Inayat-ur-Rahman, Gulf Today

Entrepreneurs and small businesses are the lifeblood of an economy and the UAE government has played a significant role in promoting entrepreneurship, SMEs and nurturing a successful startup network in the country, according to an industry veteran.

Shailesh Dash, financier and enterpreneur who establised  many successful business ventures in the UAE and some other parts of the world, said recent initiatives such as long-term residencies and visas for investors, entrepreneurs and high-earning expats; 100% foreign ownership; cancellation/reduction of government service fees; and the millions directed by Emirati governments to strengthen the startup environment, have all worked towards entrepreneurship.

The Abu Dhabi government, for instance, pledged Dhs535 million ($145.7 million) in 2019 to support entrepreneurs and jointly invest with VC startups out of Hub71. In July 2020, Abu Dhabi further implemented a coalition project supporting micro, small and medium-sized enterprises in highly-skilled fields (science, healthcare, and IT).

“The UAE has also taken dedicated efforts to launch technology hubs, incubators, accelerators, and funds that provide entrepreneurs with funding and loan schemes,” Dash told Gulf Today.

The Seed Capital Loan, for instance, enables Emiratis to launch micro-enterprises by funding part of the startup-capital needed, or the working capital/expansion costs for existing ones. The country’s efforts have successfully paid off with the UAE featuring among the top three innovation economies in Northern Africa & Western Asia in the Global Innovation Index 2020.

“It also ranked first in the MENA region and 16th globally in the Ease of Doing Business Index 2020; and 26th in 2018’s Global Entrepreneurship Index. Consequently, its startups have garnered sizable funding from investors, and entrepreneurs now prefer the UAE as a base to conduct business from,” Dash elaborated.

Dash said the UAE has come a long way over the years, and is now a prominent ‘center of innovation’ in the Menap region, upgrading its capabilities, research institutions, as well as human resources to foster new ideas and business models that competitive SMEs and businesses require for success.

“The UAE government has played a significant role in promoting these entrepreneurial efforts, and nurturing a successful startup network,” he said.

“Over the years, the UAE has clearly demonstrated its commitment to become a hub for entrepreneurial innovation and activity. In accordance with its goals, the nation must now also address the limitations to the growth of micro businesses and entrepreneurial sentiment within its borders. Although lucrative in many ways, the UAE is also arguably one of the most expensive countries for establishing a startup and conducting operations, within the Middle East. Limited access to online banking and digital financing options has also stressed the lack of holistic financial inclusion,” he added.

He said the COVID-19 pandemic has only alleviated concerns for many small start-ups and micro businesses, who are struggling to stay afloat.

“With over 90% of businesses in the UAE being SMEs, the result has been evident in the declining non-oil economy for a prolonged period in 2020 (Non-oil private sector PMI was in contractionary territory for 8 months),” he said.

“At a time when the UAE is grappling with the triple shock of health crisis, economic disruption and weak oil markets, it becomes imperative for the country to accelerate efforts aimed at promoting entrepreneurship and small businesses. The local government must thus revisit their policies to revive and revitalize entrepreneurial activity,” he added.

He said the pandemic has added to existing financial woes and operational difficulties for micro-businesses, among other challenges they have no means to combat. “The most pressing concern for such businesses remains cash preservation and financial liquidity amid stagnant/negative cash flows, and a hit to revenues and profitability. Accordingly, the government must take bold measures to ensure protecting entrepreneurial sentiment, and extend financing packages in the form of grants, equity, quasi-equity, microcredit, and other microfinancing facilities,” he said.

“A host of market participants across the tech-enabled sectors, medical and diagnostics industry, and research & development centers among others have immense funding requirements. These industries are likely to see major shifts if the required resources are made available to entrepreneurs through assistance from government agencies.”

He said Laws and regulations could be made more conducive for small business owners to begin ventures, and allowing room for error and failure by backing funding schemes with government support.