SMEs in this region are at the helm of economic development, trade and innovation. As we step into 2015, what are some crucial areas that will impact their growth and what are prime challenges that they should to be wary of? In an exclusive interview with SME Advisor, Abdul Baset Al Janahi, CEO, Dubai SME – an agency of the Department of Economic Development in Dubai, discusses key issues facing the SME sector from emerging markets and oil prices to local trade and expansion opportunities.
What would you say were the key highlights of 2014?
Looking at the sentiments of the SME sector in Dubai, we can say that the year has been good for most SMEs. SMEs maintained positive outlook for sales volume, employment and profits throughout the year. SME growth prospects in the UAE gave a shot in the arm with the Federal Law No. 2 of 2014 establishing a dedicated SME Council and making it mandatory for federal authorities and ministries to allocate at least 10 per cent of their procurement budget for SMEs.
On the other hand, there are still concerns regarding competition from local and international players, in addition to the rising cost of operations, led by high rents.
There has been a slowdown in the growth of emerging economies. What do you attribute as the main reasons for this? How will this impact the global economy?
What is happening around us is normal and it’s a fact that we can’t expect high growth to continue for good. There is growing acceptance of a ‘new normal’ and leading economies are looking at innovative strategies to sustain growth instead of ambitious double-digit growth targets. We expect to see more innovation-led growth in the coming years and SMEs – which are flexible and innovative by nature – will have a lead role to play in this phase.
What is your view on the change in oil prices? How you see this impacting businesses in this region?
I believe oil prices cooling down is healthy, particularly for re-adjusting policies and expectations at the macro level. In the short term, businesses shouldn’t be impacted but if the low oil prices continue for more than two years, impact on the businesses will be significant.
On the other hand, lower oil prices might be good for SMEs. While SMEs prosper during times of robust economic growth they are also known to remain the bedrock of economic stability during a downturn. Small and agile as they are, SMEs are more resilient and can adapt to changes much faster compared with larger enterprises. On the government side, we have already seen a strong commitment to SMEs and entrepreneurs. The emphasis on innovation in policies and in the overall economic environment is enough reason for optimism.
Innovation is the keyword for any business looking to the future. The Global Competitiveness Report 2014-15 by the World Economic Forum emphasizes innovation and skills as the key drivers of economic growth. Competitive business locations, which provide the right mix of efficient operations, proximity to major consumer markets and enabling policies will lead the charge in 2015.
For businesses looking to expand overseas, what are prime high-potential markets?
Africa and Latin America have remained bright spots even amidst the current fluctuations in global economy. The World Bank says rising investment in natural resources and infrastructure along with strong household spending will boost economic performance in leading African markets in 2015. Latin American economies are now expanding their traditional economic partnerships to new markets and during the last few years many of them have established their presence in Dubai for a wider coverage of the Middle East, Africa and South Asia.
What sectors are particularly attractive in 2015?
As the leading economic sectors in Dubai tourism and trade continue to offer the brightest prospects for local SMEs. Dubai’s focus on industrial infrastructure and output will also offer new opportunities for the growing number of SMEs engaged in industrial design.
Finally, what advice would you like to give to SMEs for business in the year 2015?
Be aggressive. The SME sector is extremely competitive and it is important to stand out from the rest. Secondly, innovate in everything, from products and services to business models and partnerships.
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.