Could we possibly talk about SMEs in Dubai and not mention the DUBAI SME, which is a governmental organization dedicated to fostering the entrepreneurial spirit by creating a business-friendly environment that facilitates the growth of new businesses and stimulates entrepreneurial activity among SME's? I doubt; but before I dig deeper into the subject, how about a brief on the SME?
The SME, which is an acronym for Small and Medium-sized Enterprise are non-affiliated, self-contained businesses with less than a certain number of workers. This figure differs by country. In the European Union, the most common upper limit for establishing a SME is 250 workers. Some countries, however, set the cap at 200 employees, while the US considers SMEs to be companies with less than 500 employees. Small firms are generally those with fewer than 50 employees, while micro-enterprises have at most 10, or in some cases 5, workers.
Small and medium-sized businesses (SMEs) are the cornerstone of every economy. Although the country's primary source of revenue could be the selling of petroleum products and natural gas, however, SMEs will still account for the majority of economic activity and, in most cases, jobs.
Are the SMEs that Significant, you may ask?
Well, truth is, the main goal of the UAE's national growth plan is to increase the contribution of SMEs to the economy. Just 0.8 percent of businesses in Dubai are classified as big, which implies that the vast majority of businesses are micro, small, and medium-sized. According to the Dubai Economic Development Board, SMEs employ 52.4 percent of the total workforce and contribute 47 percent of the city's GDP. Who ever thought that?
What then lies ahead for SMEs in Dubai?
Dubai SME, a department of Dubai Economy — Department of Economic Development, Government of Dubai — aims to promote an entrepreneurial culture and grow the Emirate of Dubai's SME sector. Its subsidiaries, such as the Dubai Entrepreneurship Academy (DEA), are mandated to grow the emirate's Small and Medium Enterprise (SME) market. With this in plan, the DEA has launched series of programs for the first half of 2021, following on from its novel initiatives to help SMEs and potential entrepreneurs to successfully manage and resolve unprecedented challenges.
While the Dubai Expo which was postponed to this year 2021, considering the pandemic, was one of the anticipated events for the year, since Dubai is renowned for its fine taste of tourism and hospitality amongst many businesses; hopefully, it be better planned and managed this year which would ripple to SMEs. Tourism as you would agree, has emerged a major economic engine in Dubai. It can be recalled that in 2018, Dubai received 15.93 million tourists, maintaining its status as the world's fourth most popular destination. Due to its diverse souks, over 100 malls, and countless shopping centers, Dubai has emerged as the Middle East's shopping capital.
Securing the development of the SME sector is at the top of decision-makers' agendas in the Arab world. Lenders tightened lending to SMEs in the aftermath of the three-year oil price downturn that started in 2014 (but has since recovered), impeding their growth or survival.
Policy makers including the International Monetary Fund is pressing for improved access to finance for SMEs in the UAE, which could raise regional economic growth by up to 1% per year and create 15 million new jobs by 2025.
Dubai SME has taken conscious efforts for SMEs by providing financial solutions and more favorable policies offering SMEs in Dubai with 50 percent Emirati ownership and management rights to obtain financing of up to Dh420,000, backed by a 50 percent capital guarantee, according to the Dubai Economy agency charged with developing the SME market. The guarantee offered by the fund, through its Dh20 million guarantee pool, helps to enable investors to engage in lending and support the SME market, which contributes an estimated Dh199.6 billion to Dubai's overall gross value-add.
According to a survey, Dubai is expected to rise by 4% this year as a result of a fast economic recovery thanks to the government's successful policy steps to contain the Covid-19 pandemic.
With these acts, we are possibly looking at:
In conclusion, Dubai certainly appears a wonderful place to be for SMEs this year.