SMEs Strengthening the Entrepreneurial Ecosystem

THE MENA REGION boasts a thriving entrepreneurial landscape, with the UAE standing out as a prime destination for business ventures. SMEs play a pivotal role in the UAE's economic fabric, comprising a remarkable 94% of all businesses. They not only serve as the engine driving business activity but also contribute significantly — nearly 63.5 per cent— to the UAE's non-oil GDP, thereby cementing their indispensability to the nation's economic vitality.

In charting its economic vision for the next 50 years, the UAE government has given top priority to the growth and progression of SMEs, fostering a conducive environment to attract local and foreign investment. As of the end of 2022, the UAE reported an estimated 557,000 SMEs, with ambitious plans to bolster this number to one million by 2030. Recent statistics further highlight the UAE's appeal to entrepreneurs. During the first half of last year, 30,146 new businesses registered with the Dubai Chamber of Commerce, up from around 21,000 a year ago.

INVESTMENT OPPORTUNITIES FOR SMES

From tourism, hospitality, technology to renewable energy, SMEs in the UAE have ample avenues to explore and capitalise on within the UAE's dynamic economy. Ranked 16th for its ease of doing business according to the World Bank, the UAE boasts the most conducive business environment for companies across the Middle East. Ongoing reforms and regulations have further fortified the UAE’s SME market, making it an exceptionally attractive destinations for entrepreneurs and investors alike.

Facilitated by a business-friendly regulatory framework, transparent procedures, and investor-friendly policies, the country’s strategic location and access to global markets also provides unparalleled access to diverse consumer bases and trading partners, enabling market penetration and growth. In addition to this, UAE’s robust infrastructure not only enhances operational efficiency but also promotes innovation and competitiveness, providing SMEs with the tools and resources necessary to thrive in today's fast-paced business environment.

UAE GOVERNMENT INITIATIVES

The UAE government has launched several initiatives and programs to support SMEs. The Entrepreneurial Nation 2.0 initiative, unveiled by the Ministry of Economy, seeks to develop more than 8,000 small and medium enterprises and start-ups by 2030, with a focus on technology.

Access to funding is one of the main challenges faced by SMEs. To address this, the UAE government launched the Khalifa Fund for Enterprise Development and the Mohammed Bin Rashid Innovation Fund, providing financial assistance, mentorship, and training programs to aspiring entrepreneurs. There are several incubators and accelerators in the country that provide office spaces, as well as mentorship or networking opportunities to startups, helping them to connect with potential partners and customers.

The UAE also has a commitment to industrial development, underscored by its 10-year strategy which endeavours to more than double the industrial sector's contribution to the GDP by 2031. The Dubai Economic Agenda (D33) was introduced as a comprehensive strategy aimed at positioning Dubai amongst the top three global cities. The prime focus of this strategy to double the economy and support small and medium-sized enterprises (SMEs), innovation, and investment.

Among the 10 transformational projects for this decade, the government aims to develop a Small and Medium Enterprises scale-up program by identifying 400 high-potential companies, supporting their capacity building, and supporting them to grow globally. SMEs in the UAE can also now benefit from new digital solutions such as the Government Procurement Platform, ensuring increased business prospects.

CHARTING A COURSE FOR SME SUCCESS

For SME success, it is imperative that the vision aligns with national ambitions and pushes beyond generic guidelines, leveraging national and regional strengths. The UAE government has successfully navigated external dependencies, empowering entrepreneurs with the necessary tools and world-class physical and digital infrastructure that supports its progressive growth agenda. Success stories such as Souq.com, Talabat, and Careem serve as inspiration, further reinforcing the pivotal role of SMEs in driving economic prosperity and solidifying the UAE's status as a global entrepreneurial hub.

ELEVATING SMES THROUGH FREE ZONES

Free zones have always been the forebearers of innovation, sustainability, and progress, and have provided a major push towards boosting the startup ecosystem. The nation’s 45 free zones have unlocked new opportunities by bringing in local and foreign investments through various incentives, infrastructural support and benefits that help entrepreneurs scale and grow their businesses.

IFZA has lent unwavering support towards entrepreneurial endeavours, reporting a 100 per cent average year-on-year growth in terms of new registrations. The top categories for new company registrations in 2023 included Management Consultancies, General Trading, Investment in Commercial Enterprises & Management, and (IT) Consultants. Marketing Management and Marketing Services via social media alone contributed to 20 per cent of new licences issued.

IFZA is the most dynamic and truly international free zone community in the UAE, differentiating itself through its multi-national approach, and personalised business establishment solutions through its network of Government Authorities and Professional Partners. The company has recently embarked upon an ambitious international expansion plan. In addition to existing offices in Spain, Switzerland, China, and Seychelles, IFZA will open an office in Germany in the first quarter of this year, with further offices planned for Austria, the UK, India, Africa, and Latin America in the coming year to further attract international investors to Dubai and drive economic growth.

Dubai’s SME sector and free zones share a symbiotic relationship. Majority of regional and international SMEs have found free zones to be ideal for establishing and expanding their operations. Business friendly practices, couple with vibrant free zone ecosystems introducing new opportunities has provided the necessary stimulus for small and medium sized companies in the UAE to grow faster, providing entrepreneurs opportunities to set their eyes on a global stage.

— Jochen Knecht is Chief Executive Officer at IFZA.

• Business Technology Review