Dubai Economic Council promotes fund to aid emirate’s small and medium-size enterprises
A new fund to help small businesses and start-ups is among ideas being considered by the Dubai Economic Council (DEC).
It is one of a series of initiatives intended to increase the economic contribution of the emirate’s small and medium-size enterprises in the next five years.
The secretary general of the DEC, Hani Rashid Al Hamli, yesterday announced the proposal for the fund, which would be aimed at helping both start-ups and more established SMEs, in his opening address at the second SME World Summit, which continues today.
As the proposal stands, local corporations would be the primary contributors to the fund, as part of their corporate social responsibility mandates, according to the council’s senior economist Ali Tawfik Al Sadik.
“It’s just at the idea stage currently,” Mr Al Sadik said on the sidelines of the conference. “We need to talk to the big corporations, and also do a [study] of how much capital the fund would have.”
As envisaged, the role of the Government of Dubai would be as sponsor of the fund, rather than contributor, he said.
The Dubai Government wants to stimulate growth within the SME sector as part of efforts to diversify the emirate’s economy in the coming years.
About 95 per cent of Dubai’s firms are in the SME sector, according to Abdulaziz Istaitieh, an economic adviser to the DEC. SMEs also contribute 40 per cent of the emirate’s GDP, and employ 42 per cent of its workforce.
Mr Istaitieh said the expansion of SMEs’ share in the economy was one of the key goals of Dubai’s new five-year plan, Dubai Plan 2021.
Unveiled in December by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, Dubai Plan 2021 focuses on moving Dubai to “a sustainable economic model driven by innovation, and productivity in capital and labour, and supported by the most business- friendly environment”.
The plan envisages the emirate’s SME segment growing on average from 7 to 10 per cent per year between now and 2021, particularly focusing on strategic sectors including light industries, Mr Istaitieh told the conference.
A shortage of reliable sources of funding for SMEs, especially start-ups, has long been identified as one of the key challenges facing the sector.
Bank lending to the SME segment in the UAE represents just 4 per cent of total loans, compared with 13 per cent in Jordan and 24 per cent in Morocco, according to figures shared by the DEC.
Dubai SME, a local government agency charged with boosting the sector, is compiling a local directory of angel equity investors focused on SMEs, as part of a survey on SME equity funding requirements.
A senior Dubai SME official, who did not want to be named, said that the compilation of the directory was in its final stages, but did not comment on when it is likely to be published.
The SME World Summit, now in its second year, is organised by the SPI Group, under the aegis of the Dubai Economic Council and Dubai SME.
The event, which concludes today, has attracted 3,500 attendees this year, compared with 2,500 in 2014.
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