The small to medium-sized enterprise (SME) sector in the UAE is being held back by a lack of financing resources, according to the country’s central bank.
“Contributions to financing SMEs are limited,” says Mohamed Ali bin Zayed, vice-governor of the Central Bank at the third UAE conference on SME in Dubai.
The Economy Ministry has drawn up a draft law to help develop the UAE’s SME sector. The Central Bank is also working with the private banks in the country to encourage them to guarantee loans and overdraft facilities to the SMEs.
“The draft law and the definition will contribute directly to the development of the national economy and will open doors to the UAE nationals to engage in the private sector,” says Sultan bin Saeed al-Mansoori, Minister of Economy.
The government is also encouraging UAE nationals to establish their own businesses. According to HSBC figures, only 26 per cent of its $100m SME fund was allocated to UAE nationals.
“We do not want national citizens to act as sleeping partners and leave the work to others,” says Bin Zayed.
The Ministry is planning to reduce the costs and time of establishing and licensing a new business in the UAE through this new law, the only one of its kind in the GCC.
SMEs account for 90 per cent of all businesses in the country by number. They contribute 46 per cent to gross domestic product (GDP) and 86 per cent to total employment, but financing to the sector stands at just 2 per cent.
“We see potential in the UAE being a magnet for these businesses in terms of infrastructure. The most important thing is to reduce the cost in establishing these businesses,” says Al-Mansoori.