Essam Disi, Director – Strategy and Policy, talks to SME Advisor about Dubai SME’s fresh initiatives to help SMEs in the New Year, and why business owners require a long-term strategy to succeed in challenging times…

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A lot of global headlines in 2015 had the recurring themes of growth in a climate of low oil prices, the economic crisis in China, Greece and so on. As a result of this, many SME owners might be tempted to continue reflecting on the challenges of the past. The reality, however, is that 2016 is the time to move ahead with a positive mind-set and a focus on productivity and profitability. In fact, this is particularly true for the SME sector. This month, SME Advisor decided to turn to Dubai SME, the agency of the Department of Economic Development (DED) in Dubai mandated to develop the SME sector, to investigate further. We asked Essam Disi, Director – Strategy and Policy at Dubai SME, to outline the critical areas of SME growth and the policy changes that will impact this prolific sector in the New Year.

First things first. What is do you see as your top priority in 2016? “Our focus for 2016 is on productivity; we’ve undertaken several research studies and all confirmed that SMEs here are overall low on productivity. Therefore, we’ve set certain benchmarks to increase their competitiveness and encourage them to adopt certain best practices that will help them achieve higher productivity. Of course, productivity ultimately leads to an increase in capacity, expansion across new markets and higher revenues. Therefore, our approach to capacity building entails widening the capabilities of an SME as a whole.”

Are there any initiatives in the pipeline by Dubai SME to help SMEs in this regard? “From an SME’s point of view, being able to sustain the business, getting contracts and generating revenue are key areas of focus; they might not necessarily think about overall competitiveness and other macro-level issues. This is exactly why we are presently working to launch an SME Productivity program, which essentially comprises of a series of workshops and provides SMEs with self-assessment tools in a very practical and pragmatic manner. Our team has worked really hard to create tools that are very easy for an SME to implement – taking away as little time as possible from running their day-to-day operations.

“As part of Phase One, we are looking to launch this initiative with the Dubai SME100 companies, and we’ve partnered with experts across various fields to tackle topics such as building human capital, adopting latest technology, etc. There is a bigger initiative at a city level that should be launched before the end of Q1 for all SMEs in Dubai.”

In the current evolving business environment, is sustainable growth possible for SMEs in 2016? “Sustainability should be built into the foundations of your business. If your internal systems are built well and upgraded regularly, you know that you are ready to adapt to any external changes. Moreover, this means that you aren’t solely dependent on market opportunities. So for instance, even when there is a down cycle, you know that your team will innovate because you’ve invested in them. This also ties back to long-term planning and helps achieve organic, sustainable growth. Our studies have shown that SMEs in Dubai often have short-term planning i.e. they plan for the next six to twelve months. Whereas if you look at SMEs in other parts of the world, you will find that they have a strategy in place for three to five years.”

Of course something else that should be ingrained into an SME’s foundation is accounting & financial reporting and governance practices. Typically, the figures in this regard have been alarmingly low for SMEs in this region. Is this something we will see changing in the near future?

“Yes, absolutely – governance principles are incredibly important. This has been identified and we have released a Code for Corporate Governance, with the key governance pillars that SMEs need to follow. There is definitely a need for further awareness; at the same time we are also looking to introduce incentives.

“We often see that tax-based economies incentivise SMEs by tax rebates and subsidies. Sometimes it is difficult for the government in this region to reward SMEs as we don’t have any taxation – we are working on coming up with schemes to support SMEs that have put in recognisable efforts towards best practices. So, if your business is aligned to the government’s overarching agenda, you get some of the rewards. Currently, we are in talks with several government entities to identify the entry criteria and the possible incentives.

“I think awareness and opportunities are two sides of the same coin. Yes, you have awareness but you need opportunities as well. For instance, we’ve heard about the upcoming Expo 2020 and its positive impact on the economy, but how do you translate this into tangible opportunities for SMEs? We understand this and are working very closely with the Expo committee to create certain privileges such as tendering opportunities for a bracket of pre-qualified SMEs.”

In addition to capacity building and boosting productivity, what are other areas SMEs need to focus in 2016? “I think there are two main things that will be at the top of the SME agenda in 2016:

–  Equity financing: in our region, we do have a developed network of PEs, who are interested in medium-sized enterprises. However, the overall funding ecosystem hasn’t fully matured and requires fine-tuning of legal procedures to help develop a healthy number of early stage VCs and angel investors. This is an area that we are continually working on, in association with partners, and hope to share new initiatives in due course of time. Our goal is to create a well-rounded finance ecosystem that supports both early-stage entrepreneurs and growth-stage SMEs.

–   Intellectual Property (IP): there is often a misconception that IP is related to trademarks or counterfeit products. SMEs need to be made aware that there might be a lot of IP that they hold within their production lines or business models. Essentially, this requires the implementation of something equivalent to a ‘Triple Helix’ model” or even a broader innovation policy, wherein the government, industry and academia join hands to raise awareness, educate businesses and execute joint R&D projects. In fact, this model works extremely well in enhancing the manufacturing sector. It also assists in research & development, higher technology adoption and increased filing rate of patents and industrial designs. The idea of engaging these three communities has been touched upon in the past, but really needs to be highlighted moving forward.”

Finally, what is one key message you’d like to leave SMEs with? “If I were to summarise our focus for 2016 in three keywords, they would be productivity, equity financing and IP. These are the critical areas that need to be addressed as we enter the New Year.”

 

 

 

Rushika Bhatia Editor

Rushika Bhatia is one of the region’s leading commentators on business and current affairs issues. She is the Editor of SME Advisor magazine - the flagship title of CPI Business. She is passionate about infographics – with special emphasis on data, research and statistics. Rushika has a Bachelor’s Degree from Indiana University, USA and is also CIMA qualified.

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