The small and medium enterprises (SMEs) are the bloodlines of economies worldwide. These companies might be small in size, but make significant contributions to the economies and generate employment for many. In the UAE, the sector contributes more than 60 per cent to the non-oil GDP, and has employed more than 85 per cent of the workforce engaged in the private sector.

Notably, around 350,000 companies are registered under the SME category and represent more than 94 per cent of the total number of companies operating in the UAE. The sheer scale of numbers involved is staggering, and one would expect that the sector is adequately served and funded for it to thrive at such a pace. In contrast, banks lend just 3.8 per cent of their lending portfolio to this sector, which industry experts say is a nominal percentage and is not on par with the actual potential of the sector.

Funding and operational issues are among the critical factors that lead to the failure of projects. In the UAE, the rate of failure of SMEs is around 30 to 40 per cent.

A recent report by the Department of Economic Development (DED) too corroborates this fact and notes that eight out of 10 SMEs in the UAE rely on self-financing for growth and development.