Government Defends Tamkeen Fund, Rejects Proposal for New SME Financing Entity

TDT | Manama

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The government has defended the role of Tamkeen, the Labour Fund, in supporting the growth of the national economy and the private sector, rejecting a parliamentary proposal to establish a new fund for small and medium-sized enterprises (SMEs). The government argued that Tamkeen already effectively fulfills the objectives of the proposed new fund.

The government highlighted Tamkeen's significant contribution to the SME sector, noting that approximately 96% of its total support has been allocated to micro, small, and medium-sized businesses since its inception, with only 4% going to larger companies. The government cited successful programmes like the "Career Development Programme" and the "Business Growth Programme" as examples of Tamkeen's positive impact on SME development.

The government's response came in the form of a memorandum addressing a parliamentary bill proposing a new fund for SME financing. The government asserted that creating a duplicate entity would be unnecessary and inefficient, given Tamkeen's existing infrastructure and proven track record.

The government further emphasised its commitment to supporting SMEs through various initiatives. These include incentivising programmes for SMEs in promising sectors and the launch of the 2022-2026 Financial Services Development Strategy.

This strategy includes performance indicators targeting a 20% increase in SME access to available financing to boost their businesses and contribution to the national economy.

The government also pointed to the Central Bank of Bahrain's directive to all retail banks to review and expand their SME financing targets. This includes establishing dedicated departments or units within credit departments to handle SME financing and developing financial products tailored to SME needs.

The government cited positive progress, noting that SME financing by banks increased to 10.5% last year, compared to 4.8% in 2022—a significant increase of over 50% in a single year. This demonstrates, according to the government, the effectiveness of the current strategies and the unnecessary duplication of effort that a new fund would represent.