Kuwait’s economic makeover under threat
Thousands of small and medium Kuwaiti businesses could go to the wall after being walloped by the pandemic, potentially torpedoing a private sector central to the country’s efforts to remake its unorthodox and oil-pumped economy.
The government, which spends more than half of its annual budget on the salaries of Kuwaitis who mostly work in state jobs, has encouraged citizens to set up their own businesses over the past decade in an effort to engineer a private sector.
That’s a major problem for Kuwait, where SMEs generate 11.9% of GDP by gross value added, employ tens of thousands of people and play an important role in sectors like wholesale and retail trade, food and drinks, hospitality and construction.
An amendment to Kuwait’s bankruptcy law, which began to be implemented last month and freed SME owners from the threat of imprisonment from debt defaults, has offered some relief.
Yet entrepreneurs are still exposed to risks such as seizure of assets or insolvency if they can’t settle their debts.