SMEs employ 42% of Dubai workforce: DEC

The small and medium enterprises (SMEs) account for 95 per cent of the total enterprise population in Dubai and employs approximately 42 per cent of Dubai's workforce, according to the latest report released by the Dubai Economic Council (DEC).

It said that despite their impact and importance in the economy, they are frequently confronted with market imperfections and face difficulties in obtaining capital and credit, especially whilst the business is in its infancy.

The report revealed that the most effective way in which SMEs may achieve greater access to credit rests in the development of legislation and regulations governing secured transactions.

The report recommended changes to the current legislative and regulatory framework surrounding the creation of security interests, with an intention to encourage banks to further lend to SMEs and in turn improve their access to finance.

The report said that many SMEs may initially rely on internal sources of funding, such as the owner's personal savings etc., but once the call for expansion arises, external sources are usually tapped in order to foster such growth and for the company to fulfill its potential. However, this is not always the case, and some SMEs, depending on the business type etc., may even require funding at the initial start-up phase. Of all the challenges faced by SMEs, access to finance is certainly considered a key obstacle.

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