Transcript Small and Medium enterprises (SMEs)

On the Importance of Small and Medium
Enterprises (SMEs) in Dubai
Mohamed TRABELSI
March 18th, 2015
Figure 1: GDP per Capita in Dubai, Singapore, Hong Kong and UAE in
(Current US$)
55,182.50
60,000.00
50,000.00
43,048.90
40,000.40
38,123.50
40,000.00
30,000.00
20,000.00
10,000.00
0.00
Dubai
Singapore
Hong Kong
UAE
Source: World Development Indicators (2014) and Dubai Statistics Center (2014)
Small and Medium enterprises (SMEs) in Dubai
SMEs in Dubai represent:

95% of all firms registered
 42% of the labour force
 40% of the emirate’s GDP
Figure (2): Whether the establishment applied or not for loans or lines of
credit (%)
11.1
88.9
No
Source: Business Environment Survey (2012)
Yes
Figure (2): The ratio of SME loans to total loans in the MENA region (%)
30%
24%
25%
20%
20%
15% 15% 16%
13%
15%
10%
5%
0%
6%
4% 4% 5%
2% 2% 2% 2%
1%
0.5%
From the point of view of enterprises (Business Environment Survey 2012)
 The preference of SMEs to rely on their own funds may be accounted for
by insufficient collateral, i.e. unacceptable or unsuitable collateral.
From the point of view of banks (survey covering 7 banks operating in Dubai)
 The banks are agreeing that SME’s opacity or lack of transparency is one
of the major obstacles facing lending to SMEs.
 Credit information system is also important as the absence of information
on borrowers regarding their creditworthiness leads to information
asymmetry and creates a risk premium for those who want to access bank
finance.
Main Recommendations
 Improving the current regulations on collateral requirements to make
them more flexible. This includes encouraging banking institutions to
accept movable properties as collateral which needs a deep reform of
secured transaction laws and registries.
 The development of an independent institution that keeps track of credit
information on borrowers. The different experiences across developing
countries is an important element in improving the access to finance to
individuals’ and corporates’ borrowing.
THANK YOU FOR YOUR ATTENTION