Reshaping the Private Sector for the Next Phase of Growth
by: BTM - Tue, 10 Mar 2026
Dr. Jarmo Kotilaine, a seasoned development economist with 30 years’ experience across academia, consultancy, banking and government.
Across the Gulf, governments are navigating fiscal adjustment in a world shaped by oil price volatility, global economic shifts and the accelerating energy transition. In this environment, the private sector is expected to play a larger role in driving sustainable growth. In Bahrain, this ambition aligns closely with the objectives of Economic Vision 2030: a productive, competitive economy led by a dynamic private sector.
The question today is not whether the private sector matters – it clearly does – but how it must evolve to compete in a more demanding global economy.
For decades, Gulf economies developed through a successful model of state-supported expansion. Public investment in infrastructure and services created opportunities for private contractors and suppliers, while public employment supported consumption that fuelled retail and hospitality. This model delivered modernisation and rising living standards.
However, economic structures shaped by earlier growth phases do not automatically generate the productivity gains required for the next stage. Many companies remain concentrated in trading, subcontracting and consumer services. These sectors remain important, but they often operate in fragmented markets with limited scale and thin margins.
As competition intensifies and demand patterns shift, relying solely on familiar business models may constrain long-term growth.
International evidence shows that productivity gains frequently come from changes in business models rather than incremental cost-cutting. Companies that rethink how they create value – through technology adoption, partnerships, scaling strategies and export orientation – tend to outperform those that maintain static structures.
This also requires a degree of self-reflection within the business community. Access to capital is often cited as a constraint. Yet financiers, whether banks or investors, look for structured governance, financial transparency, credible growth plans and disciplined execution. Businesses that operate informally or without scalable strategies will inevitably struggle to secure funding. Building a proper institution – rather than simply operating a trading activity – is not optional in a more competitive environment.
Encouragingly, opportunities are expanding. Technology, financial innovation, logistics, advanced manufacturing and digital services offer higher value-added pathways. Bahrain’s leadership in financial services and FinTech demonstrates that new sectors can flourish when regulation, infrastructure and entrepreneurial ambition align.
Entering more complex industries requires institutional strength. Companies need clear strategic direction, professional management, robust financial controls and a willingness to invest in capability-building. Strategic partnerships, consolidation where appropriate and export ambitions can help businesses move beyond fragmentation toward scale and resilience.
Digital tools, including generative artificial intelligence, are increasingly accessible and can enhance productivity when applied thoughtfully. Technology is not a substitute for sound management, but it can amplify good strategy and disciplined execution.
Ultimately, sustainable prosperity depends on forward-looking enterprises capable of competing beyond domestic markets. Bahrain’s openness, financial sophistication and entrepreneurial talent provide strong foundations. But the next phase of growth will depend not only on policy reform, but on how decisively businesses choose to professionalise, innovate and scale.
The opportunity is significant. Realising it will require moving beyond incremental adjustment toward deliberate transformation – building companies that are not just participants in economic change, but drivers of it.
Tags #btm march 2026 #Bahrain entrepreneurship #gulf business transformation #Bahrain economic diversification #bahrain fintech growth #private sector development gulf #bahrain business growth #bahrain economic reform #economic vision 2030 bahrain #bahrain private sector growth
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