What SMEs really need in the UAE

The UAE’s banks showed great initiative last week when they announced they would suspend any legal action against small and medium sized enterprises (SMEs) struggling to repay debt. The three month-reprieve should provide some leverage for affected businesses to catch up on liabilities and prevent defaulting – a scenario that is not only detrimental to the business owner but also the banks and the wider economy.
But amongst the applause for the 49 members of the UAE Banks Federation who agreed to the initiative, there was still plenty of continued finger pointing. The stark contrast between SMEs’ contribution to the UAE’s non-oil gross domestic product (60 percent) and their share of total bank lending in the country (3 percent) remains a point of contention.
This magazine has long talked of the difficulties SMEs have in gaining funding and I will not elaborate further. The UAE government-backed Khalifa Fund, which provides funding and training to worthy start-ups (see more on page 30), fills a small gap, but it is only available for nationals.

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