As the world gets to grips with a virus that it doesn’t fully understand, stock markets plunge and soar, and political institutions across the globe continue to tremor, it’s easy to see the future as unpredictable.
However, amid all the uncertainty, one trend has remained constant. Small or medium enterprises (SMEs) are part of a fast-growing business sector that specializes in ‘strengthening productivity, delivering more inclusive growth and adapting to megatrends’, according to an OECD report.
The COVID-19 crisis has been the catalyst for several megatrends across the world — including increased home working and use of technology — and SMEs are in a prime position to capitalize. One of the leading SME hotspots in the global arena is the UAE.
The impact of SMEs on the Emirati economy is difficult to overestimate: 94% of registered companies are start-ups — employing the vast majority of the private sector workforce — while SMEs alone make up 40% of Dubai’s GDP. As such, the UAE government has stated its ambition to enhance the performance of the SME sector in the future.
It’s likely that the industry is set to flourish in the post-COVID landscape, and there are four clear stimulants that make the UAE the perfect breeding ground for entrepreneurship.
The UAE government recognizes how crucial SMEs are to the economy. Their initiative, the National SME Programme, provides financial support to entrepreneurs as a way of helping them to grow their idea and overcome obstacles.
Operating under the guidance of the UAE SME council — a group of government-appointed experts — the programme can be broken down into three important fragments:
- Financial support: Direct state funding gives start-ups the means to survive an uncertain economic climate via grants and subsidized taxing measures.
- Knowledge sharing: Participants receive access to business expertise through workshops and seminars, as well as a specialized database that contains market information.
- Use of cutting-edge methods and facilities: The programme provides pioneering technology and business tools that give entrepreneurs a springboard towards achieving their goals.
Such support from the nation’s government underlines their desire to be at the forefront of the global SME industry. By pooling together the best resources and talent into one accessible programme, the country is helping to create scalable enterprises that are well-prepared to deal with the demands of a volatile post-COVID world.
Aside from government involvement, the UAE boasts a thriving social entrepreneurship sector, with many businesses set up to nurture budding SMEs.
Like the government, they focus on providing start-ups with the tools to thrive in an unpredictable business landscape, but with one key difference: a tailored plan of action that pinpoints what that enterprise needs to succeed.
CE-Creates is a prominent example of this type of venture. They focus on incubating new startups so that they are well-placed to deal with volatile marketing conditions.
They achieve this via two principal methods: building resilience and ensuring sustainable growth.
CE Director Samer Choucair outlined this approach in a recent interview with Haykal Media. Businesses under CE’s stewardship become more robust due to efficient cost-cutting measures, such as ethical waste management and sourcing of materials. They also follow key Environmental, Social and Governance (ESG) criteria that makes them more attractive investment prospects.
Their portfolio contains companies in the refreshment, clothing and transport industries with strategies aimed at thriving in a crisis-hit business world. Their green mobility start-up, ION, promotes ‘sustainable transport solutions’ in the ongoing battle to curb carbon emissions, while another, industrial clothing specialist Shamal, focuses on optimal outdoor clothing for workers in Gulf Cooperation Council (GCC) countries, where temperatures can reach over 45c.
Ventures like CE-Creates use their know-how to add immense value to promising startups. The UAE’s vibrant startup scene is a perfect environment for them to invest in SMEs and offer them strategic guidance in developing industries in the post-COVID era.
A focus on technology
The COVID-19 crisis has sped up technological development. With consumers more likely to use services digitally rather than in person, it is imperative that start-ups embrace tech innovation.
SMEs in the UAE benefit from being part of an ambitious digital sphere in 2020 with investment set to soar in the near future. Artificial intelligence (AI), an industry expected to generate $2.9 trillion of business value globally by 2021, will be at the forefront of the nation’s business mind, and the UAE hopes to be one of the leading Middle Eastern nations when it comes to adopting AI solutions. Their AI program aims to make the nation a major tech hub, and SMEs will incorporate low-cost solutions, such as chatbots and machine learning, into their business plans, vastly increasing productivity and customer service.
Fintech is also something that the UAE has embraced. Projects such as the Fintech Hive combine the technology and finance spheres; uniting companies from the two sectors and offering mentorship and funding. Hundreds of UAE startups applied for Fintech Hive’s program in 2020, reflecting a growing demand for SMEs of this nature.
As the world economy staggers through the worst pandemic in a century, businesses are reaching out for the comfort of digital innovation to guide them through stormy economic weather. The UAE’s status as a hotbed for technological growth makes it an ideal home for SMEs looking to utilize tech in their operations.
The COVID-19 outbreak heightened the already high demand for sustainable development. Lockdown measures had a severe economic impact across the globe, but it also showed positive environmental effects. One report estimated that there were 11,000 fewer air pollution-related deaths in 2020 compared to the previous year.
It has led to concepts such as Green Capitalism dominating corporate agendas to reflect public demand for a cleaner planet, and the UAE government has shown commitment to related causes. It set up the National Committee on Strategic Development Goals in 2017, and a recent Oliver Wyman report reveals how the country plans to become a leader in cleaner business processes.
SMEs, such as those listed under CE-Create’s guidance, are often organic by nature, and respect environmental and ethical concerns. In the UAE, they stand to benefit from progressive government initiatives, such as the Dubai Green Fund, a Dh 1 billion project that aims to finance ecological projects at low interest rates. SMEs can also apply for funding from different private sector sources, such as Masdar’s green credit facility: the first in the Middle East.
A focus on environmental awareness is imperative for new SMEs, and the UAE provides the perfect conditions for such entities to survive.
A hotbed of homegrown entrepreneurship
A key method of assessing a nation’s suitability for startups is a PESTLE analysis, which takes into account political, economic, social and technological factors that contribute to success. The UAE appears to score highly in several of those areas through the following:
- Government funding, providing political and economic weight to the chances of SME success, as well as enhanced expertise and financing in the private sector
- A commitment to sustainability and a greener post-COVID business world
- An eye for technological advancement through the likes of AI and Fintech.
Such factors contribute to making the UAE a hotbed for SME talent in 2020, and offers reassuring stability to aspiring entrepreneurs following the COVID-19 pandemic.