The Ministry of Economy last year launched a new vision for Small and Medium Enterprises (SMEs) to provide UAE businesses with more growth possibilities and improved market access, on March 12, 2022, in Dubai. Photo: Ministry of Economy
The Ministry of Economy last year launched a new vision for Small and Medium Enterprises (SMEs) to provide UAE businesses with more growth possibilities and improved market access, on March 12, 2022, in Dubai. Photo: Ministry of Economy
The Ministry of Economy last year launched a new vision for Small and Medium Enterprises (SMEs) to provide UAE businesses with more growth possibilities and improved market access, on March 12, 2022,
Mohammed Alardhi is the executive chairman of Investcorp, chairman of Muscat Stock Exchange MSX and chairman of Royal Jet
March 09, 2023
Small and medium enterprises (SMEs) in the GCC region have suffered from the fallout of the Covid-19 pandemic and the subsequent global economic downturn. It is now time to empower entrepreneurs to lead their enterprises to success, especially in the context of net zero and overall national socio-economic goals. A truly inclusive economy will support the growth of small businesses and empower them to make valuable contributions.
According to a report published by the International Monetary Fund in December 2019 (titled Enhancing the Role of SMEs in the Arab World – Some Key Considerations), SMEs in the Gulf countries at the time accounted for 15-30 per cent of their national GDPs, which was behind the global average of 40 per cent in emerging economies.
Small businesses were also among the first to face detrimental impacts of challenges arising from the pandemic and subsequent lockdowns. While we have come a long way as a region to recharge our economies, there is a dire need to empower small business owners so they can reach their maximum potential, not only in terms of output but to support our nations in becoming more sustainable.
Governments across the region have launched a series of initiatives towards sustainability and made progress most notably in the area of renewable energy. Although to move forward, the contribution of both corporations and SMEs is crucial.
The Organisation for Economic Co-Operation and Development (OECD) published a paper in November 2021 that stressed the importance of small businesses as drivers of socio-economic change, their impact on the carbon footprint and also challenges they face with environmental degradation. The paper also pointed out how SMEs are led by entrepreneurs who are innovative and forward-thinking in their overall approach to business, which means they have great potential to make an impact in the realm of sustainability.
Given the tradition of entrepreneurship in the Gulf region, it is no surprise that we have a wealth of ideas with profit-making potential. And while business infrastructure has improved over time, more collaborative strategies from within the private sector can engage owners of small businesses and set them up for success.
One way to fill this gap is for small businesses to actively work on job creation with greening goals in mind
Larger private sector organisations can engage with SMEs in industry-wide greening initiatives – whether it is reducing the carbon footprint in their current operations or fostering new ideas that can open new revenue streams and support environment conservation goals.
Strategic partnerships between corporations and small businesses can create synergy and contribute towards industry-wide growth while targeting climate goals.
There is also room for governments to collaborate more closely with SME owners and aspiring entrepreneurs to support them in greening their existing businesses and developing innovative solutions for climate preservation.
Funding is a major area of concern for SME owners. So this is a great time for financial institutions in the region to work with them to develop flexible financing models that see them through various stages of organisational growth.
The greatest asset the GCC region boasts is the youth, a segment of the population that is increasingly educated and driven. There still remains, however, a gap between private sector employers and graduates. Globally, young minds have been instrumental in pushing the movement for climate change. The Middle East should be no exception especially when it is home to bright and capable young citizens.
One way to fill this gap is for small businesses to actively work on job creation with greening goals in mind. Companies can harness fresh young talent through internship programmes that focus on greening and innovation.
Also, SMEs can work with educational institutions to engage with students to encourage an early and continued interest in sustainability in the context of lifestyles and business.
While it is encouraging to know that myriad efforts are under way across the GCC region within the realm of sustainability, there are still ways to go in order to meet net zero emissions. As mentioned earlier, we are still dealing with the fallout from economic setbacks, but the region has come out strong, with both the public and private sectors remaining focused on recovery.
The increasing complexity of the modern world requires multi-faceted approaches for economic inclusion and subsequent growth. GCC countries have a series of strengths – from dedicated governments to innovative entrepreneurs and bright young minds who are capable of leading the region towards a sustainable future.
Proactively collaborating, focusing on greening business and developing innovative solutions while strengthening small businesses will be the way forward to climate safety and ultimately, net zero emissions.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Nancy 9 (Hassa Beek)
Nancy Ajram
(In2Musica)
How Islam's view of posthumous transplant surgery changed
Transplants from the deceased have been carried out in hospitals across the globe for decades, but in some countries in the Middle East, including the UAE, the practise was banned until relatively recently.
Opinion has been divided as to whether organ donations from a deceased person is permissible in Islam.
The body is viewed as sacred, during and after death, thus prohibiting cremation and tattoos.
One school of thought viewed the removal of organs after death as equally impermissible.
That view has largely changed, and among scholars and indeed many in society, to be seen as permissible to save another life.
