This paper examines the current status of small and medium enterprises (SMEs) in the economy of Kuwait. It begins by discussing the theoretical relationship between SMEs and economic development in its varius stages. It points to the difficulty of placing Kuwait in this set-up. It then examines the existing role of SMEs in the Kuwait economy and concludes that it is not delivering. The paper then discusses what are the causes behind that meagre contributions. The paper finally proposes some policy option to invigorate SMEs