Research from Kuwait, published in the International Journal of Public Sector Performance Management, has looked at the financial challenges faced by small and medium-sized enterprises (SMEs) there. Economic disruption and the post-pandemic environment have increased the risk of financial default among such businesses. Kuwait is among the richest nations, but its dependence on oil exports has made its economy highly vulnerable to global shifts, and SMEs have had to bear much of the burden.
Financial default, a situation in which businesses are unable to meet their debt obligations, is a growing concern for SMEs in Kuwait. The research, based on interviews with numerous SME managers, has identified several factors that have contributed to the financial instability of these businesses. The economic fallout from the COVID-19 pandemic, disruptions to daily operations, and changes in consumer behaviour were among the most significant factors, the researchers found.
In the wake of these crises, many SMEs found it difficult to access funding from traditional sources such as banks, which typically offer loans to support business operations. This lack of access to funding has left many companies with limited resources to adapt or recover. The researchers suggest that their findings point to a need for SMEs to adopt better financial management practices in order to mitigate the risk of default in future crises. SMEs in Kuwait, the research suggests, need to place greater emphasis on sound financial practices like budgeting, cost management, and cash flow forecasting. They say that by improving these areas, businesses may be better equipped to handle unexpected challenges.
Additionally, there is a need for businesses to explore alternative funding methods such as crowdfunding and angel investments rather than relying on bank loans. Of course, those approaches may not be appropriate for every kind of SME.
These findings also point to a need for increased government support and regulatory reform. The research suggests that greater transparency, regulatory simplification, and stronger public-private partnerships could help create a more stable financial environment for SMEs in Kuwait.
Alhaimer, R., Alshami, A., Alkhaldi, A., Alsadeeqi, A., Aloumi, D. and Malik, S. (2025) ‘Evaluating public policy interventions in mitigating financial default risk among SMEs‘, Int. J. Public Sector Performance Management, Vol. 15, No. 5, pp.1-18.