x Abu Dhabi, UAEWednesday 17 January 2018

Entrepreneurs drive wider economy

The Life: There is an unprecedented opportunity for entrepreneurs in the UAE to break into the big leagues and stand among the famous brand names.

Small is beautiful: 80 per cent of the Mena region's workforce is employed in the SME sector. Lee Hoagland / The National
Small is beautiful: 80 per cent of the Mena region's workforce is employed in the SME sector. Lee Hoagland / The National

I have just had lunch and it was good. The usual lunchtime choice would be either to go somewhere nearby for something uninspiring or less healthy than asbestos, or to drive somewhere and waste precious time I could have spent making a difference.

On this occasion, however, I used the services of an entrepreneur who has given me access via the internet to hundreds of restaurants offering thousands of dishes, all beautifully described, photographed and often discounted.

The Website is called Room Service Deliveries and can be found at www.rsd.ae.

With no more effort than a waft and a click of my mouse this entrepreneur has delivered a service that offers health, happiness and productivity. This market-opening service is an example of two things: businesses that offer a better product within local catchment areas, and businesses that create efficient sales channels being rewarded for product quality and price efficiency.

On a larger scale, two World Bank economists, Thorsten Beck and Asli Demirgüç-Kunt, believe that a thriving small and medium-sized enterprise (SME) sector is crucial to the development of any economy.

SMEs enhance the competitive landscape of any sector, delivering efficiency, innovation and productivity growth at a faster rate than more entrenched businesses.

The SME sector in the UAE has been enjoying a significant resurgence over the past two years, with the Dubai Department of Economic Development announcing that trade licence applications were up 9 per cent in July compared with a year earlier.This is wonderful to see; such a large proportion of the UAE's talent pool has been underemployed by the traditional economy since the downturn. It is a sign that great people are taking their destinies in their own hands and generating a grass roots economy around us that will generate fantastic long-term benefits.

While large local and international companies focus on controlling costs and nursing sickly balance sheets, the opportunity for energetic and ambitious SMEs to take market share is readily apparent.

Traditionally, SMEs have faced three major barriers to success: lack of affordable financing, self-promotion costs and the structure of business services focused largely on the needs of larger institutions. These are changing.

About 80 per cent of the Middle East and North African region's workforce is employed in the SME sector, but until recently only a few investors had noticed the potential.

Financial regulations such as Basel III may hinder lending to SMEs, but on the plus side there are many bored investment bankers out there with time on their hands to work around capital adequacy rules.The second traditional barrier is self-promotion, with SMEs unable to shout louder than the established large companies.

But weakening brand loyalty and the democratising force of the internet through services such as daily deals sites can quickly give anyone a big voice.

The third is something that some companies are waking up to: the lack of business services designed for smaller institutions and the potential revenue on offer.

Smaller businesses may often be lacking in cash flow, process and policy, but they are frequently quicker and more effective decision-makers. They also tend to be open to new suppliers, while the competition is not exactly beating a path to their doors.

I relish seeing the corporate landscape in the UAE in just five years' time, as I believe we have an unprecedented opportunity for entrepreneurs to break into the big leagues and stand among the famous brand names.