Small and Medium Enterprises (SMEs) are the backbone of the second-largest economy in the Gulf Cooperation Council – the United Arab Emirates. And their role has become particularly significant, as the country continues to establish itself as a hub for enterprise ventures and one of the top entrepreneurial ecosystems in the world. From trading and manufacturing to services, SMEs currently employ 86% of the workforce in the UAE’s private sector and contribute more than 60% to the country’s GDP.

An SME in the UAE typically employs between six and 250 workers with an annual revenue ranging from AED 50 million to AED 250 million. Over the past two decades, SMEs have been an integral part of the UAE’s economic growth, serving as an efficient tool for budding entrepreneurs to transmit their ideas into globally competitive businesses. In turn, they have helped the country, as a whole, shift away from an oil-dependent to a knowledge-based economy.

 

 

Government Support for SMEs

 

 

Across the UAE, SMEs have solidly flourished, representing more than 94% of all local companies, according to the Ministry of Economy. In Abu Dhabi, they account for 98% of the Emirate’s workforce, including micro-enterprises, and feed into 44% of its economy. Dubai has experienced similar growth opportunities, with SMEs making up almost 95% of its total number of businesses, employing 42% of its workers, and contributing around 40% to its GDP.

 

 

To ensure sustained and inclusive economic growth, governmental organisations across the country have geared their efforts towards continued SME expansion. Such endeavours have been witnessed throughout a number of different schemes, including the Dubai Chamber of Commerce and Industry’s Business Mentoring and Support (BMS) Programme. The first-of-its-kind Corporate Social Responsibility (CSR) initiative launched in June last year aims to help SMEs in the Emirate manoeuvre through difficulties that have emerged from the COVID-19 pandemic, by connecting them to larger companies that can provide guidance and mentorship.

 

 

A year later, the Dubai Industries and Exports launched its Export Assistance Programme (EAP) for SMEs to receive funds for export operations. In line with the Dubai Plan 2021, the initiative aims to stimulate local exports internationally and further grow the number of manufacturers and service providers in vital industry segments.

 

 

Investment in SMEs for the Future
 

In a more recent move towards boosting the role of SMEs in the UAE’s industrial sector, the government launched, in March 2021, an array of transformational projects under the Industrial Strategy Operation 300bn to help accelerate regional and global capabilities.

 

 

Today, the UAE has reinforced its efforts towards developing the industrial sector, as the 10-year strategy seeks to more than double its contribution to the GDP, from AED 133 billion to an ambitious AED 300 billion by 2031. Led by the Ministry of Industry and Advanced Technology, several schemes will encourage 13,500 industrial SMEs across the country, including reforming the Industrial Law to stimulate local start-ups and attract more Foreign Direct Investment.

 

 

Moreover, the government announced the first-of-its-kind Make it in the Emirates initiative, for global investors, developers and innovators to be able to create and export their products from the UAE. Research and development will also play a paramount role, with spending in the field expected to rise from AED 21 billion to AED 57 billion by 2031 – contributing 2% to the GDP.

 

 

As part of the renewed push to grow the UAE’s economy, Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, spoke last month of facilitating access of local companies into new markets. Under the Ministry of Economy, new programmes will include an economic research institute and a global investment conference, as entities across the UAE join forces to ensure the project’s success.

 

 

As such, the Emirates Development Bank (EDB) is expected to provide funds for the Operation 300bn strategy, including financing schemes to help SMEs in their growth, while adopting new state-of-the-art technologies to support such development. Over the next five years, a total of AED 30 billion will be distributed by the EDB within the industrial sector, generating thousands of new jobs. From loans and digital programmes to non-financial services, SMEs across the UAE will receive a range of benefits from the EDB.

 

 

As the world continues to shift towards increased connectivity, advanced innovation and state-of-the-art technologies, sustaining the development of SMEs will prove crucial. In the UAE, they have played a fundamental role in the advancement of the Fourth Industrial Revolution Strategy (4IR), which aims to use cutting-edge technologies to contribute to economic growth and serve society. Through their innovative approach to sustainability across a number of vital sectors, SMEs are considered the drivers behind financial prosperity. Ultimately, SMEs hold an undeniable place at the heart of the UAE’s economic growth in the future. And with events, such as Expo 2020 in Dubai, set to bring about numerous innovative technologies and governmental organisations prioritising the development of SMEs within key areas of society, unique opportunities are on the horizon for SMEs across the country.