It is estimated that low-income economies will need to integrate more than two billion young adults into the world economy by 2050. And a significant number of those will be looking for employment opportunities in the steam engines of the Middle East’s economy, the oil rich states of the GCC.

But these countries are well aware of the limitations their own hydrocarbon resources face and the need to diversify. They are also becoming all the more aware of their growing native population spearheaded by the protracted period of economic prosperity and relative political stability.

The UAE is experiencing a population boom with recent figures estimating that 38 per cent of its nationals are less than 15 years of age. The equivalent number in Saudi Arabia is estimated at well above 50 per cent. Their overreliance on governmental positions is a wrong that needs to be put right.

In the face of growing Arab youth unemployment, enterprising individuals could play a vital role in helping GCC governments address the challenges of long-term productivity and viable job creation for economically sustainable societies.

In the UAE, 4.1 per cent of the adult population represent entrepreneurs who have set up new business and a further 3.9 per cent are nascent entrepreneurs actively trying to start a business. Combining these rates means that eight out of 100 persons representing the adult population is engaged in some aspect of early stage entrepreneurial activity.

Among Emiratis, 6 per cent are “new firm” entrepreneurs and 4.6 per cent are “nascent” entrepreneurs, which means that the rate of Emirati entrepreneurial activity — at 10.4 per cent — is higher than the rate of expatriates or even the average rate for innovation-driven economies. This means that approximately 10 out of every 100 Emiratis can be considered early stage entrepreneurs.

These statistics have catapulted the UAE to the world’s 20th position in terms of the country’s attitude, abilities and aspirations towards entrepreneurship, according to the 2015 edition of the ‘Global Entrepreneurship Index’ which measures the health of the entrepreneurship ecosystems in 130 countries.

The study shows the UAE jumped nine places versus its 2014 standing, thus cementing its regional lead and ahead of Qatar in 24th position, Saudi Arabia (31), Kuwait (37), Oman (39) and Bahrain (43).

Although Emiratis participate to a much higher degree in entrepreneurial activities than do expatriates, the rate of established businesses is still much lower than the average in innovation-driven economies such as the US, the UK and Chile, which lead their respective regions, ranked first, fourth and 20th overall.

However, the UAE’s enviable global position has dramatically improved. According to a 2012 ‘Global Entrepreneurship Monitor’ (GEM) report, the UAE, along with Russia, had the lowest entrepreneurial intention rates across a sample that included 140,000 individuals from 54 countries.

This progress partly stems from various incentives the UAE Government has introduced as it has realised that enterprise is a crucial engine of economic growth which can foster innovation, productivity growth, and new jobs. Still, is enough being done to reap the full benefits entrepreneurship can bring to the table?

SMEs represent more than 90 per cent of Dubai businesses and they play an essential role in building a competitive private sector. Furthermore, SMEs contribute 40-46 per cent of nominal GDP in Dubai, and more than 60 per cent of the UAE’s GDP. SMEs host the majority of employment opportunities in the country and provide 86 per cent of all private sector employment.

Of those, 73 per cent are active in trade and retail, 16 per cent in services and 11 per cent in manufacturing. The highest concentration of SMEs can be found in Dubai, with 45 per cent of the total, and Abu Dhabi playing host to 32 per cent. A further 16 per cent have Sharjah as their home emirate.

Small businesses progressively increase their contribution towards the UAE economy in critical areas such as job creation, diversification and access to markets with the active participation of Emirati citizen population.

But despite their integral role to the UAE’s economy, many of them face funding difficulties due to unsustainable financing rates. In fact, the UAE’s total bank lending to SMEs is around 3.85 per cent when its target is 24.3 per cent.

Entrepreneurial success requires appropriate focus and attention from the authorities and political will is omnipotent for the further development of a sector that can truly find a long-term solution to the long-debated issue of youth unemployment in the Arab world.

The writer is an Oman based entrepreneur.