Only 4% of bank loans go to SMEs in the United Arab Emirates (UAE), yet the government of the UAE is pushing their citizens to start businesses according to a comment in Gulf News.
As with other parts of the world the UAE is recognizing the challenges in job creation and access to capital. The tendency for a disconnect between governments and economic reality is pervasive.
According to Fadi Ghandour, founder and vice chairman of Aramex,
SMEs make up around 95 per cent of businesses in Dubai. Also, SMEs account for around
70 per cent of the private sector job creators in the Arab world, according to Ghandour. The private sector is “about SMEs” and not big companies
Alternatives are starting to appear though exemplified by the Khalifa Fund which was launched in 2007 to help build and develop entrepreneurs in the region. The fund will provide interest free loans and support for start ups and acts as support entity. The organization is striving to create a new generation of Emirati entrepreneurs by instilling and enriching the culture of investment in young people. Currently a majority of young people join the public sector after they graduate due to availability and security.
As funding vehicles such as the Khalifa Fund and other crowdfunding resources grow in the region entrepreneurs will have more access to capital. With 70% of private sector jobs being SMEs the importance of new funding vehicles is clear.
