Foreign Policy

Bahrain: The Innovation-Driven Financial Hub

Content by Prisma Reports

Established in 1992, Bahrain Development Bank (BDB) is playing a crucial role in nurturing the country’s economic growth and assisting its recovery from the pandemic. The national development bank is exclusively focused on encouraging and developing Bahrain’s small- and medium-sized enterprises (SMEs) and entrepreneurs through a variety of financial services that are specifically tailored for them.

As the country’s premier SMEs bank, those services have provided a lifeline to many smaller businesses during the COVID crisis. For example, the bank has been the focal point for assisting SMEs under the government’s Liquidity Support Scheme and BDB has made a quantum leap in its disbursements to SMEs, which rose by 179% in 2020 to $281 million.

All of BDB’s activities are fully aligned with the three guiding principles of Bahrain’s Economic Vision 2030 development plan: sustainability, fairness and boosting the competitiveness of the private sector so that it drives the economy. The crux of BDB’s contribution, as the bank sees it, is to promote Bahrain’s entrepreneurial and innovation ecosystems by supporting the country’s enterprising professionals and young people through their entire business journey.

All of BDB’s activities are fully aligned with the three guiding principles of Bahrain’s Economic Vision 2030 development plan: sustainability, fairness and boosting the competitiveness of the private sector.

Along that journey, BDB has invested in Tenmou, an angel investment company that supports startups with seed funding. In addition, the bank operates three incubators, which benefited 155 emerging businesses in 2020. One of these is dedicated to female entrepreneurs and offers them highly subsidized business spaces and facilities to run their businesses. Its second incubator is open to all entrepreneurs and provides similar services, while the third is focused on the agricultural sector. As part of its wide-ranging portfolio of services, BDB also channels financing to startups and SMEs to help them grow within or outside of Bahrain. 

In order to expand and create access to funding in Bahrain and across the wider region, in 2018 BDB became the investment manager of the $100-million Al Waha Fund of Funds aimed at building Bahrain’s venture capital capability and creating access to funding, ultimately boosting the startup ecosystem in Bahrain and the Middle East and North Africa (MENA) region. 

This government-led scheme is investing in technology venture capital funds that invest in innovative tech entrepreneurs across the MENA region. To date, about 60% of the fund has been successfully deployed and the bank has cemented its reputation for leading the way in helping Bahrain’s entrepreneurs and SMEs to become regionally competitive businesses.

BDB is also meeting its vision to be a sustainable industry leader. In recent years, it has undergone a significant operational transformation that has allowed it to deliver stronger, efficient and more sustainable performance and growth. The bank’s financial results illustrate this: for example, in 2020 it posted a profit for the second year running and its capital adequacy ratio rose from 52.51% to 63.84% year on year.

A key aspect of this transformation is that BDB is positioning itself as one of the most digitalized banks in the region. It is currently in the process of migrating its core banking system to the cloud and is about to launch a new digital-banking platform for customers: tijara. This will enable SME loan procedures to be fully automated from client onboarding through to loan disbursement and documentation. As a result of these digitalization measures, BDB will be able to carry on meeting the unique and evolving needs of Bahrain’s SMEs and entrepreneurs by providing enhanced and faster end-to-end digital experiences, while maintaining the best-in-class governance and compliance standards it is renowned for.