MasterCard, a leading global payments and technology company in its recent research reported that the confidence and optimism amongst the UAE Small and Medium Enterprises (SMEs) are now coming back after the severe economic upheaval caused by covid 19 induced pandemic.
While 88% of SMEs were seen upbeat on the next 12 months; two-thirds of them forecasted the revenue flow to be better or remain stable over that period, the inaugural Mastercard Middle East and Africa (MEA) SME confidence index revealed. Increased and easy access to funding, skill enhancement and digitalization have been identified as key growth drivers in the future.
With a remission in the number of active covid cases and gradual easing of lockdowns and social restrictions, many emirates are coming back to normal economic activities enabling the UAE SMEs easier access to funding for a business, suggested by 40% of the SME population. Digital payments and online transactions have been cited as one of the other reasons by 34% of the respondents. Skill enhancement and training of staff have also been identified as major growth drivers by 34% of SMEs surveyed.
The reasons for future growth opportunities thus factored both external influencers e.g. industry policies, regulations, industry trends etc. and internal transformation and capability enhancement of SMEs through experience, training and upskilling.
Increased focus on core business activities, streamlining operations and cost reductions have also been recognized by Dubai SMEs for internal strengthening and outsourcing PRO services in Dubai should be an ideal proposition in that direction. Engaging external accounting services in Dubai will also come as a great help in reducing overheads and fixed costs of SMEs and enhancing business competitiveness.
More than 400,000 SMEs run their operations within the UAE employing over 86% of the UAE workforce in the non-oil sector and to support this sector, the UAE government has already announced 8.2 billion USD financial support for these SMEs and startups in April. Vision 2021 of the UAE government also stressing on SME participation in the non-oil economy touching 70% this year.
“Starting a business is one of the most ambitious and rewarding things one can do, and it’s great to see that confidence is returning to the UAE’s SME sector after a challenging period. The study highlights the potential of several key drivers of growth that small and medium businesses in the UAE rely on as they look towards an optimistic future. At Mastercard, we connect SMEs to the technologies, the network and the expertise they need to sustainably grow their businesses, collaborating to build prosperous and more inclusive economies,” added Girish Nanda, Country Manager, UAE and Pakistan, Mastercard.
Though the UAE SMEs sounded more upbeat compared to other middle eastern counterparts, they voiced their concerns over the high cost of running a business in the country. Public-Private partnerships, however, are cited as a positive growth engine. During the survey, 60% of UAE SMEs said that the maintenance and growth of their business was the biggest challenge they were facing.
61% of SMEs surveyed highlighted the increasing cost of doing business as the major hurdle over the next one year while 38% of them pointed to the immediate requirement of even more easy access to capital and funding.
Private sector partnerships were seen as positive for business growth by 57% of SMEs and 53% spoke in favour of government-led initiatives as one of the most potent factors for favourably impacting SMEs and the greater UAE market and economy.
Girish Nanda emphasized saying, “Access, whether it is to growth, stability and financial support, stands out as the top concern that SMEs in the UAE face today. The fundamental benefit of a digital economy is that it eases access across these barriers. Whether it is the ability to sell online, acquire a larger customer base through eCommerce, or enable instant access to apply for or extend credit lines through digital banking, the digital economy works for everyone. At Mastercard, we work every day with the diverse players in this financial ecosystem to transform this infrastructure and build a smart economy that enables access for businesses of all sizes.”
As new consumer trends are rapidly evolving after the covid pandemic across the globe, businesses must acclimate themselves to these new trends for sustainable growth and development. It is believed that a more than 20% increase in e-commerce retail spending would be a permanent thing in the future. 73% of consumers in the UAE are seen doing more shopping online than they used to during pre-covid time and 97% of UAE businesses would prefer and adapt to digital payment over the coming years.
The Dubai government announced four economic stimulus packages in 2020 to mitigate the impact of economic restrictions during the pandemic. The latest package announced this year amounted to AED 315 million for the revival of Dubai startups and SMEs.
An independent agency of the Government of Abu Dhabi, the Khalifa Fund for Enterprise Development (KFED) has recently launched a new media platform called Abu Dhabi SME Hub fully dedicated to supporting small and medium enterprises (SMEs) in the UAE and will extend support to all SMEs during every stage of business and equip them with the appropriate tools needed to comfortably cope up with the local UAE ecosystem to as well as to grow and innovate in terms of best industry practices and newly evolving technologies.
The UAE government has handled the covid pandemic with utmost determination and unwavering commitment that has been very much appreciated and recognized internationally. UAE as a whole and especially Dubai has retained its status as one of the most coveted places for business, logistics, travel and holiday and increased migration of companies for business set up in Dubai is a glaring testimony of that.
The government has also done a stupendous job and kept international travel restrictions limited during the pandemic and stayed away from unnecessary and unpredictable lockdowns to encourage the international business community and promote FDI.
There has been an all round endeavour in keeping the UAE startup and SME ecosystem vibrant by connecting foreign business entities to different local stakeholders including regulatory bodies and investors.