The United Arab Emirates is one of the leading suppliers of oil and their revenue from the commodity accounts for a large portion of their financial strength. However, as the global market begins to transition towards alternative fuels and other energy sources, the UAE is taking steps towards changing their economy based on other revenue-generating ventures. With that said, the future of oil revenues is uncertain and the UAE is initiating a new government-funded program that may account for a significant amount of financial contributions that’ll allow them to thrive economically.
The UAE Cabinet recently endorsed the National Programme for Small and Medium Enterprises, which is a first of its kind that is backed by the government. The goal of the program is to boost the success rate of SMEs across the country where financial analysts are predicting will increase up to 50%. However, it’s not the first initiative aimed at SMEs as private holding companies and investment firms have already paved the way of SME development. In fact, Hussain al Nowais, Chairman of Khalifa Fund for Enterprise Development based in Abu Dhabi, established a support program that has already achieved great success in the SME sector.
Both the government-funded and privately invested programs promote assistance and support to Emirati citizens to utilize their entrepreneurship skills in a meaningful way by starting their own SME business in the country. While the current success rate of SMEs hovers around 25 to 30%, both initiatives can help raise those numbers, which will, in turn, stimulate economic growth and decrease oil revenue reliance.
The SME sector already contributes to the UAE significantly as they account for 92% of all companies in the country and provides 86% of the total jobs available. About 300,000 SMEs are already up and running, but with the help from the new program, more are expected to boost that number. The government-funded initiative will provide strategic business plans, technical support and business training to emerging SMEs in an attempt to give Emiratis the resources they need to be successful business owners. Since Hussain al Nowais has already provided the much needed framework to pilot such an initiative, he welcomed the responsibility to help set up the new government program.
The launch of the program has high expectations to meet the SME sector GDP goal of 70% contributions by 2021.