Dubai: Government agencies have taken the lead in supporting small and medium enterprises (SMEs), particularly over the last ten years.
The recognition of this sector as an important engine for economic growth began with the setting up of the Shaikh Mohammad Bin Rashid Establishment for SMEs (MBRE) in 2002. And to date it has facilitated the creation of some 5,000 start-ups across multiple industries.
Last March, the agency introduced SME 100, a ranking system for businesses operating in the local economy.
"The ranking helps these SMEs to see where they stand and encourage others to get inspired," said Abdul Baset Al Janahi, CEO of MBRE. "It will also help us identify the people who can be trained to reach the next level."
In 2007, the Khalifa Fund, an independent agency set up by the Abu Dhabi government, was launched. So far the fund has approved more than Dh400 million for 250 small businesses.
"We have received more than 5,000 applicants since and been getting an average of 170 entrepreneurs every month," said Dr Ahmad Khalil Al Mutawa, CEO of Khalifa Fund. "There is quite a big appetite for entrepreneurship here."
One of the Khalifa Fund's recent projects was an industrial financing initiative of up to Dh10 million.
Elsewhere, several government-launched education initiatives have also made their mark. The Akoun campaign brought together the Abu Dhabi Council for Economic Dev-elopment, the Khalifa Fund and the Abu Dhabi Chamber of Commerce and Industry two years ago. It offers a series of workshops in universities in Abu Dhabi.
The Dubai Chamber of Commerce and Industry recently launched a start-up advisory service for one-on-one guidance, coaching and mentoring programmes on restructuring and investment opportunities.
Other players from the private sector have also recognised the potential of the industry to launch independent initiatives exclusively for small businesses. The private equity company Abraaj Capital set up Riyada Enterprise Development (Red) in 2009 to offer financing and advisory services to SMEs in the Middle East and North Africa territory as well as South Asia.
The platform has more than $500 million (Dh1.83 billion) and looks to invest in 75 to 100 companies over the next five years.
"SMEs have been starved of capital and left to their own devices and as a result they are underperforming their counterparts in other parts of the world in terms of productivity," said Tom Speechly, CEO of RED. "We need to address that by providing support in all its forms — finance, mentorship, education and recognition."
Earlier this year, Abraaj launched the online community Wamda. "It speaks to entrepreneurship in the region; it has an Arabic interface as well as an English interface," Speechly added.
"There's over 250 video interviews with leading entrepreneurs and other players in the region and it's a really good resource to be connected to entrepreneurs and to finance."
On the banking side, the Al Tomooh Finance Scheme by Emirates NBD has been involved in 113 projects and committed Dh40 million to support enterprises launched by Emiratis.
The scheme provides interest-free finance of up to Dh2 million for three years with the possibility of an extension of eight years. Recipients pay 10 per cent in equity.
For a business in its planning stages, renting out office space eats away at the minimal initial funds they have. In response to this, a number of business incubators have been set up. One of the most prominent venues for those in the creative industry is Shelter.
Founded by Ahmad and Rashid Bin Shabib, the original Shelter in the Al Quoz district is a 40,000 square foot converted warehouse which provides office space and support materials. It is open 24 hours a day, seven days a week and can be rented for only a fraction of the cost of regular office space.
Policy boost: Right environment
- $500m - corpus for Red set up in 2009
- 5,000 - start-ups' launch aided by MBRE