Clear definition of SME will boost lending to sector

A clear definition will boost lending to SMEs
Korean team visits UAE to assess and recommend plans to improve sector’s development
Staff

A clear definition of what constitutes a small-and-medium enterprise will assist banks in extending vital financial support to the growth of the SME sector, Sultan Nasser Al Suwaidi, Governor of the UAE Central Bank, during his meeting with the Korean delegation.

A World Bank report said earlier this month that access to finance for small and medium enterprises (SMEs) is more constrained in the Middle East and North Africa (Mena) than other emerging markets as bank lending to SMEs accounts for only two per cent of the total loans.

While UAE banks top the list in the GCC by giving four per cent of total loans to the SMEs, Saudi Arabia, Kuwait and Oman lend only two per cent each to small businesses, the report said.

As part of its efforts to streamline the small and medium enterprises (SMEs) sector in the country and integrating international best practices in sector development, the Ministry of Economy recently organised discussions between a high profile delegation from South Korea and various stakeholders in the UAE.

The focus of the discussions was on finding a clear definition for SME and benefiting from the Korean experience in developing the sector. South Korea is globally acknowledged for its successful efforts in clearly defining and developing enterprises that fall under the SME category.

The Korean delegation met with representatives from different federal and local government institutions including the central bank, economic development departments, chambers of commerce and local government agencies promoting SMEs, in order to assess the exact nature of the SMEs in the country before offering effective recommendations and plans for sector development.

The delegation was also briefed on the current status and achievements of the SME sector in the UAE. The efforts of the Ministry of Economy in this respect came in for special praise from the members of the delegation.

Sultan Saeed Al Mansouri, Minister of Economy, said: "The Ministry of Economy strives to attract international expertise in finding a clear definition for the SME sector in the UAE as this will support and
strengthen our national economy. The meetings we organised with the visiting Korean delegation were very positive and gave the Koreans a clear idea of the nature and strength of SMEs in the UAE."

The Korean Delegation also met with representatives of the Mohammed Bin Rashid Establishment for SME development (MBRE) and reviewed achievements since its inception in 2002. The efforts of the Khalifa Fund in promoting SMEs were also commended by the delegation during a meeting with the Fund officials.

The Ministry of Economy, along with its partners, will now review the recommendations of the Korean delegation in order to reach a broadly acceptable definition for SMEs. (With inputs from Wam)

Follow Emirates 24|7 on Google News.