x Abu Dhabi, UAE Thursday 20 July 2017

SME building blocks

Small and medium-sized companies are good for the economy and society, and deserve encouragement. But too ofen they encounter paperwork burdens, high entry costs, and financing problems.

Around the world, owners of small and medium-sized enterprises (SMEs) turn green with envy whenever anyone mentions the UAE's unique advantage: there are no taxes.

Their verdant tinge would fade, however, if they knew what SME owners in this country know: that start-up costs, the burden of regulation, and awkward problems in financing all brake the growth of small businesses.

That's a pity, because a vibrant and growing SME sector - for example, the top 100 SMEs The National reported on this week - is tremendously valuable to any country. Such companies hire (and some grow quite big). Also, successful SME owners as a class are the sinews of a society. They offer goods or services people want; they network with others; they buy raw materials and services. SME entrepreneurs have a stake in stability but are attuned to social or economic problems, and support progress.

In Gulf countries, governments and state-owned companies are big employers, but when it comes to SME job creation, the best thing governments can do, in many cases, is to step back. That is, they should provide the simplest possible path through licensing and compliance, so that SME owners can concentrate on their customers.

As for banks, The National reported this week that some lenders are now moving to make loans more available to SMEs. That too will help.