The UAE's economic diversification has been significantly driven by small businesses at a large scale in recent years. According to Younis Haji Al Khoori, the undersecretary at the Ministry of Finance UAE, “The UAE SMEs sector contributes to more than 53 percent of the UAE’s non-oil GDP, and this percentage is expected to rise to 60 percent by the end of 2021, and to higher levels in the coming years.”
Al Khoori believes entrepreneurship and the SME sector was a top priority for the UAE government in 2020, and all government entities rolled out various initiatives and stimulus packages to support businesses that were affected by the COVID-19 pandemic. In fact, the UAE’s federal export credit company, Etihad Credit Insurance (ECI), issued around $114 million worth of trade credit support to the SMEs last year.
ECI, which aims to accelerate the UAE’s non-oil economy, has made many efforts to ensure that the local SMEs remain competitive, especially during the COVID-19 pandemic, with Massimo Falcioni, the CEO of ECI, stating, “ECI understands the vital role SMEs play in building the nation’s economy. That is why we have developed an online user-friendly solution in 2019, named 'SME Protect' to allow SMEs in the UAE to trade safely and confidently and gain access to international markets, thereby positioning the UAE as the global hub of trade and export. This will enable SMEs to evolve further and become more resilient to risks and economic situations such as this current pandemic.”
It also offers a solution to one major hurdle preventing SMEs from expanding export operations—access to bank loans. It provides financial support to SMEs’ international export activities, along with bank guarantees, allowing these institutions to reduce the capital they allocate for funding if collateral is used, thereby securing the supply chain. The SME Protect is thus a trade credit solution supporting businesses' growth plans globally and facilitating them to expand their footprint.
“The close cooperation with Abu Dhabi Department of Economic Development (ADDED), and the chambers of commerce of Abu Dhabi, Dubai, Sharjah, and Ras Al Khaimah and Dubai Exports allowed an ECI dedicated team to develop several webinars coaching, counseling, and guiding SMEs to better understand their export potential, and understand how to enter in international markets and offer competitive payment terms with secured terms,” said Falcioni.
Thus, the UAE’s non-oil economy is expected to grow 3.6% by the end of this year, according to the Central Bank of the UAE (CBUAE).
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