Lending a hand to start-ups

Dubai: Short of extending full government guarantees, the UAE authorities have done more than their bit to nurture small businesses from conception through infancy to full maturity. Multiple government-backed agencies — and even private entities — have come into being in recent years to create fertile ground for small businesses.

While Dubai has been an early starter with the likes of the Shaikh Mohammad Bin Rashid Establishment for SME development and the Al Tomooh Finance Scheme from Emirates Bank Group (now Emirates NBD), Abu Dhabi created the Khalifa Fund to Support and Develop Small and Medium Enterprises in 2007.

With access to bank credit still restricted for start-ups and small businesses, these agencies will be called upon to do more in the short- to medium-term. But by playing their parts right, they can indeed become the agents of change in altering the landscape for small businesses in the UAE.

Here, we profile the leading players in bringing about this change:

Mohammed Bin Rashid Establishment for SME Development

These are busy days for the entity which came into being in 2002 under the umbrella of the Department of Economic Development. It is working closely with the Dubai Statistics Centre to collect and analyse data on the small business population. The intention is to use these findings to publish the first Dubai-specific statistical bulletin on small and mid-sized enterprises by the middle of this year.

There are also plans to get into venture capital and a credit guarantee scheme, possibly as early as 2011. The Mohammad Bin Rashid Establishment's primary task is to facilitate entrepreneurial activity among UAE nationals by providing financial support, training and educational programmes.

"Innovative economic ventures undertaken by our citizens have been largely responsible for the dramatic growth achieved," said Abdul Baset Al Janahi, CEO. "The objective is to create a fertile ground for entrepreneurship to flourish and assist emerging national businessmen and businesswomen to realise their dreams."

Its notable successes include Fat'hia Ahmad Othman who started Heritage of Henna to offer upscale henna-based beauty services.

Al Tomooh Finance Scheme

The Al Tomooh Finance Scheme has been involved in 113 projects and committed a total of Dh40 million to support enterprises launched by UAE nationals.

The scheme provides interest-free finance of up to Dh2 million for three years with the possibility of an extension of eight years. The recipients pay 10 per cent in equity while 90 per cent is held by Al Tomooh. On average, four out of the ten project proposals received will be approved.

Two recent projects include Experts International, a management training centre, and Deira Montessori Nursery which were financed with Dh1 million each. The scheme also extends loans to existing projects that need to be expanded.

The Khalifa Fund

Launched in June 2007 as an independent agency of the Abu Dhabi government, the Khalifa Fund to Support and Develop Small and Medium Enterprises has provided funds to 35 Khutwa (First Step) projects, 144 Bedaya (Beginning) ventures and 26 Zeyada (Growth) initiatives.

It has approved more than Dh111 million in funding for small business, taking its total financing for 205 projects to Dh340 million since the formation. "The Khalifa Fund has been established at a time when Abu Dhabi is experiencing a highly strategic and integrated economic growth based on diversification of incomes and development of Emirati human resources," said Hussain J. Al Nowais, chairman of the fund.

The fund also offers a range of support services which aim to raise awareness, educate and instill best practices.

"The efforts of the fund will serve to nurture the many talented and capable Emiratis in Abu Dhabi who wish to enter the world of business."

Arab Business Angels Network

The Arab Business Angels Network is a seed capital initiative launched three years ago to promote the growth of entrepreneurship in the Middle East. It targets start-ups and early stage businesses that are looking to raise $100,000 to $500,000 in seed capital to fund their operations. The initiative brings together the Young Arab Leaders, with funding by Dubai International Capital. Within the region, the venture has a number of innovation centres where acceleration programmes are provided in the form of training and skills development.

It also introduced a pan-Arab business plan competition which drew 1,000 entries from across the region. Two companies from Egypt and Jordan won the contest and $2.5 million in investment backing. To be eligible, the companies have to fit ABAN's mandate, be located in the region and require less than $1 million.

The Big Start

An initiative from Al Tamimi Investments, The Big Start seeks to promote entrepreneurial skills among final year undergraduate students in the UAE. The chosen student(s) will set up and run their own businesses after they graduate, with full funding and support from Al Tamimi Investments. They will be assigned the title of CEO and have a structured shareholding in their businesses. It is open to all final year university and college students studying in the UAE.

The Dubai Enterprise Centre

Launched in 1996, this is a business incubation project launched by Dubai Airport Free Zone at their facilities in Dubai. It provides the facilities and help launch ventures by offering the infrastructure and support network to help individuals turn their businesses into a success.

DEC seeks experienced professionals who have spent at least two years of their career in the UAE and have a business proposition.

Useful websites

http://www.sme.ae/english

http://www.khalifafund.gov.ae

http://www.aban.ae