Emirates Leaks

SMEs decline due to the growing economic crisis in the UAE

12

The harsh indicators of the escalating economic crisis in the UAE and its negative repercussions are affecting even small and medium-sized enterprises (SMEs).

This is due to imposing taxes and financial fees on these projects for multiple purposes, as well as directing the state budget to serve foreign conspiracies and increase its suspicious influence.

SMEs are the main drivers of the UAE economy and classified as one of the most important mechanisms of strategic direction to support the production structure. They represent more than 94% of the total number of companies operating in the country, distributed by 73% in the wholesale and retail sector, 16% in services, and 11% in industry.

Emirates Leaks monitored the results of a survey conducted by a local newspaper, Al Roeya, which showed that more than 60% of SMEs in the UAE are stumbling amid complaints from entrepreneurs about the obstacles to their business growth.

The funding problem

The problem of finance has emerged in the absence of a unified mechanism for the ceilings and conditions of bank lending, which allows banks to put conditions that do not fit most of the projects, while some saw that the decline in finance ceilings is the biggest obstacle.

Some felt that the weakness of the small enterprises benefit from government contracts is the most prominent obstacles, demanding to expand the benefit from the government procurement allocations decision as the ceiling of total purchases does not directly support the need of small companies, especially with the increase in their numbers.

A group of entrepreneurs added that there is no mechanism to protect the products and services provided by small national companies.

A small percentage considered the importance of reducing the conflict between the classification of projects between the financial institutions and government institutions, which is reflected in the disparity of benefit, whether from funding or government incentives.

The financing constraints are in terms of payment requirements and periods, so they demand greater flexibility so that projects can achieve returns that cover operational costs first and ensure that their activities do not stall.

High fees

The entrepreneurs pointed out that their basic demand is to reduce government fees on guarantees and employment, as well as to consolidate the necessary licenses for expansions between different government departments.

They also call to expand the government initiatives for emerging projects, whether in finding an appropriate funding channel or granting guarantees.

They also demand the government to provide a direct facilities such as exemption from bank guarantees, taking only checks for guarantee or support from the Khalifa Fund and guarantee the projects that have been approved by them because they are the major obstacle now, in addition to the inability of the start-up companies to compete with large companies in financial solvency despite their technical qualification.

SMEs in the UAE still face many challenges, including individual challenges that vary depending on the project activity, as well as the overall challenges of low market availability and therefore poor returns.

The funding is lacking, in which a competent government entity should be established to support the needs of the projects, either at the time of incorporation or in the various stages of operation, without relying solely on the banks.

Entrepreneurs emphasize that small enterprises need a stand by government institutions, especially in the light of the high fees and the available government support inability to meet all the requirements of those projects.

The survey included interviews with a number of young people who shut down their projects because of high local and federal fees and the increase in the number of violations lines that have become a heavy burden.