MSMEs and their role in achieving the UN's Sustainable Development Goals (SDGs) 

Today is International MSME Day! 

Back in 2017, the United Nations General Assembly declared June 27 as International Day for micro-, small, and medium-sized enterprises, aiming to raise public awareness around their critical importance to the 2030 Agenda for Sustainable Development and the SDGs, particularly in terms of poverty reduction, job creation, and economic growth.

According to the World Bank, MSMEs “represent about 90% of businesses and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income (GDP) in emerging economies. These numbers are significantly higher when informal SMEs are included.” The global institution estimates that they generate 7 out of 10 jobs in emerging markets and, considering that 600 million jobs will be needed by 2030 to absorb the growing global workforce, their development should be a high priority for governments.

Indeed, MSMEs need the support of public authorities to face the numerous challenges that hinder their growth, from the absence of coherent policy frameworks to limited access to finance, information and capacity gaps, and inadequate infrastructure.  

Aiming to address these issues and develop an even more supportive entrepreneurial ecosystem, the UAE government has been actively working on implementing its National Entrepreneurship Agenda, part of its “Fifty Economic Plan” defining its vision for the country’s economic framework between 2021 and 2030. 

By the end 2022, MSMEs represented 94% of operating companies in the UAE with over 350,000 companies operating in the country. They contributed over 60% to the country’s GDP, employing over 86% of the private sector’s workforce. Yet, the plan is for the UAE to become a full-fledged “entrepreneurial nation,” home to 10 unicorn start-up companies and one of the top 3 countries in the Global Entrepreneurship Index by 2031. 

A robust federal framework

A number of public structures and regulations are delineating the way MSMEs operate in the UAE, and are constantly enriched with a constellation of initiatives. 

The Federal Law No. 2 of 2014 on Small and Medium Projects and Enterprises provided MSMEs in the country with a solid foundation and established the National Programme for Small and Medium Enterprises and Projects, which offers its members expertise, training, and technical support across various fields:

• Access to facilities and incentives, as well as expertise, training, and administrative and technical support in various fields to develop the business.

• A suitable space to display locally-made products at international exhibitions.

• Financial support to grow their businesses, achieve better returns, and enhance their presence in local and foreign markets.

• Coordination with federal and local government bodies and the private sector to market the products of the National SME programme members, both inside at outside the UAE, along with benefits and incentives for members’ projects.

• Access to the programme’s specialised database containing up-to-date information on foreign markets. This helps them to identify opportunities and make informed decisions.

• Training, seminars, and workshops to empower and educate SME owners.

Meanwhile, the UAE SME Council, formed of representatives from different government bodies, is meant to empower MSMEs, developing strategic plans and policies, regulating the coordination between the various participating bodies, and monitoring the initiative’s performance. 

On the industrial front, Operation 300bn, the country’s industrial strategy, aims to finance 13,500 MSMEs through the involvement of the Emirates Development Bank. 

To enable and modernize government procurement, simplifying procedures and increasing accessibility for SMEs, the Government Procurement Office was set up in 2020 under the newly established Ministry of Possibilities, which aims to tackle impossible challenges effectively through new innovative models and working methods.

 The UAE’s National Cybersecurity Strategy, launched in 2019, creates a comprehensive legal and regulatory framework to protect SMEs against cyber threats and enhance their resilience in the digital age.

And the Ministry of Finance offers various forms of sponsorship for all stages of building and development, and has launched digital solutions, transparent procedures, and smart services to create a business-friendly environment for SMEs.

Abu Dhabi takes the lead

The Emirate of Abu Dhabi has set ambitious goals for the development of its MSMEs, aligning its various strategies and plans such as the Abu Dhabi Economic Vision 2030, Environment Vision 2030 (Abu Dhabi), Plan Abu Dhabi 2030, Abu Dhabi Transportation Mobility Management Strategy, and Surface Transport Master Plan (Abu Dhabi).

The Abu Dhabi Department of Economic Development (ADDED) collaborates with regional and international partners, utilising cutting-edge technology and expertise to attract investments and create a business ecosystem that promotes the emirate’s economic strengths globally. Its Competitiveness Office of Abu Dhabi (COAD) was established in 2013 to ensure the emirate’s achieve the highest levels of competitiveness by creating a diverse and sustainable environment that stimulates innovation and initiative. The Abu Dhabi SME Champion initiative, launched by ADDED, provides training, mentorship, and procurement opportunities to SMEs and start-ups, enabling them to scale up their businesses and contribute significantly to the economy.

A comprehensive package of economic incentives aims to support MSMEs in government procurement, aligning with its commitment to the UN’s SDGs, while the Abu Dhabi Chamber actively contributes to the realisation of the Abu Dhabi Economic Vision by supporting entrepreneurship among youth. It offers comprehensive programs, including seminars and workshop.

Support in practice

Dozens of agencies, accelerators, and programmes have been launched over the past two decades in the UAE to stimulate entrepreneurship in the country and empower MSMEs in practical ways. 

One actor of note is the Khalifa Fund for Entreprise Development (KFED), established in 2007 in Abu Dhabi to encourage entrepreneurship, inculcate a culture of innovation, and support SMEs, running several highly targeted financing, training, and networking initiatives to boost their efficiency and capability. Its membership programme offers business support to non-funded SMEs or to members that do not need funding for their projects at different stages with benefits such as waiving of government fees, enabling connections with stakeholders, business counselling, opportunities to access new markets, and participation in local and international tradeshows and exhibitions, among others.  KFED has also partnered with Etihad Credit Insurance (ECI), the UAE Federal export credit company, to bolster the export capabilities of SMEs and with Amazon to establish e-Empower, an online education programme that provides useful e-learning content to help SMEs succeed in the digital economy. Lastly, Khalifa Fund’s Al Mentor is an interactive advisory platform that offers a variety of digital and training tools for entrepreneurs during the business planning phase, and provides support when applying for funding.

Another key player is Hub71, Abu Dhabi’s global tech ecosystem that enables founders to build globally enduring homegrown tech companies in any sector by providing access to global markets, a capital ecosystem, a global network of partners, and a vibrant community. Hub71 offers incentive monetary programmes and provides a progressive regulatory environment for digital assets and blockchain technology through Hub71+ Digital Assets. 

Also on the digital side, Fazaa, a social initiative for the Emirati community, opened in 2020 the Fazaa Center for Business Incubators and Accelerators, which helps Emirati entrepreneurs overcome challenges related to managing, financing, and marketing their ventures. 

Another significant step was the launch in 2022 of “Setup in Abu Dhabi,” a new platform positioned as a marketplace where users can find all information related to setting up a business, support services such as banking, insurance, legal advice, tax and accounting, human resource services, and much more.

As new measures keep being put in place, such as reducing the number of requirements to start a business by 71%, slashing business set-up fees by over 90%, granting full foreign ownership rights, and providing golden visas for entrepreneurs, the UAE government continues to enhance the role of the small and medium-sized enterprises sector in the development and diversification of the national economy. This is a space to keep watching.