The important role SMEs play in Dubai, like in other major cities, has been the subject of numerous recent studies, with the Gulf News reporting that SMEs accounted for 47% of Dubai’s GDP in 2016. The government agency Dubai SME categorizes SMEs into three groups: micro, small, and medium. The definition of each of these groups varies based on three industry groups, namely trading, manufacturing, and the services sector, as shown in the table below.
According to the Gulf News, citing a study by Dubai SME and Dubai Statistics Centre that examined data from 2009-2016, small firms accounted for 25.6% of GDP and employed 30.6% of the total workforce of Dubai at the end of the period. This statistic clearly shows the growing importance of small firms as a subset of SMEs which in total employed 52.4% of Dubai’s workforce in 2016. The study also found that approximately half the total number of SMEs in Dubai are less than five years old, and a fifth are less than ten years old.
In the UK it is estimated that SMEs account for 60% of total private sector employment, and in the US some studies put the figure as high as 80%. Small firms play an integral role because not only are they major contributors to employment and GDP, but they spur competition and positively contribute to growth and innovation. One need only look at disruptors like Uber and Airbnb to see the impact these SMEs have had on their respective industries. It would be amiss not to mention homegrown gems like Careem.
In Dubai’s pursuit of innovation and progress, government agencies including Dubai SME have been taking steps to insure the growth of the SMEs through various initiatives. The biggest challenge they face is to insure that startups have access to the support and funding they require, and to create an environment where they can thrive and evolve. The funding landscape is evolving rapidly with a growing number of venture capital firms and crowdfunding platforms providing much needed finance to SMEs.
Another obstacle faced by startups is the high cost of licensing and associated office space in Dubai, although recent years have seen a rise in the number of business incubators, co-working spaces, and various other support schemes for startups. Dubai has a number of free zones that cater to the needs of specific sectors, and many of these now offer packages designed specifically for startups. The onshore licensing authority, the Department of Economic Development (DED) has also taken steps to reduce licensing costs, and allow businesses to operate from co-working spaces.
If you are considering setting up a new business in Dubai and would like professional advice on licensing and all other aspects, the team at Sentinel Business Centres offers free, impartial advice on all matters relating to business setup. They also complete the entire setup process on your behalf, and provide the required office space to suit licensing requirements and offer ongoing support to your business. Sentinel offers premium serviced offices, co-working space, and meeting rooms at the 5-star H Hotel in Dubai.
Contact Sentinel Business Centres for more information.