This presentation discusses the SME environment in Dubai - key issues and challenges.

1. Dubai SMEs
Issues & Challenges
Essa Al Zaabi, Senior Vice President
Dubai Chamber
21 May 2014

2. Dubai SME Environment
• Business friendly environment for business
startup and growth
• UAE top ranks on global indices:
 Ease of Doing Business
 Global Competitiveness Index
 Trade Facilitation Index
 Logistics Performance Index
• Dubai SMEs is a strategic segment of Dubai’s
economy
• Access to finance is a key constraint to SMEs
globally

3. Definition of Dubai SMEs
• No official definition of SMEs in UAE
• Dubai SME defined SMEs across 3 main economic sectors by
employment size and turnover
Micro
Small
Medium
Trading Manufacturing Services
Employees Turnover
< =9 & < = AED 9 mln
<=35 & <= AED 50 mln
<=75 & <= AED 250 mln
Employees Turnover
< =20 & < = AED 10 mln
<=100 & <= AED 100 mln
<=250 & <= AED 250 mln
Employees Turnover
< =20 & < = AED 10 mln
<=100 & <= AED 100 mln
<=250 & <= AED 250 mln
Source: Dubai Chamber based on Dubai SME

4. Dubai Chamber Members
Over 90% are SMEs
Source: Dubai Chamber database

5. Dubai Chamber Members:
Trade Statistics 2013

6. SME Contribution to Dubai Economy
SMEs contributed on average 40% of Dubai total GDP
Source: Dubai Chamber database

7. Significance of SME’s to Dubai Economy
Dubai’s SMEs are significantly contributing to Dubai total employment
Source: Dubai Chamber based on Dubai SME

8. Significance of SME’s to Dubai Economy
Dubai’s SMEs dominate number of establishments
Source: Dubai Chamber based on Dubai SME

9. UAE SMEs Access to Finance
Actual SMEs lending penetration is very low in most of GCC.
however, target rates are promising
Source: Dubai Chamber based on “Bank lending to SMEs in MENA Survey Report, World Bank and Union of Arab Banks, 2010”

10. UAE SMEs Access to Finance
• Access to finance remains a key
constraint
• Private equity and venture capital are
not mature options for SME finance
• 77% of Dubai SME’s have no access
to bank lending
• 80% of Dubai start-ups are self-financed
• SMEs mainly demand bank finance
for:
• 59% working capital
• 37% capital expansion/investment
• 4% short term financing
Source: Dubai Chamber based on Dubai SME

11. Primary Constraints to SMEs Financing
Supply Side
•Banks remain cautious about lending to SMEs sector due to:
o Lack of credit information on SMEs
o Risky and costly lending to SMEs
o SMEs lack of business and financial skills
o Lack of guarantees or collateral availability

12. Primary Constraints to SMEs Financing
Demand Side
•Dubai SMEs access to bank finance is constrained due to:
o High transaction and setup costs.
o Unclear borrowing requirements.
o Lack of awareness on being ‘bankable’
o SMEs are offered the most expensive mode of
financing such as the overdraft and the credit line

13. Challenges and Way Forward
• Financing is still a major constraint for
SMEs in Dubai and UAE
• Larger share of SMEs in a bank’s lending
portfolio is expected to enhance banks‘
returns and is necessary to diversify risk
• Dubai Chamber has always supported
SMEs with financial and non-financial issues
• Our dedicated business support unit has
SMEs training programs, credit rating
and events organization to support
segment growth
• Dubai Chamber has launched Tejar Dubai
Initiative to support and train young local
Dubai entrepreneurs

14. Enhancing Dubai SMEs access to finance through:
 Inclusive banking services for SMEs:
 Provide incentives for banks to lend to SMEs.
 Upgrading banking officers skills for improved ME’s credit evaluation
 Broadening financial infrastructure base:
 Launching credit bureaus and credit rating agencies to improved
SMEs transparency
 Alternate funding options:
 Private equity
 Crowd funding
 Training:
 Designing and launching training programs with banks for SMEs on
how to become more bankable.

15. Thank you
Essa Al Zaabi, Senior Vice President
Dubai Chamber
21 May 2014