UAE ranks top in business activity

Dubai: The UAE has been ranked first among 42 countries in international business activity and business environment.

Global Entrepreneurship Monitoring Report, sponsored by Mohammad Bin Rashid Establishment for Young Business Leaders and conducted with contribution from Zayed University, made the ranking.

The international business activity position is owing to the UAE hosting the highest number of start-ups that have 25 per cent to 75 per cent of customers from overseas markets in terms of exports or re-exports.

The country's ranking also jumped from 29 to 17 in the number of start-up businesses that took off in 2007, underlining a healthy business and development activity throughout the year.

While most new ventures are small and medium enterprises, the report noted that banks had almost an insignificant role in terms of funding. In most of the cases, funding was from a friend or neighbour, while close family and relatives also had a substantial presence.

"Through identifying key drivers and challenges facing small and medium enterprises (SMEs), the report provides clear guidelines for policy makers and key stakeholders on the necessary steps for enhancing innovation and entrepreneurship across the country," said Akil Kazim, director of operations for the establishment.

Business environment

The ranking for entrepreneurial environment is based on the parameters of market openness, business opportunities, innovation and technology, knowledge and skills and financial support, all in which the UAE was ranked first.

The other parameters include government policies, norms and culture, education and infrastructure.

Meanwhile, the nation has been reported to have fared badly in support for businesswomen, compared to the previous year, even though the number of female start-up businesses showed a seven-fold increase.

Experts say the country needs to provide ongoing encouragement for more female entrepreneurs to enter the market.

While the ranking was high for business start-ups at 17, the UAE was also ranked top in discontinuation of business within high-income countries.

The percentage of closures went up from five to over seven per cent. One of the main reasons for closures was non-profitability, while experts said that inflation was also a major issue.

Added to that, the fear of failure in business has remained high. Kenneth Preiss, professor of management at Zayed University, said this is a critical hurdle for start-up businesses.

On a composite business participation scale, a composite of start-ups, baby and established businesses, the UAE was ranked 25th, a significant jump from the position of 41 last year.

The study is "a useful reference for policy makers to develop a comprehensive mechanism that ensures greater contribution by SMEs to the national economy," said Kazim.