Small and medium-sized businesses in Dubai stand on the cusp of a Dh90 billion windfall from Expo 2020, according to the chief economist of the Dubai Economic Department.
“Dubai is targeting a 5 per cent growth rate for the next 5 years with macro stability,” the department’s Mohamed Lahouel said at the SME World Summit yesterday. “Dubai expects a 10 per cent growth in visitor numbers every year till 2020 which will meet the 20 million visitor target even if there was no Expo. I see a Dh90bn opportunity for Dubai’s SMEs with the amount of construction, infrastructure and sales that will be generated.”
Mr Lahouel said the Dubai Government is working to ensure that SMEs avail themselves of this opportunity.
"SMEs should be integrated into the economy with a public procurement website that advertises where spending is happening. We know now the government is spending US$8 billion on infrastructure before 2020, that is an opportunity. DubaiSME is producing a 2020 document as we speak that will outline all the potential,"
Other speakers at the summit also outlined the potential for the SME community with regard to Expo 2020 and the increasing availability of finance.
For all the positive sentiment about Expo 2020, availability of funding for the SME community remains a challenge.
The UAE’s high street banks currently charge high rates for SME loans, perceiving them as a risk. This is a region-wide problem, with little headway expected without greater transparency and accessibility to financial information through the use of credit bureaus and secured lending, according to experts.
“Right now the UAE does not have the correct transparency and accessibility of information, the likes of credit bureaus etc, you contain the risks through information.” said Roberto Rocha, a senior adviser at the World Bank. “The Mena region shares the same challenges pretty much. It is seen as a risk here lending money to SMEs but you have to have a good financial infrastructure to start with.
“Some countries ask the World Bank for a diagnosis, a banking solution, I think that would be a good option for the UAE. The elements needed are easily built, the UAE’s legal framework is already close to the necessary level. The Mena region has many countries that are far from ready. We would begin by instating a financial reporting system, building a credit registry and move to secured lending. The banks in the UAE, year after year, complain about the same problems and little has been done to rectify them.”
The next Expo will be held in Milan in 2015, which is in the final stages of preparing for an estimated 8 million visitors. There have been multiple benefits to the Italian small business community with over 600 SMEs working directly on the site and thousands looking to benefit off-site in retail and hospitality.
“The potential for work within the Expo site was spotted very early,” said Vicenzo Grassi, an associate partner at PwC. “All the international pavilions that are being built have to be built in Milan, using Italian hardware and Italian labour. There has not been one new building or hotel built for the event. We do not want to build something that is useful only for six months and then empty ever after. The hope is that it will be a boon to the region as a whole. The visitors will be able to stay in Milan, Venice or Switzerland, which are easily reachable, and spend their tourist dollars where they stay and at the Expo site.”
ascott@thenational.ae
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