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Bahrain’s rise to the top of the regional FinTech hierarchy was once again highlighted by a new report dubbed “Bahrain & the Fourth Industrial Revolution.” 

Researchers at Milken Institute who compiled the report have underscored how with careful planning and a few bold regulatory reforms, the Kingdom could extend that stature on a global scale. 

There are a few challenges, though, the report noted. Albeit, all of them are pretty much within the grasp of the government and the broader ecosystem to collectively resolve. 

In this article today, we’re going to have a quick look at some of the most important issues and developments highlighted by the Milken Report. 

Key takeaways from the Milken report

#1 Bahrain is on the right trajectory

The Milken analysis highlights that Bahrain is on the right trajectory to a major global hub for technology and innovation. The Kingdom has taken several strategic calls over the past few years to ensure that it stands out among its GCC neighbors, many of whom have their own ambitious FinTech programs. 

A few of the impactful strategic decision taken over the past few years include:

  • Allowing more sectors to embrace 100% foreign ownership.
  • A new and much-improved bankruptcy law that is able to cater to the changing requirements in today’s fast-evolving business environment. More on that here.
  • Positive changes in regulatory frameworks have drawn significant global investments. 
  • Commendable improvements in infrastructure and communication technology.
  • Enabling Amazon to launch its regional data hub in the Kingdom. For more details, refer to our earlier article of how the launch of AWS in Bahrain is significant for the growth of innovative local startups.

#2 Micro firms help with economic growth

Milken researchers have pointed out that “the growth of firms is skewed towards micro-firms” that employ no more than 10 employees. Compared to that, a large enterprise, on average, can create 130 jobs. A new micro-firm, meanwhile, creates jobs for around three people on average. 

The report added that the job scene, and by extension, the economy stands to gain a lot if these micro-firms are nurtured and assisted to grow bigger. 

#3 Continue investing in human resources

With is commendable growth over the last decade, the private sector in Bahrain is going to require an increasingly large pool of skilled workers. While Bahraini authorities are duly investing in training programs, the country could benefit from further accelerating these efforts. 

#4 Focus on Digital transformation already paying off 

Under the Bahrain Economic Vision 2030, the Kingdom is increasingly focusing on digitizing its business and entrepreneurship ecosystem. While opening a new business in a digital economy is cost-effective, among many other perks, it is not always easy for existing businesses to carry out a large-scale digital transformation quickly. Especially for small firms, of which there are many in Bahrain, any such transformation could be extremely costly.

In sectors such as the financial services sector, it is relatively easy to get around that problem via strategies such as consolidation via merger and acquisition. However, the Milken report urges that in the absence of a viable alternative, smaller businesses should be allowed to open as they were. 

#5 The CBB FinTech Sandbox was revolutionary

The Central Bank of Bahrain launched a Regulatory Sandbox in May 2017 to empower FinTech startups to test their innovative products in a safe environment under its direct supervision. The move yielded the desired results by paving the way for a new wave of innovations in the realm of financial technologies. 

#6 The CBB’s Open Banking initiative was another major development

In June 2019, the CBB entered a series of new partnerships with other global financial hubs to implement Open Banking solutions. Needless to say, the move proved to be quite fruitful as it made access to financial information easier, faster, and better-suited to customers’ needs.

Additionally, the CBB also embarked on a progressive path by timely drafting regulatory policies in cryptocurrencies/digital assets while simultaneously addressing issues pertaining to governance, licensing, capital requirements, and risk management.

#7 Impressive progress in the telecom sector

Noting that Bahrain has been at the forefront in the field of ICT innovation not just regionally, but also globally, the Milken report underlined that it today stands at the 31st position out of 176 countries globally. That’s rather impressive considering that it has been only around two decades since the government made the telecom sector open for competition.

By the way, did you know that the Department of Social and Economic Affairs Global Inde named Bahrain in the fourth position (out of 193 countries) in the 2017 UN International Telecommunication Union ICT Development Index?

The report also mentioned impressive growths in various sectors such as the health sector, as well as the insurance sector. 

If you’re looking for further details, read the full report on the official Milken Institute portal here. Also, don’t forget to reach out to StartUp Bahrain if you would like to share your feedback or direct your queries at our in-house experts. Here are our social media channels for that:  Instagram, Twitter, Facebook, and LinkedIn

Jenan Al-Mukharriq

Jenan Al-Mukharriq

A highly driven organizing member of the StartUp Bahrain ecosystem. And a Project Manager at Matter In Hand with a passion for content creation and empowering communities.