Small and medium enterprises in the UAE are optimistic about growth in the next 12 months, identifying easier access to funding as the top driver of future expansion, according to research by Mastercard.
Around 88 per cent of UAE-based SMEs are optimistic about the next 12 months following the challenges of the Covid-19 pandemic, with two thirds projecting revenues will either grow or remain stable, according to the Mastercard Middle East and Africa SME Confidence Index.
Some 40 per cent of SMEs surveyed said easier access to funding is a key driver of growth, while 34 per cent pointed to acceptance of digital payments and another 34 per cent identified training and upskilling staff as growth drivers.
"It’s great to see that confidence is returning to the UAE’s SME sector after a challenging period," Girish Nanda, country manager for UAE and Pakistan at Mastercard, said.
The UAE's economy is expected to grow 2.4 per cent as the country gradually recovers from the pandemic-induced headwinds, the Central Bank of the UAE said in June. SMEs are the backbone of the UAE economy, with the government introducing measures to help business owners weather the crisis.
More than 400,000 SMEs operate in the UAE and provide jobs for 86 per cent of the country's workforce, according to the Khalifa Fund for Enterprise Development.
Asked about the main concern these companies face, 60 per cent of the SMEs surveyed said maintaining and growing their business was their top issue, according to Mastercard.
More than half the businesses said private sector partnerships (57 per cent) and government-led initiatives (53 per cent) have the biggest potential to positively impact SMEs and the wider UAE market.
“Access, whether it is to growth, stability and financial support, stands out as the top concern that SMEs in the UAE face today," Mr Nanda said. "The fundamental benefit of a digital economy is that it eases access across these barriers."
The ability to sell online, acquire a larger customer base through e-commerce, or enable instant access to apply for or extend credit lines through digital banking, are some of the ways that the digital economy works for various businesses, he added.
The Covid-19 pandemic has accelerated a consumer shift to online shopping and food deliveries in the Middle East amid movement restrictions to curb the spread of the virus.
As consumer trends change in a post-pandemic world, businesses will have to adapt and prepare for the future, Mastercard said in its report.
Mastercard’s Economic Outlook 2021 estimated that 20 to 30 per cent of the pandemic-related surge in e-commerce would be a permanent trend in the share of overall retail spending globally.
Recent Mastercard studies also showed that 73 per cent of UAE consumers are shopping more online than they did since the start of the pandemic and 97 per cent of UAE shoppers would consider making a purchase with an emerging payment technology over the next year.