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Saturday, May 18, 2024

Entrepreneurship in the UAE

by W. Lowe

© Al Habtoor Group, Nawaf and Saud Al Ali, the co-owners of Funtakino
Mark and Jackie Allen – the co-founders of Wet Fish.

Small businesses, started by their owners, are already the backbone of the UAE economy. In recent years however the government has been actively encouraging the growth of entrepreneurship.

Small and medium enterprises, otherwise known as SMEs, have often been cited as the backbone of the UAE economy. Making up 95 per cent of the total businesses here; employing 42 per cent of the Dubai workforce and comprising 40 per cent of the Emirates GDP, it’s hardly surprising.

It’s a point which was recently highlighted by HH Sheikh Ahmed Bin Saeed Al Maktoum, Chairman of the Dubai Economic Sector Committee at the launch of ‘SME 100’, a new ranking system for UAE-based SME’s. “Today the SME sector is a key catalyst of economic growth in the UAE and the country has one of the most progressive and fast evolving SME landscapes,” he says. “Dubai has moved to the next level of growth and, in our renewed growth and development outlook, small and medium enterprises play a very significant role in contributing to the national economy.”

Launched by MBRE the ‘Dubai SME 100’, is the regions’ first ranking system of top performing and fastest-growing SMEs. By ranking well performing SMEs, it aims to inspire emerging entrepreneurs and boost those companies that are doing well. “‘Dubai SME 100’ will serve as the foundation of other initiatives such as the possible development of an SME Secondary IPO Market Listing and the building of an equity market dedicated to SMEs,” says Sami Al Qamzi, the economy minister for the UAE.

In the last few years, the country has seen a rapid expansion of these businesses, with both the UAE government and a number of private entities working hard to create a more fertile atmosphere for them.

Financing is often the first and biggest hurdle for those wishing to start up their own business. A lot of start-up companies rely on their own savings or loans from families or friends for the initial capital, but for more ambitious projects or for those that need a large capital injection such as engineering or healthcare, it can be hard to find the money. As a result the UAE government has set aside funds for these initiatives, most of which cater for the local population.

There are a number of government initiatives in existence to help those wishing to set up there own business. The Sheikh Mohammed bin Rashid Establishment for SMEs (MBRE), under the umbrella of the Department of Economic Development, was launched in 2002 to support local entrepreneurs. To date, it has successfully facilitated the creation of some 5,000 startup companies here in the UAE.

Heritage for Henna is one such business that has benefited from the scheme. Fathiya Ahmed started the company which sells henna to tourists. She funded it herself at first, but later received additional capital from the government. Now, her 50 shops, across the UAE, are proving extremely popular, not only with tourists but with local residents, and she has plans to expand the business to other parts of the MENA region.

Funtakino, started by two young Emirati students, is another business that has benefitted from the initiative. Nawaf and Saud Al Ali began by renting a stall at a subsidised rate at Global Village, a yearly outdoor market held in Dubai, selling unsually shaped flip flops. They were doing so well however that they decided to go out on their own fulltime. Almost a year later and business has never been better for Funkatino.

“Before, we were just designing and selling to friends and family,” says Saud Al Ali, one of the co-owners. “At the Global Village however we received a lot of interest from customers who clearly loved our unique designs. It just made sense to go start the company.”

In 2007, the Khalifa Fund, an independent agency of the Abu Dhabi government was launched to support and develop the capital’s SME sector. So far, the fund has financed 205 projects. “The Khalifa Fund has been established at a time when Abu Dhabi is experiencing a highly strategic and integrated economic growth based on diversification of incomes and development of Emirati human resources,” says Hussain J. Al Nowais, Chairman of the fund.

The Akoun campaign, launched by the Abu Dhabi Council, offers a series of workshops for aspiring entrepreneurs in universities across Abu Dhabi.

What’s more, in April 2010, Abu Dhabi University launched a Centre of Excellence for Innovation and Entrepreneurship. “Our main objective and mission is for this centre to enable innovative small and medium enterprises,” says Ali Bin Harmal Al Daheri, Chairman of ADU’s executive board at the time.

The Dubai Chamber also recently launched a start-up advisory service which offers oneon- one guidance, coaching and mentoring programmes on restructuring and investment opportunities. “So many people are still looking for jobs and starting up their own company is a good option.

Business incubators

However, most people looking to set up a company are not very familiar with the framework here,” says Lourda Sexton, founder of Pink Slip Dubai, a networking group for recruiters and jobseekers. However when a start-up business is still in the planning stages, renting out office space can eat into the funds considerably. In response to this, the government has set up, what it calls business incubators, or venues where a business can find its feet without paying rent before branching out on its own.

One example is the Shelter – a popular venue for those in the creative industry in Dubai. Founded by Ahmad and Rashid Bin Shabib, the Shelter in the Al Quoz district of Dubai, is a 40,000-square foot, converted warehouse, which provides office space and support materials for creative entrepreneurs such as freelance writers, architects and bloggers. The space is open 24 hours a day, seven days a week and can be rented out for only a fraction of the cost of regular office space.

Established in 2008, Tashkeel is another example of a ‘business incubator’. A venue in Dubai, catering for creative types who want to set up their own business, it offers artists the use of the venue and its equipment for a membership fee. “After we won the award, business picked up a lot. We had media interviews and clients who had heard or read about us calling us up instead of us calling them,” comments Mark Allen, adding that in his opinion the UAE is a great place to start up a small business.

Private companies and sovereign wealth funds

A number of private equity companies and sovereign wealth funds also offer money specifically for the SME sector. Abraaj Capital, one of the region’s leading private equity companies, is one. In 2009 the company established ‘Riyada Enterprise Development’ (RED) – an investment platform dedicated to providing financial aid and advice to SMEs across the MENASA region.

“SMEs have been starved of capital and left to their own devices and as a result they are underperforming their counterparts in other parts of the world in terms of productivity,” comments Tom Speechly, a partner at Abraaj Capital. “We need to address that by providing support in all its forms, finance, mentoring, education and recognition.”

The Al Tomooh Finance Scheme introduced by the Emirates Bank Group (now Emirates NBD) is another example. It has been involved in 113 projects and committed a total of Dh40 million to support enterprises launched by UAE nationals.

Achievement should always be recognised and the establishment in recent years of awards to encourage small businesses has helped.

One SME which has benefitted from such an award is Wet Fish – founded by Mark and Jackie Allen. Specialising in sourcing, packaging and delivering fresh fish to the UAE’s top hotels and restaurants, it won the first ‘UAE Lloyds TSB Small Business of the Year’ award in 2006 and found that business was boosted as a result. “After we won the award, business picked up a lot. We had media interviews and clients who had heard or read about us calling us up instead of us calling them,” comments Mark Allen, adding that in his opinion the UAE is a great place to start up a small business.

And well... judging by the success of so many, this does indeed appear to be the case.

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