Small Enterprises in the Middle East and North Africa Face Risks and Rewards in the Public Market

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For many medium to small companies, winning a government contract can mean steady business and a path to growth.

It should usually be a cause for celebration.

Not so for Shirzad. Celebration quickly turned into anxiety in the face of long delays in payment.

Shirzad works in the Kurdistan Region of Iraq (KRG), where public budgets are stretched thin from coping with the flow of refugees as a result of recent instability.

It has made it hard for the local government to pay its bills on time.

A larger firm might have been able to weather the delays. Shirzad, however, still had to meet his company’s payroll without many other sources of revenue. His company doesn’t have the same kind of nest egg as those of a larger company to cover the salaries.

It’s the kind of situation that can lead to bankruptcy, and one of the reasons why small to medium enterprises (SMEs) often cannot afford to bid for government contracts.

Other obstacles are equally as daunting for smaller firms.

For instance, some Middle East and North Africa (MENA) governments require very large down payments for bidders on public contracts that discourage small companies like Shirzad’s from participating.

Read more at World Bank

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