Business confidence among smaller businesses in the UAE is running higher than anywhere else in the world, a study shows.
The survey findings released yesterday from the Association of Chartered Certified Accountants (ACCA) and the Institute of Management Accountants signalled a boost in confidence levels at the end of last year and again this year.
“The thrust of confidence amongst UAE SMEs [small and medium-sized enterprises] in the global economy comes despite far from perfect business conditions,” said Rosana Mirkovic, ACCA’s head of SME policy.
“It reflects a common trend across the world’s small business community – they know the economic climate is improving but still face their own challenges.
“SMEs in the region are facing greater business pressures than large corporates in UAE, which is a pattern reflected on a global scale. The key issues for UAE SMEs were decreased income and increased costs, but also access to finance and securing prompt payment from customers, which strangle the cash flow that small business need to survive.”
Policymakers are banking on smaller businesses to play a key role in the development of the Emirates, which explains the push to help to develop local entrepreneurs. SMEs currently account for 92 per cent of total companies operating in the country and 86 per cent of the workforce in the private sector, according to the Ministry of Economy.
Nearly 300,000 companies can be classified as part of the SME sector, ministry data showed. The UAE is considered a hub for entrepreneurship in the region by creating a world-class infrastructure and attracting companies and innovative ideas in different sectors.
A new SME draft law approved in June is set to be passed to promote the sector, but it would do little without further support, Abdullah Al Darmaki, the chief executive of Khalifa Fund for Enterprise Development said at the Abu Dhabi Entrepreneurship Forum on Wednesday. “There has been talk of an SME law that will empower our smaller companies, but one law is not going to create a vibrant SME landscape, especially when it is not in conjunction with a bankruptcy law,” he said.
“I am not looking to copy and paste a law from the US or the UK. Our finance industry knows what to do, but there is nothing encouraging them to do it. Why are our banks posting record profits and the SME sector [is] not being part of the conversation?”
* With additional reporting by Andrew Scott