UAE has set an ambitious plan to become home to 20 privately held startups valued at more than $1 billion each, commonly known as ‘unicorns’ in business, over the next nine years, country’s Minister of State for Entrepreneurship and SMEs, Dr Ahmad Belhoul Al Falasi, noted on Wednesday, 10th November 2021.
At the launch of the “Entrepreneurial Nation Project” in Dubai, Falasi emphasized that this would be the fundamental theme of the ‘entrepreneurial nation’ initiative that would aim for public-private partnerships and bringing together funding entities to support startups to grow.
“A number of large corporations have come to us saying we want to be a part of this,” said the Minister. “We want to help you grow these companies; we will interpret the value of the company,” he added.
The national project offers 3 programmes:
- The SkillUp academy programme helps the UAE populace with entrepreneurial skills and mindset.
- The StartUp programme focuses on achieving success stories and helps entrepreneurs, in the UAE and outside, to embark on their entrepreneurship journey. It provides entrepreneurs, who are desirous in doing business in Dubai and other parts of UAE, with various incentives and support services.
- The ScaleUp programme aims to empower high revenue earning and fast-growing companies that are at least years old and have the potential to grow into a unicorn.
UAE is relentlessly working to achieve its ambitious target systematically and methodically, informed the minister adding,” We want to transform ourselves from a regional to global entrepreneurship hub.” He also appraised why the country is confident about realizing its target by 2031
The corporate tax announcement is a winning situation for entrepreneurs, emphasized Dr Falasi. “With the latest corporate tax announcement, you will see for sure government fees being reduced – that is what has been agreed,” he remarked.
“Three years down the line, you will get a position where setting up a business would be much cheaper, and you would not be paying government and fees or taxes unless you are profitable,” said the Minister. “The government needs to create revenue, and this model is a fundamental gamechanger for startups,” he highlighted.
The UAE has an advantage in attracting foreign capital because its population is overwhelmingly foreign workers, he commented. “So foreigners feel much more confident starting their business in a country, which has 90% ex-pats as opposed to other countries,” he noted.
After the outbreak of the pandemic, the UAE government has introduced visa and business reforms for attracting more expatriates to live and work in the country.
The government plans to offer funding in several formats, including equity, direct lending and loan guarantees, to boost startups and entrepreneurship, the minister added.
A Dh1 billion private equity fund has been launched for financing SMEs operating in strategic sectors. The first funding will be made available during the first quarter of 2022 and over the next five years.
The Minister attributed the country’s attractive labour market as the biggest challenge for entrepreneurship. “It is very tempting to go for a job than to start a business – the majority of entrepreneurs here are actually employed and have a side hustle. But today, we want to encourage young students to look into (full-time) entrepreneurship,” he remarked.
Opening accounts within 48 hours in partnership with Emirates Development Bank (EDB) is an initiative under the StartUp programme. “The No.1 complaint I got was the amount of time it takes to open up a bank account,” said the Minister. EDB launched an app that provided the necessary support, during the last three months, to more than 500 entrepreneurs seeking to establish a business by opening accounts in less than 48 hours. The account opening is free for all and across all emirates and doesn’t need a minimum balance.
Lending activities through strategic financing solutions are being promoted by the UAE government to support company formation in Dubai UAE as startups and SMEs. “I’m putting on my other hat as Vice-Chairman of the Emirates Development Bank (EDB). We introduced a credit guarantee where the federal bank guarantees 50 per cent of loans through eight commercial banks that will lower the interest rates for entrepreneurs,” Al Falasi remarked.
The Ministry of Economy rolled out the Innovation Patent initiative during February 2021 to safeguard intellectual properties at the national level. “It’s a stepping stone for startups,” noted Al Falasi. “This way you are able to protect your product before going to the market. Otherwise, you would have to wait for a long time, and that delays your access to the market,” the Minister highlighted.
In his speech during Step Conference 2022, the Minister informed about the government initiatives for entrepreneurs. He highlighted saying, “The first thing we did was to decriminalise bounced cheques as there were many cases where entrepreneurs renting office space, retail space were being criminalised.” A new law, decriminalizing bounced cheques has recently been announced in January 2022.
The UAE has long reduced its dependence on oil and started focusing on a knowledge-based economy that potentially harnesses emerging technologies and innovative ideas. The country’s unicorn ambition is mainly driven by Dubai, the emirate standing tall as home to more than 10,000 SMEs and startups, and organizing annual startup contests including Dubai Startup Hub’s Smartpreneur competition series. Dubai Smartpreneur is an opportunity for innovative startups to present their business ideas and eventually establish their business setup in Dubai free zone.
