SMEs booming in MENA region

Published October 23rd, 2012 - 10:48 GMT
Small and Medium sized Enterprises in the MENA region are booming
Small and Medium sized Enterprises in the MENA region are booming

The number of start-ups in the MENA region increased eight times in 2011 as compared to 2005. Jordan, Lebanon, Egypt and the UAE attracted most early stage investments in the same period. More specifically, the UAE attracted 17 per cent of these start-ups during 2011, according to a report released by Dubai Internet City (DIC) in collaboration with global business research and consulting firm Frost & Sullivan.

The report indicates that government-backed initiatives to encourage entrepreneurship, as well as the development of universities offering programmes for entrepreneurs and investors, technology parks, and incubation centres are some of the reasons behind the surge in the small and medium-sized enterprise (SME) sector.

Entitled The Role of Entrepreneurship and Small and Medium Enterprises (SME) in the Development of the ICT Industry, the report highlights the UAE government’s firm conviction that the SME sector serves as an effective enabler for economic growth. Consequently, the UAE allows100 per cent ownership for start-up companies along with other support services across its free zones.

Malek Al Malek, Managing Director, Dubai Internet City and Dubai Outsource Zone, said, “The report generated in collaboration with Frost & Sullivan identifies the UAE and Dubai as a leading destination for ease of doing business for SMEs. It additionally points out that free zones such as Dubai Internet City have played a key role in contributing to the UAE’s status as a favoured business hub. In line with the UAE’s vision to support SMEs, DIC will continue to offer state-of-the-art infrastructure, business assistance as well as incubation services to attract new tech start-ups to the region.”

Ranked fifth globally in the freedom to trade internationally, higher than the US, the UAE is regarded a lucrative location for Foreign Direct Investment (FDI). Long-term political stability augments the UAE’s position as a favoured destination for business, validates the report.

The study also revealed that many governments in the MENA region are seeking to drive economic growth through implementing business friendly policies and regulations. Among the GCC countries, the UAE tops the list with its governmental initiatives to promote international partnerships and foster innovation. For instance, the UAE government has reviewed its laws on intellectual property and copyright and streamlined them with international standards.

Jonas Zelba, Senior Research Analyst, Frost & Sullivan, said, “The report through its comparative analysis has identified the UAE to have a compelling value proposition that should see it emerge as a leading international destination for entrepreneurship and incubation in the next decade. Leveraging key strengths such as high numbers of foreign language speakers, stable operating conditions and favourable taxation provisions, the UAE is expected to gain traction with IT start-ups servicing industries such as financial services, retail, and IT among others.”

The report showed that only few MENA countries such as Egypt, Jordan, the UAE and Saudi Arabia are investing in innovation through various incubation programmes and funding tie-ups with international governments and private equity (PE) firms. On this front, the UAE stands as the largest investor in innovation as far as the PE transactions are concerned. With efforts such as the ICT fund to promote the sector in the region and multiple levels of networking, the UAE is committed to innovation and the progress of R&D through entrepreneurship.

According to the report, the level of ICT skills amongst the population of the UAE is high compared to most Middle East countries with 99 per cent of educational establishments featuring computer labs,95 per cent of teachers with professional ICT qualifications and 84 per cent of students using internet at schools. Additionally, the report points out that the working population has easy access to computers, with 94 per cent of government employees and 95 per cent of non-government employees using a computer at work in 2011.

On the business side, 16 per cent of online sales account for ICT businesses and 85 per cent of other organisations has reported receiving orders from people accessing their website, clearly indicative of a technologically savvy and aware population.

The UAE has invested in state-of-the-art infrastructure to support its growing population. With a 45 per cent increase in public spending for infrastructure and development, Dubai is keen to ensure it has the necessary infrastructure to enable economic development. With the IT spend predicted to reach $1.8billion by 2013, the UAE will continue to top the MENA charts in terms of mobile penetration and a growing information technology market.

Ranked number one among Arab states in network readiness, the availability of internet services has enabled the growth of a knowledge-based society in the UAE. With broadband penetration levels expected to hit 100 per cent by 2012 and cables connecting the nation to Europe and the US, the country has the necessary technology to back its internet driven stature. Notably, 72 per cent of the population between the ages of 15-74 use the internet, indicating that the UAE society is headed to becoming one of the most internet driven societies in the MENA region.

Meanwhile, the UAE continues to be highly ranked for education in the MENA region, which is showing vast improvement in the last decade. Tie ups with companies such as Intel through the Intel Teach initiative, the Microsoft initiative and the CISCO initiative distinguish the UAE universities from the perspective of innovation, industry and entrepreneurship. Such collaborations not only increase the ICT skills of the population but also provide students with an exposure to industry.

At the forefront of the region's ICT industry, Dubai Internet City remains committed to supporting emerging technology trends in the region and continues to play an instrumental role in developing the industry while contributing to Dubai's drive for creating a knowledge-based economy.

© 2022 CPI Financial. All rights reserved.

You may also like