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ALKESH SHARMA / Emirates Business
The economy of UAE — the world’s eighth largest oil producer — fundamentally remains shielded from the global slowdown, thanks to its 300,000 small and medium-sized enterprises (SMEs) that contribute nearly 60 percent to the Gross Domestic Product (GDP). Minister of Economy HE Sultan bin Saeed Al Mansouri has said he expects the contribution of SMEs to GDP to rise to 70 percent by 2021.
Owing to the diversification plans and increasing business activities, in 2014-15, the UAE’s GDP grew 4.6 per cent, reaching AED1.47 trillion, marking the country’s best economic performance in the past 44 years.
“At a time, when most oil-producing countries are feeling the ripple effect of the declining crude prices, the UAE has been largely unaffected by the trend. SMEs are the backbone of any economy and in the UAE they are perfectly supporting the corporate ecosystem. The growing number of successful SMEs in the Emirates is reflective of the government’s stress on economic diversification and creating a congenial environment for entrepreneurs and the start-ups,†Rakesh Lokhandwala, an economist, working with a nationalised bank in the Emirates, told Emirates Business.
According to the Ministry of Economy, SMEs represent almost 92 percent of the total number of companies in the UAE and provide more than 86 percent of jobs in the private sector. As per a World Bank 2015 report, the UAE is ranked 58 among 189 countries on the ease-of-doing business. In the Middle East, the Emirates is clearly way ahead of other countries.
“Dubai continues to live up to its reputation as an international entrepreneurial hub and a launching pad for new start-ups in various sectors such as health, education, information technology, retail, tourism and hospitality. SMEs in Dubai account for a major share of the net economic output in the UAE. Considering 95 percent of Dubai’s workforce is engaged in SMEs, Dubai Plan 2021 focusses on sustainable economic model and creation of the most
business-friendly environment,†a UAE-based entrepreneur told
Emirates Business, requesting not to be named.
Not only Dubai, but Abu Dhabi is also way ahead in creating congenial environment for the growth of SMEs. Abu Dhabi’s Tourism and Culture Authority (TCA) encourages entrepreneurs to start their own tourism-related SMEs and facilitate the hospitality industry.
It is also enticing international tourism operators in Abu Dhabi into engaging with local entrepreneurs. It also aims to boost local and foreign investment among SMEs active in the sector as part of its 2030 economic vision.
Notably, UAE is acting as magnet for SMEs as it is offering highly transparent, corruption free and user-friendly market for budding and experienced entrepreneurs.