Dubai has tapped into its entrepreneurial mentality to create an ecosystem that helps businesses navigate the complexities of early-stage development to global expansion. Dubai SME focuses on helping businesses to take advantage of Dubai's strengths and bridging gaps in the system, notably in terms of expertise and resources, as the Department of Economic Development's agency is charged with developing the small and medium enterprise (SME) sector. Thus, our study further highlights the SME sector of the country.
Growth of SMEs in the UAE
The UAE's recent changes in law and new initiatives have made it easier for foreign investors and SMEs to set up shop in the country. The UAE has created advantageous conditions for future investors by putting in place supportive mechanisms to stimulate investment in SMEs, which will aid the UAE's rapid growth.
Article 10 of the Federal Commercial Companies Law (Federal Law No. 2 of 2015, the "CCL") was revised in 2020 to provide foreign investors 100 per cent ownership rights. Foreign nationals previously held 49 per cent of the company, with their local Emirati affiliate owning the remaining 51 per cent. Foreign investors and potential SMEs can now set up shop in the UAE according to the modified law. The lack of capital investment is one of the primary concerns of emerging SMEs. Investing in SMEs can help them acquire the resources and technical support they need to run their company efficiently. SMEs and foreign investors, according to Bin Hendi, can come up with new and long-term business concepts. Many people may be able to find work as a result of this. Innovative concepts are required to operate successful SMEs.
It is necessary to make investments in order to support the development of creative ideas. Creating a business entails a number of stages and legal procedures. Numerous things influence it, including the company's type, location, budget, and office space. Capital management is likely to be one of the most important of these.
According to the Ministry of Economy, the SMEs sector employs more than 86 percent of the private sector's workforce and accounts for more than 94 percent of all enterprises functioning in the country. SMEs account for over 95% of all businesses in Dubai, employing 42% of the workforce and providing roughly 40% of the city's GDP. Small and medium enterprises (SMEs) are given special attention by the UAE government since they are important for economic diversification and growth, as well as for the development of national human resources. National SME Programme, UAE SME Council, Operation 300bn, the UAE's industrial policy, Khalifa Fund, and Dubai SME all help SMEs in the UAE get started and develop.
In the UAE, there were 350,000 Small and Medium Enterprises (SMEs) as of mid-2020. Also:
- Over 94 per cent of all businesses in the country were represented.
- 73% worked in the wholesale and retail industry.
- In the services sector, it's 16%
- In the industrial sector, 11%
Under the Vision 2021 theme of Competitive Knowledge-Economy, the UAE plans to boost the contribution of SMEs to non-oil GDP from 53 per cent in 2018 to 60 per cent by 2021. The UAE believes that entrepreneurship is critical to unlocking nationals' potential and enabling them to be a driving force in the UAE's economic development through small and medium-sized private businesses. It aims to instil an entrepreneurial culture in schools and universities so that future generations would be able to lead, create, be responsible, and have ambition. The UAE will be among the best in the world in terms of ease of doing business, innovation, entrepreneurship, and R&D indices as a result of this.
Government’s Role in Boosting the SMEs across the Country
The following are some of the Government of the UAE to boost SMEs:
- The federal government passed Federal Law No. 2 of 2014 on Small and Medium Enterprises to protect, promote, and regulate SMEs.
- The National SME Program was established to establish broad frameworks and standards for providing knowledge, training, technical, and administrative support to SMEs in a number of industries in order to promote and develop them.
- Established The UAE SME Council's mission is to develop strategic plans and policies for SMEs, as well as to establish the necessary rules and regulations to improve coordination between the National Programme for Small and Medium-Sized Enterprises and participating bodies and to promote long-term economic growth.
- The UAE's industrial strategy, Operation 300bn, was launched, with Emirates Development Bank contributing to the financing of 13,500 SMEs.
- Created the Ministry of Possibilities, whose Department of Government Procurement intends to make government procurement more accessible and speedier, particularly for SMEs.
- The goal of the National Cybersecurity Strategy 2019 is to put in place a comprehensive legal and regulatory framework that will cover all types of cybercrime, safeguard existing and developing technology, and protect SMEs from the majority of cyber threats.
Dubai SME, the agency of Dubai's Department of Economic Development (DED) tasked with developing the small and medium enterprise (SME) sector, has announced the start of an Equity Investment Initiative targeted at attracting investment and funding for SMEs. In line with the major pillars of the Dubai SME Plan 2021, the programme intends to give entrepreneurial initiatives access to financing through equity involvement of venture capitalists, angel investors, private equity corporations, and others.
The market for SME equity investments in the UAE (especially Dubai) is currently small, but increasing. On the one hand, the market provides opportunities in the form of a wealthy investor class (possible investors), but the percentage and flow of quality investment-worthy enterprises (targets) remains limited. To encourage investment, the government has recently implemented legal and regulatory reforms.
Furthermore, the UAE Government's 'National Innovation Strategy' places a strong emphasis on encouraging R&D and innovation, with the goal of placing the country among the top 20 most innovative nations on the Global Innovation Index Ranking. These goals are also in line with the need of establishing a strong equity investment landscape.
The liberal government policies are playing a positive role in business setup in the UAE. Connect with us, our expert team will assist you throughout the process of your business setup. If you are looking for any business-related services in the UAE, connect with us, we will gladly assist you.