2021 Entrepreneurial Activity Review

During their time participating in GEM, the Qatar population has consistently expressed high levels of entrepreneurial confidence, both among the general population and among active entrepreneurs themselves. This continued in 2021, improving on 2020 levels, which were relatively high despite the COVID-19 pandemic. For example, 73.8% of the Qatar population saw good opportunities to start a business where they lived, compared to 72.3% in 2020, while 70.9% also said they had the skills, knowledge and experience to start a business, compared to 68.2% in 2020. Unsurprisingly given this level of confidence, the Qatar population led all GEM Level A economies in expectations to start a business within the next three years (50.4%) during the 2021 GEM cycle.

Yet, despite this enthusiasm, Qatar’s TEA rate declined slightly to 15.9% from 17.2% in 2020, while EBO remained the same at 6.1%. Confidence may generate new business plans, but the country also had to contend with some serious economic challenges from COVID-19 which must have contributed to this decline. Even in 2021, as the country’s GDP recovered, 53.5% of the Qatar population said their household income had decreased because of COVID-19, the second-highest rate among GEM Level A economies. 

The impact of COVID-19 also weighed on entrepreneurs in 2021. The country had by far the highest rate of businesses that exited due to COVID-19 than any other GEM Level A economy. In total, the rate of individuals exiting a businesses in 2021 nearly equalled the country’s TEA rate, meaning there is significant churn in entrepreneurial activity as a result of the pandemic’s impact on Qatari business. 

One clear solution to this dilemma is to manage COVID-19 effects on businesses, so that fewer exits occur. In time, this will also boost EBO levels as more firms survive to the established stage. Other options include encouraging more business services startups, which tend to generate more income and can more easily operate remotely, within targeted growth policies. Qatar currently has a high rate of consumer service-oriented new businesses, which tend to be highly susceptible to economic swings, such as the kind generated by COVID-19. Given their enthusiasm, Qatari entrepreneurs could thrive beyond the consumer services sector.

2021 Framework Conditions Review

Qatar’s framework conditions received generally lower scores in 2021 compared to 2020, even as the economy improved. Financing was particularly viewed as a constraint on entrepreneurship by experts. The condition of Entrepreneurial Finance received a 4.6 score, ranked 17th among GEM Level A economies. Improving this condition will be crucial in reducing the high rate of business exits seen in 2021. Policymakers may offer tax breaks and other financial incentives for new businesses, particularly in innovative sectors, so that those companies may compete better for funding. Additionally, on the other side, the state could offer tax incentives or funding matches for financial institutions who lend to entrepreneurs.

Qatar has a highly visible development program, called the Qatar National Vision 2030, which includes a strong component of entrepreneurial support. Yet, despite this, experts gave the country’s governance conditions lower scores than in 2020. Still, these conditions fared better than finance when compared to peer economies. Qatar’s Government Policy: Support and Relevance condition received a 5.2 score, which was down compared to 2020, but still eighth among GEM Level A economies. This suggests the state does provide sufficient support to entrepreneurs, but perhaps more is needed beyond the Vision 2030 plan. Policies that help entrepreneurs survive the economic strains of COVID-19 into the future would be a significant boost.