The finalists greeted old friends, made new contacts and congratulated one another on their wins. Although the attendees were technically in competition with one another, there was an evident delight at the success of others. The winner on the night was the SME community as a whole.

“You can see the vibe, the energy and the growth that [the winners] have,” said Karim el-Solh, CEO and managing partner of private equity at Abu Dhabi-based Gulf Capital. “It’s an exciting event for us to attend and sponsor every year.”

The head of a major regional free zone told MEED she was excited to be at the event, and not just for the networking and profile-raising opportunities. “My neighbour is up for a prize,” she said. “We’ve all come along to support her; I hope she wins.” Her neighbour did win, for The Camel Soap Company in the RSA Start-up Business of the Year category. It sells soap products made from camel milk and olive oil.

At many awards shows, the attendees are cogs in a giant machine. They are justifiably proud of the multibillion-dollar multinationals they work for. However, their interests in their employers’ successes are less vested. By contrast, those who choose to work for SMEs are more personally and emotionally involved in their businesses’ success.

There is a tenacity among SMEs, said El-Solh in his opening remarks on the night. They have to be able to get up after being knocked down again and again. Many of those at the ceremony had taken these knocks and got back up. Many are still struggling. At last year’s awards, the winners of two tickets in a British Airways prize draw said this meant they could get home for Christmas. Business success and awards triumph come at the cost of a lot of hard work, heartache and risk.

So why do SME founders and employees so often choose to leave well paid, secure jobs in established, large companies to go it alone? Mere freedom from the corporate yoke is only part of the answer; by setting out on your own, you can choose which hours of the day you are in the office.

Working for an SME is tough, but the benefits of smaller businesses are manifold. SMEs can move fast and adapt to change. The successful ones are created to fill a genuine gap in the market, and must react to customers and market demands rapidly as they cannot afford to languish in doing what they have always done. This is reflected in the dynamism of those who found them and choose to work for them.

Once an SME has launched, and managed to find its foothold in the market, it must then target growth in order to move away from the hand-to-mouth existence of those start-ups operated out of spare rooms and garages. And this is where the next challenges present themselves. While the average share of bank loans to SMEs in high-income OECD countries is 26 per cent, in the GCC it is a minuscule 2 per cent, according to the Washington-based World Bank’s chief technical specialist Farrukh Iqbal, in an April report.

This is despite bank targets of 21 per cent. Iqbal suggests that a need for onshore companies to be locally owned means they are often fronted by figureheads who have no practical input into the business. “Banks in the GCC not only face the same constraints to SME-lending that they face elsewhere – lack of collateral, informal or non-existent accounts, and weak business planning skills among applicants – but many also feel unsure of the true ownership of the projects for which loans are requested,” he writes.

In August, UK lender Standard Chartered issued a statement that it was exiting the SME business in the UAE as part of “broader efforts to sharpen its strategic focus”. This was after the New York State Department’s financial services watchdog fined the bank $300m and imposed restrictions on its activities, after finding holes in its anti-money-laundering protocols. This illustrates the challenges facing SMEs in securing funding in the region.

An earlier report by the World Bank found that “state banks still play an important role in financing SMEs in the Middle East and North Africa (Mena) region, but they use less sophisticated risk management systems than private banks.” It concluded that to promote SME growth, financial infrastructure must be upgraded to strengthen credit reporting systems and insolvency regimes. “Direct policy interventions through public banks, guarantee schemes, lower reserve requirements and subsidised lending and other measures have played a role in compensating for [the Mena region’s] weak financial infrastructure, but more sustainable structural solutions are needed,” it said.

One of the key drivers behind government support for SMEs is the urgent need for more job creation. The International Labour Organisation estimates that the GCC will need to create 3.3 million new jobs by 2020 to support its growing, predominantly young population. And with only 20 per cent of these jobs expected to come from the public sector, SMEs will play a major role in generating this employment.

Between 2000 and 2010, 88 per cent of all new jobs in the GCC were created by the private sector, according to a 2014 report by US consultancy AT Kearney. Worldwide, 95-99 per cent of enterprises are SMEs, and in OECD countries and Europe, they create 60-70 per cent of new jobs. In the EU, SMEs contribute 55 per cent of GDP, but in the GCC this figure varies from only 14 per cent in Oman to a still meagre 30 per cent in the UAE. In Bahrain, 73 per cent of employees work for SMEs, but they only contribute 22 per cent of GDP.

AT Kearney cites Saudi Arabia’s National Commercial Bank, saying: “The region’s SMEs are relatively inefficient and their share of employment far greater than their share of GDP, highlighting the limited value-added contribution most of them make. This is supported by the fact that few SMEs have grown into large-scale enterprises in recent decades.” The consultancy’s paper found: “SMEs need to expand into more innovative and value-adding activities such as knowledge industries and manufacturing – areas GCC countries have identified as gateways for diversifying their economies.”

Each GCC state has programmes to support SMEs. For example, Saudi Arabia’s Ministry of Labour leads a programme of 38 initiatives for SMEs, and other organisations in the kingdom have launched their own. Abu Dhabi has established the $1bn Khalifa Fund for Enterprise Development to provide financial and professional advice to local entrepreneurs, and other countries have similar schemes to encourage local enterprise.

As well as generating jobs for locals and shifting mindsets away from the expectation of comfortable, highly paid public sector employment, more SMEs also mean wider economic variety, which will help reduce regional reliance on oil and gas. This can make economies more sustainable and less prone to oil price shocks.

So there are as many reasons for governments to drive SME growth as there are reasons for individuals to follow their visions and target gaps in the market. Which means more SMEs, better SMEs and more success for those companies celebrating at MEED’s Gulf Capital SME Awards every year.