The SME World Summit took place in Dubai yesterday. The SME sector is well understood to be one of the largest drivers of an economy, however the definition of SME varies wildly.
The OECD and UN define an SME as:
Small and medium-sized enterprises (SMEs) are non-subsidiary, independent firms which employ fewer than a given number of employees. This number varies across countries. The most frequent upper limit designating an SME is 250 employees, as in the European Union.
In Dubai, there is a different definition:
Micro, Small and Medium enterprises within the three sectors are defined as follows: Within Trading: A micro business is any enterprise with less than or equal to 9 employees AND a turnover of less than or equal to AED 9 million.
No matter which definition you use, or which part of the life-cycle you are in, there seems to be a common issue for SMEs – money. From raising finance to getting paid. These issues are not just challenges for SMEs in the UAE and Middle East, but around the world.
Much of the discussion in Dubai yesterday was around a perception that banks do not understand SMEs and are not set up to deal with the specific challenges that SMEs face.
There is no doubt that business is being stifled by some banking practices. Fundraising aside, the process of getting a merchant account to allow companies to accept credit cards is limiting growth of the Ecommerce sector.
According to ORACLE Middle East, 58% of SME’s say their biggest challenge is the lack of Digital expertise. It is true that Digital talent is relatively hard to find, however this is compounded by the way visas are issued and the costs associated with relocating people to the region.
But no-one said that being a start-up or a small business was easy and there is a sense that a city like Dubai should be able to support a thriving entrepreneurial community. For the most part, new business models and innovation is ‘copycat’ cut and paste from ideas that are working elsewhere and localising them, however there are a few ways to see how to capitalise on the vision of the emirate.
Dubai has an Industrial Strategy for 2030 and a vision for 2021. These are publicly available and shows the sectors that are to be developed. There are also initiatives in place to guarantee that SMEs are awarded a percentage of government contracts.
SMEs are an important part of the economy and the overall mood at the World SME Summit was confident and enthusiastic, which bodes well for the future.
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