The report found that complex procedures and documentation as well as insufficient transparency and guidance from bankers are concerns for SMEs. Getty Images
The report found that complex procedures and documentation as well as insufficient transparency and guidance from bankers are concerns for SMEs. Getty Images
The report found that complex procedures and documentation as well as insufficient transparency and guidance from bankers are concerns for SMEs. Getty Images
The report found that complex procedures and documentation as well as insufficient transparency and guidance from bankers are concerns for SMEs. Getty Images

Banking a challenge for 65 per cent of UAE SMEs, study shows


Alice Haine
  • English
  • Arabic

Almost two-thirds of entrepreneurs consider banking their first challenge when setting up a business with funding the second biggest obstacle, according to a new UAE government study released on Sunday.

Sixty-five per cent of those polled find setting up their company's bank account a struggle, according to the white paper from the Dubai Chamber of Commerce and Industry in conjunction with the UAE Ministry of Economy, Council of Small and Medium-sized Enterprises and the global consultancy Roland Berger. Securing finance is the second biggest concern for 61 per cent of start-ups, according to the poll of 250 SMEs.

Opening a bank account can take new firms at least a month and up to three months, the white paper said “making the commencement of commercial operations difficult” in contrast to "what the banks state on their websites," the study said.

The report also found that complex procedures and documentation as well as insufficient transparency and guidance from bankers and a complex verification process were also significant obstacles for SMEs.

Representing over 60 per cent of the country's GDP and employing 42 per cent of its workforce, SMEs “form the backbone of the UAE’s economy”, according to the UAE Banks Federation.

UBF said SMEs make up 94 per cent of all companies operating in the country and account for a good share of the customer base of local banks.

However, smaller companies took a hit in recent years when the economy slowed amid falling oil prices. Many have struggled to meet their debts amid payment delays and failed to secure new credit lines as banks reduced their exposure to the SME sector.

________

Read more:

DIFC partners with UK's Startupbootcamp on FinTech

Can you afford to help your children start a business?

UAE start-ups face barriers to growth, but landscape improving, says Clyde & Co

UAE Banks Federation issues financial literacy handbook to reduce chronic indebtedness

_________

According to the Dubai Chamber white paper, the third biggest concern for SMEs is a lack of affordable office space, with 53 per cent of those polled citing this as a challenge.

The report attributed the banking issues for SMEs to two factors: one, pressure on banks to comply “with increasingly stringent regulatory standards to combat illegal activities” and two the banks’  “sense that emerging companies are not as commercially attractive as other customer segments”.

To get around these challenges, the white paper urged banks to provide basic accounts for new ventures, such as accounts that set a limit on transaction amounts or allow for local transfers only. It also called for simple and transparent guidelines on procedures, well-trained and experienced bankers and for the adoption of technology to reduce costs and improve operations.

The study noted that regulatory pressures are high on banks and that SMEs are not always the most attractive segment for financial institutions as only a few survive and expand. This limits the desire for banks to lend to them, it said, "especially considering cases where banks have suffered losses due to non-performing loans granted to UAE SMEs in the past".

The white paper added that for banks, “some of the challenges faced by entrepreneurs are self-induced. The banking sector highlighted a lack of awareness from the start-ups on the basic requirements as a major cause for delays”.

In June, the UBF issued a new financial literacy handbook for SMEs to raise financial literacy skills of entrepreneurs. The document focused on different aspects of business finance, including governance, financial management, access to finance and borrowing and debt management. The handbook also stressed that SME owners must acquire skills to distinguish between personal and business finances.

“Financial education offers entrepreneurs a deeper understanding of business strategies and objectives, as well as the availability of financing options and support services,” Abdulaziz Al Ghurair, chairman of UBF, said in a statement in June. “It also leads to proper financial planning, which enables small businesses to maximise their chances of business success by taking advantage of business opportunities and weathering business downturns.”

ELIO

Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett

Directors: Madeline Sharafian, Domee Shi, Adrian Molina

Rating: 4/5

COMPANY%20PROFILE%20
%3Cp%3E%3Cstrong%3EName%3A%3C%2Fstrong%3E%20Haltia.ai%0D%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202023%0D%3Cbr%3E%3Cstrong%3ECo-founders%3A%3C%2Fstrong%3E%20Arto%20Bendiken%20and%20Talal%20Thabet%0D%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%2C%20UAE%0D%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20AI%0D%3Cbr%3E%3Cstrong%3ENumber%20of%20employees%3A%3C%2Fstrong%3E%2041%0D%3Cbr%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20About%20%241.7%20million%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Self%2C%20family%20and%20friends%26nbsp%3B%3C%2Fp%3E%0A
Know before you go
  • Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
  • If you’re driving, make sure your insurance covers Oman.
  • By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
  • Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
  • Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.

 

Inside%20Out%202
%3Cp%3E%3Cstrong%3EDirector%3A%C2%A0%3C%2Fstrong%3EKelsey%20Mann%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%C2%A0Amy%20Poehler%2C%20Maya%20Hawke%2C%20Ayo%20Edebiri%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E4.5%2F5%3C%2Fp%3E%0A
AGL AWARDS

Golden Ball - best Emirati player: Khalfan Mubarak (Al Jazira)
Golden Ball - best foreign player: Igor Coronado (Sharjah)
Golden Glove - best goalkeeper: Adel Al Hosani (Sharjah)
Best Coach - the leader: Abdulaziz Al Anbari (Sharjah)
Fans' Player of the Year: Driss Fetouhi (Dibba)
Golden Boy - best young player: Ali Saleh (Al Wasl)
Best Fans of the Year: Sharjah
Goal of the Year: Michael Ortega (Baniyas)

At a glance

Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

 

Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year

 

Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month

 

Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30 

 

Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

 

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

 

Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances

UAE currency: the story behind the money in your pockets
WOMAN AND CHILD

Director: Saeed Roustaee

Starring: Parinaz Izadyar, Payman Maadi

Rating: 4/5

Company Profile

Company name: Yeepeey

Started: Soft launch in November, 2020

Founders: Sagar Chandiramani, Jatin Sharma and Monish Chandiramani

Based: Dubai

Industry: E-grocery

Initial investment: $150,000

Future plan: Raise $1.5m and enter Saudi Arabia next year

Director: Laxman Utekar

Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna

Rating: 1/5