Big year forecast for small businesses in the UAE

A survey of leading SMEs in the UAE, including Just Falafel, Propertyfinder.ae and Coffee Planet, finds optimism for the year ahead, thanks to momentum from 2013 and the prospect of Expo 2020.

The country's small and medium enterprises (SMEs) are increasingly confident of their growth prospects for this year, buoyed by strong economic growth in 2013 and the prospect of Expo 2020.

A survey released yesterday by Meed found that 18 of 20 leading UAE-based SMEs expressed optimism for the year ahead, on the basis of an expected strong year-end performance.

Of the companies polled, 17 expected their profit last year to have exceeded that of 2012.

The survey included prominent SMEs including Just Falafel, Propertyfinder.ae and Coffee Planet.

The year ahead is also looking positive for the healthy fast-food chain Kcal, which was not part of the Meed survey.

“From our side, things are looking good for this year and the next,” said the company’s founder, Mark Carroll. “The health food industry is doing well as governments increasingly stress the importance of healthy living and diets.”

Kcal, which currently runs six outlets in Dubai, plans this year to open two more locations in the emirate and six in Abu Dhabi.

At Virtuzone, a Dubai-based business that helps smaller businesses set up, the number of new registrations last month rose 12 per cent compared with January 2012, according to its chairman, Neil Petch.

“Based on January we’re expecting this year to be the biggest year we’ve had so far,” he said.

Of greater importance, perhaps, is that 62 per cent of Virtuzone clients signed renewal agreements last year, compared with 56 per cent in 2012.

Renewal figures for this year were currently about 70 per cent, said Mr Petch, indicating that an increasing number of smaller businesses are surviving beyond their first year.

UAE governments have launched several initiatives to boost the SME segment in recent years, as a means of encouraging entrepreneurship in the country and diversifying the economy.

Dubai SME 100, a Dubai government initiative established in 2011 to nurture SMEs, has registered a 50 per cent rise in applications for its 2014 rankings, according to the chief executive Abdul Baset Al Janahi.

“We expect this figure to grow even more next year as more business opportunities arise with the continuing growth of the economy,” he said.

The IMF last month estimated that the UAE’s economy would grow by 4.5 per cent this year, in line with estimates for 2013.

The increase in the UAE’s workforce in the run-up to Expo 2020 in Dubai was likely to have a positive effect on SMEs, said Mr Carroll.

“There’s been a lot of hype and it’s hard to know what the reality of the economic impact will be for smaller businesses,” he said. “Having said that, if it leads to more jobs and an increasing population it certainly can’t do any damage for businesses like us.”

However the UAE needs to ensure that the economic benefits of the Expo are not negated by increases in rents and living expenses, according to Adam McEwan, the managing director of Platinum Heritage Tourism.

Official figures showed that inflation in the UAE rose to 1.1 per cent in 2013 from 0.7 per cent in 2012.

Mr McEwan also expressed concern that SMEs looking to hire temporary staff on shorter contracts would not be able to do so, given the current visa structure in place.