Dubai authorities are launching a ranking of the top 100 small-to-medium enterprise (SME) and weighing the creation of an equity market for those companies as well.
Speaking at an event yesterday, Sheikh Ahmed Bin Saeed Al Maktoum, chairman of the Dubai Economic Sector Committee, said the creation of a stock market for SMEs was the next step in the development of the sector, although he conceded it was at "the idea stage."
The comments came as Dubai SME, an agency of the Department for Economic Development, announced the launch of a top 100 ranking for SMEs in the emirate.
"Dubai SME 100 will serve as the foundation for other initiatives such as the possible development of an equity market dedicated to SMEs," Sheikh Ahmed said.
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The launch of the index was welcomed by small business owners, although questions remain on how it will work.
SMEs already make up 95 per cent of registered businesses in Dubai, 42 per cent of the workforce and 40 per cent of the emirate's GDP, according to the Ministry of the Economy.
"The index has been on the radar for some time and businesses are quite encouraged by it," said John Martin St Valery, chief executive of the Links Group of Companies, which helps companies to establish in the UAE.
The index is designed to enable accepted companies to use their inclusion as a marketing tool, while banks and other investors in the region could use it as a means of identifying attractive business opportunities.
"We do not just want banks to deal with SMEs on a financing level," said Abdul Baset al Janahi, the chief executive of Dubai SME. "We expect the banks to support SMEs by participating in their business, buying them out or taking them to the next level."
Mr St Valery said SMEs would also have to be realistic in their expectations of the top 100 index until details of the application and judging processes are clear.
"For credibility of the whole index and the industry as a whole, there needs to be some teeth behind it," he said. "Transparency and governance need to be high on the agenda."
Paul Kenny, the chief executive and founder of the start-up discount website Cobone.com, said it would be "great" to see his business listed on the index, but agreed that more information was required.
"The value of any ranking is in the transparency offered," Mr Kenny said. So far, Dubai SME has only said any listing would be on 50 per cent financial and 50 per cent non-financial basis. But it is not clear how subjective categories such as innovation and human capital development will be measured.
The Dubai SME 100 website, which will be accepting applications for the index, was not yet live late yesterday. The site is expected to include more details on the ranking process when it is launched.
The first official definition of SMEs in Dubai was released by the emirate in 2009 and includes any Dubai-registered company with a turnover of up to Dh250 million (US$68.06m) and employing up to 250 staff.
Alexandar Williams, the director of strategy and policy at Dubai SME, said this definition would be used to decide eligibility.
Mr Williams also said SMEs would have to provide financial documents for the previous three years, including compound annual growth rates. It is not clear what accounting measures will be required.
