Small businesses in the UAE squeezed by slower payments, survey says

Small and medium-sized businesses continued to feel the pinch in the first quarter as the economy slowed with payment collection and tapping debt remaining difficult, according to a survey by the SME financier Gulf Finance.

Despite the gloom however, Gulf Finance’s chief executive, David Hunt, said that there are increasing signs of stability such as the fact that these businesses have not accelerated layoffs and expect to keep headcounts stable during the second quarter.

Nonetheless, he said any improvements would be gradual and that the rebound in the price of oil during the first quarter would take time to filter through the wider economy.

“As a whole, our first-quarter survey has seen a cautious rebound in trade and commerce while holding firm on hiring and pulling back on regional expansion,” Mr Hunt said. “Yet one needs to note this has been accomplished at a lower entry point to previous quarters and we will get a clearer picture of whether this is a dead cat bounce or a more prolonged recovery.”

According to the survey, one in four respondents during the first quarter said they had difficulty collecting payments, and while there was an improvement from the fourth quarter in raising funds, that ability remains well below what it was during the first quarter of 2015.

UAE government officials have been counting on small businesses to play a key role in the development of the economy.

SMEs account for 86 per cent of the workforce in the private sector, according to the Ministry of Economy. And 300,000 companies can be classified as part of the SME sector.

The push to promote SMEs, however, has been handicapped by the slowing economy after oil prices shed nearly 70 per cent of their value since mid-2014.

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