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Dubai SMEs

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Business friendly environment for business startup and growth ... of Dubai s economy Access to finance is a key constraint to SMEs globally ... setup costs. Unclear ... – PowerPoint PPT presentation

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Title: Dubai SMEs


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 Dubais
    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

Manufacturing
Services
Trading
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 SMEs to Dubai Economy
Dubais SMEs are significantly contributing to
Dubai total employment
Source Dubai Chamber based on Dubai SME
8
Significance of SMEs to Dubai Economy
Dubais 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 SMEs 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
  • Lack of credit information on SMEs
  • Risky and costly lending to SMEs
  • SMEs lack of business and financial skills
  • Lack of guarantees or collateral availability

12
Primary Constraints to SMEs Financing
  • Demand Side
  • Dubai SMEs access to bank finance is constrained
    due to
  • High transaction and setup costs.
  • Unclear borrowing requirements.
  • Lack of awareness on being bankable
  • 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 banks 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
    MEs 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
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