established businesses.

GLOBAL INSIGHT

Bahrain is focused on advancing its private sector and making it the key driver of an increasingly diverse, competitive, entrepreneurial and knowledge-based economy.

To foster the development of its own citizens and businesses, as well as boost the local economic environment for foreign investors, the government has created an extensive and collaborative ecosystem of business-friendly organizations that are mandated to encourage private-sector enterprises of all sizes and realize the potential of those that set them up and their employees.

This strategy is working — in just the last three years, the number of Bahraini startups has grown by 46 percent.

At the heart of this ecosystem is Tamkeen, the Bahrain Labor Fund, which empowers individuals and businesses through grants, financial assistance and programs for business development, in addition to offering wage-support initiatives.

“Tamkeen was founded in 2006 after the government had considered what was needed to reform the economy,” said Chief Executive Dr. Ebrahim Mohammed Janahi, who noted that central to the organization’s mission is investing in the development of human resources and Bahrain-based businesses that contribute to economic growth.

That investment has had a significant impact. Since its establishment, Tamkeen has injected $3.1 billion into supporting Bahrain’s private sector and has launched over 300 programs and initiatives. Thirty-eight percent of citizens working in the private sector have benefited from its training programs, while 53 percent of active businesses have received support.

“What Tamkeen has done has been amazing for the nation. It’s been a huge success. To begin with, some in the business community were unsure about Tamkeen’s potential but now they are very much in support of what we do,” stated Janahi.

“Tamkeen is a success story for Bahrain because we work with small, medium, large and even micro level enterprises and, at the same time, we do a lot for individuals. Internationally, it is quite unique to reach out to both groups,” he added.

The majority of the authority’s budget for 2018 was allocated to training and wage support, according to Janahi, “We have invested significantly to make sure that Bahrainis have the right skills and professional qualifications to make them the right and affordable choice for companies in the country.”

Tamkeen’s training programs target every stage of an individual’s career or a business’s development, and cover a multitude of subjects including skill and career progression, entrepreneurship, funding and financing, with many being sector or employer specific. For example, it has recently supported courses created especially for staff of Citibank and Amazon Web Services, a technology company that opened a regional base in Bahrain in 2018. This wide variety of initiatives all have one thing in common, however: a focus on customer centricity, improving quality and delivering results.

Transformational initiatives

In 2018, Tamkeen increased the support it gave companies to pay employee salaries by 182 percent in comparison with 2017, resulting in the generation of 8,712 new jobs for Bahrainis within the private sector. In a bid to create even more employment opportunities, the organization has now extended this wage-support program, which provides any startup with the financial means to hire staff from the local population.

“Tamkeen’s program covers any new graduate that is taken on as an employee in the private sector,” explained Janahi; “We will support 70 percent of their salaries for their first year of employment and 30 percent for a further six months.”

This wage-support program, along with all of Tamkeen’s other initiatives, are open to companies from any country, he said: “They can be Japanese, British, American, Singaporean or German — we don’t look at the nationality of the owner. As long as they are commercially registered in Bahrain they are treated exactly like a Bahraini company and get all the incentives a Bahraini businessperson can get.

“I would advise international companies to come and see for themselves how Bahrain’s system works; how Tamkeen and other entities offer their combined support to investors; and how our initiatives address their needs.”

To ensure Tamkeen’s initiatives continue to address its current and future clients’ needs, the authority reviews and adapts its strategy every three years.

“Every year, we hold a consultation forum, which brings the owners of around 500 enterprises and organizations together. We listen to their feedback about what they want, process those opinions and use them to develop our operational plan,” Janahi explained.

As a result of this process, Tamkeen’s 2018-2020 strategy is focused on transformation, he stated: “All our programs need to make an impact and serve the needs of companies in Bahrain but we also want to transform ourselves into the best possible entity for the benefit of our private sector.”

This focus requires Tamkeen to react quickly to emerging sectors and technologies. “For example, as part of our 2018-2020 strategy development we looked hard at what new services we needed to provide to cater to companies in the fintech sector,” said Janahi.

One of those new services was launched in February 2019 in conjunction with the sector’s largest hub in the region, Bahrain FinTech Bay. The FinTech Talent Program is the first training and development initiative for the emerging technologies in the Middle East.

It was created in partnership with global experts in the subject such as the U.S.’s Georgetown University and should position the kingdom as a center of excellence for fintech skills and entrepreneurs.

Investing in startups

As part of Tamkeen’s 2018-2020 strategy, “We are taking a new and expanded approach to the organization’s investment activities by venturing into investments that enable us to become an even more active participant in the national effort to create a competitive and resilient economy,” he stated. These enriched initiatives will allow the organization to further develop the private sector, said Janahi: “Our investment pillar will provide a diverse set of solutions to help improve access to finance for businesses at all stages of growth, including startups, and will support the emergence of new business sectors within the economy. In this regard, Tamkeen’s investment initiatives will mainly bridge investors with relevant investees. This will be done through multiple strategic investment projects, carried out in collaboration with relevant stakeholders, that will support the acceleration of businesses.”

A major example of this new strategy came in May 2018, when Tamkeen became one of the most significant limited partners in the $100-million Al Waha Venture Capital Fund of Funds. Managed by the Bahrain Development Bank, this fund is already boosting the technology startup ecosystem, with 45 percent of it having been allocated to various venture capitalists.

Another way in which Tamkeen is investing in the economy is through a support program for cloud computing launched in September 2018. Through this plan, Tamkeen covers the costs to businesses of cloud services from Amazon Web Services for a period of 18 months. “We think that enabling access to enterprise-grade technological infrastructure is crucial for enhancing our businesses’ competitiveness in a changing market,” Janahi explained.

“At Tamkeen, we seek to keep pace with the dynamic changes in the economy and design the most appropriate solutions in line with the opportunities,” he added, noting that the authority believes accelerators are an excellent solution for enhancing the kingdom’s entrepreneurial ecosystem.

For this reason, in 2018, Tamkeen partnered with Egypt-based Flat6Labs to launch the Flat6Labs Bahrain accelerator program. Through this plan, Tamkeen will invest in more than 40 local and international startups over the next three years, with each receiving $30,000 in seed funding and mentorship-driven support.

As a result of Tamkeen’s initiatives, as well as those of many other organizations in Bahrain, the kingdom’s reputation for supporting talent is now so strong that it was chosen as the location for the 11th Global Entrepreneurship Congress in 2019. The event was held in April as a collaboration between Tamkeen and the Global Entrepreneurship Network, probably the world’s most important entrepreneurial platform.

The successful congress brought together more than 3,000 leading entrepreneurs, investors, researchers and economic policymakers from over 170 countries, and shone an international spotlight on the talent that the authority is helping to nurture, said Janahi, “With Tamkeen’s history of proactively developing and enacting programs designed to empower Bahrainis and new enterprises, we were perfectly placed to host this important event.”