Chief-in-Editor  Prof. Badria A. Al-Awadi

In recent decades, small and medium projects have constituted one of the most important investment trends in the world, just like major investment projects related to companies and countries, in the context of the volume of funds destined for the said projects, the number and quality of the sides related to them, and their direct and indirect effects on the groups that undertake these investments firstly, and then on societies, economies, states, and nations.

This type of projects is responsible for two thirds of jobs in the world, according to official data of the International Labor Organization (ILO) and to the United Nations, and it constitutes one of the most important drivers of economic and social growth, with a rate exceeding 50% of GDP in some countries, and up to 70% in other countries. These projects also contribute about 60% of the GDP in the service sector, as these projects thrive to meet the increasing requirements of this sector.

According to the United Nations, the companies working in these projects represent more than 90% of all companies on average, and accordingly they are considered actors in achieving green recovery. Therefore, they have been designated a global day on June 21 of each year to celebrate their developmental role, and to provide all kinds of support and assistance to the efforts of the entities in charge of them, the sides organizing them, and their workers. This support includes establishing international financial resources for financing and assistance, and providing rehabilitation and training services, awareness-raising, and education, among other resources.

Because of the importance of these projects at the local level in providing job opportunities for different groups (whether they are college graduates, less educated groups, or others, and the social and economic growth that this achieves) various countries – developed and developing alike – have passed legislation and laws regulating this type of projects and establishing frameworks and structures to organize them in a way that facilitates their activation and the development of their impact.

In this context, the State of Kuwait issued Law No. 98 of 2013 establishing the National Fund for Small and Medium Enterprises’ Development, as an independent public institution with a capital of two billion Kuwaiti dinars whose mission is to support projects established by citizens, starting with a feasibility study and training, through implementation, production and marketing, as well as providing assistance in management and ending with ensuring the sustainability and continuity of projects that have proven to be successful.

This law consists of 33 articles in six chapters, regulating: the establishment of the fund, its purposes, and its management which consists of a board of directors and a CEO, project incubators and stages of support, project financing and procedures, and incentives and benefits offered to the projects. The law was amended in the direction of clarifying and explaining the nature of the fund and its terms of reference in 2018. The amendment covered articles (1, 5, 6, 7, 12, 13, 16, 17, 18 bis, 26, 29, 31), which included a statement about the role of the administration, the competencies and powers of the units, the procedures for studying project requests and issuing a decision regarding them, and the methods of complaining against them.

To activate the law, administrative structures of the fund were formed, including a Board of Directors and the appointment of a Chief Executive, by the Kuwaiti Council of Ministers, who in turn undertakes the establishment of administrative units. The fund has already launched its work in financing projects, as reports issued by it indicated that it provided financing during the first years to more than 300 projects after they had been approved in accordance with current legal and administrative procedures, and other reports indicated that at the same time, it refused to accept and finance another 700 projects for legal and administrative reasons related to the quality of the projects, to feasibility studies about them, to their scope and to other reasons. This procedure is an inherent competence of the Fund and its management which helps in selecting new projects and initiatives that bolster the local economy.

However, the legal and administrative debate that is being raised at this stage is related to the controls of the fund’s policies and activities, and the need to set more disciplined standards with regard to the feasibility and seriousness of projects, to monitor their financing and spending, and to find more flexible and effective formulas and forms in sponsoring and providing care to projects and initiatives, as well as expanding their scope to allow the Kuwaiti entrepreneur and project owner to expand the business in the Gulf Cooperation Council and other countries. Moreover, work on training, consulting and assistance in planning and management, in turn, needs to be developed and strengthened in a way that contributes to the success and development of small and medium enterprises, which will have a positive impact on the national economy and on social development.

The legal framework which regulates small and medium enterprises is not limited to laws organizing the fund only, but also includes various other laws which organize commercial and investment work, companies and others. Thus, the law maker is required to give special care to such projects. Furthermore, the managements overlooking such projects include several Ministries, agencies, and bodies. Being the country’s executive body, the government is thus required to pay increased attention to this sector by allocating budgets for training, qualification, partnership, and financing.