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SMEs are essential to the UAE’s economic landscape

The economy of the uae is one of the largest emerging economies in the GCC region.

At $360 billion in 2012 — a 20.8 per cent rise from $298 billion in 2011 — the GDP of the UAE ranks second in the GCC (after Saudi Arabia), third in the Middle East and North Africa region (after Saudi Arabia and Iran) and 30th in the world. In fact, The UAE is part of one of the globe’s few remaining true growth regions — the Mena.

In order to maintain the best environment for the aforementioned economic development, the UAE continues to ensure an efficient regulatory framework that governs business transactions while allowing a relatively high level of freedom for businesses. The economic freedom score of the UAE is 71.1, an overall score that is higher than the global and regional averages, ranking it 28th globally and third out of 15 Middle East countries, in the 2013 index. Dubai in particular has a strong track record of attracting businesses from around the world, aided in large part by the business-friendly policies of the government, the city’s strategic location, its stable political composition and world-class lifestyle options, to name just a few. In addition, winning the Expo 2020 bid marked a significant milestone in the UAE’s history, and one that will benefit the region for many years to come. Hosting the event not only strengthens Dubai’s position as one of the world’s leading trade hubs, but also helps businesses foster greater collaborations with other communities and inspire the next generation of business leaders and innovators.

In Dubai, small and medium enterprises, or SMEs, account for over 90 per cent of private enterprises and contribute to nearly 40 per cent of the emirate’s GDP. SMEs are leading economic growth and job creation in the UAE today, accounting for more than 42 per cent of its workforce. It is therefore a top priority this sector has access to cutting-edge knowledge, technology, funding and markets.

There is a strong will in the region to create a supportive environment for SMEs, and with many governments and businesses in the region coming forward with incentives and programmes, a promising future lies ahead for home-grown entrepreneurship. Yet, more is needed to provide for the push forward for SMEs in the region, as they are vital to the region’s growth. Entrepreneurship and technology innovation are historically the two pillars that propel a nation’s economic growth. With a majority of businesses in the UAE comprising SMEs, the UAE government firmly believes that economic growth can be incited by supporting SME development.

Despite their integral role in the development of the economy, many SMEs continue to face difficulties securing financing at sustainable rates. In fact, the UAE’s total bank lending to SMEs is around 3.85 per cent, when its target is 24.3 per cent. This is due to the fact that banks focus on big loans for big corporations. Yet, the government has had great efforts to support SMEs and overcome the challenges they face. In fact, the government of Dubai has launched a body dedicated to supporting SMEs: Dubai SME, the SME development agency of the Department of Economic Development. Supported by those efforts, there is a growing realisation that SMEs are often more lucrative for financiers than big firms. Yet, I believe that education plays a vital role in developing the entrepreneurial culture in the region, and the academic sector has to support government efforts in promoting entrepreneurship and innovation. Today, the number of students is on the rise. According to the GCC Education Industry Report 2012 (Alpen Capital), the student population in the GCC has been steadily increasing and is expected to reach 11.6 million in 2016. Hence, we have an opportunity to spread the importance of SMEs through integrating entrepreneurship programmes into academic curricula.

Several studies revealed that entrepreneurship education increases the intention to start a business. They significantly increase entrepreneurial attitudes and intention of students. The knowledge and resources shared with the students increase the likelihood of success for students who are going to start a new venture, escalating the chances of an entrepreneurial career at some point in their lives.

We at Cass Business School and City University London, proudly offer electives that support innovation and entrepreneurship for students. We provide courses to aid students in understanding issues regarding launch and post launch campaigns, supporting new products or services, and the new product development process. In addition, as part of Cass’ commitment to attract and support the best students, regardless of their financial status, one of the scholarships we offer is the entrepreneurship scholarship, which is open to candidates with exceptional entrepreneurial flair creating and running a successful or growing business venture.

It is essential that industry, academia and government join forces to support SMEs in the region, in an effort towards supporting the overall economic development in the UAE, and we at Cass Business School and Cass Dubai Centre remain committed to that.

The writer is the regional director for Mena and head of Dubai Centre, Cass Business School and City University London.