UAE SMEs, start-ups drive economic diversification

ALKESH SHARMA / Emirates Business

Economic diversification, through reducing dependence on oil revenues, is the only path to success in the UAE’s corporate ecosystem. Small and Medium Enterprises (SMEs) and start-ups, which are considered the backbone of any economy, could play a crucial role in facilitating this diversification. Buoyed by the great government and bank support, SMEs and start-ups in the UAE have nothing to focus on except the key sectors they can cash in on. Dubai’s successful bid to host the World Expo 2020 has already stimulated growth in the non-oil sectors very significantly and Abu Dhabi Department of Economic Development expects the Emirate’s non-oil sectors to grow by 5.3 percent in 2016.
“At this point of time, UAE is one of the best places in the world to start a new business. There are many incentives available from the government if we take initiative to step into an unconventional industry, especially in renewables and energy efficiency businesses. These steps are gradually contributing towards nurturing non-oil sectors in the Emirates,” Alexandra Sanchez, who is running a digital media start-up in Dubai, told Emirates Business.
Industry experts believe retail, fashion, fast-food and hi-tech companies are among the exciting growth areas for start ups in the UAE
region. Besides, the indispensability of using social media, having website content in Arabic for any new business starting up in the country and high smart phones’ penetration have opened up vast opportunities for technology entrepreneurs in the region. In the Gulf Cooperation Council (GCC) region, the UAE in particular has seen a surge in start-up accelerators and incubators for technology companies.
Aleksandar Petkovic, a Serbian expert who stepped into bakery business in Dubai around two years ago, told Emirates Business, “UAE is the hub for entrepreneurial minds like me. While I was back home in Serbia, there was nobody to support me but here things are different. I have got every kind of backing to run my business in the UAE. Right from the easy lending and enthusiastic sponsors, there are many positive catalysts. It really feels good to contribute in the economic diversification of this young supportive nation.”
Notably, there has been increased spending on construction, tourism and hospitality industries. The flow of foreign capital to the UAE has seen a surge and promises to fuel renewable energy and retail sectors in the upcoming years.
The UAE’s industrial sector currently accounts for nearly 14 percent of the Gross Domestic Product (GDP), and the figure is expected to reach 20 percent by 2025.
The volume of foreign investments had soared to $126 billion by the end of 2015, compared to $115 billion in 2014, mainly driven by increased investment in manufacturing and other heavy industries.