News Column

Dubai Economic Council launches report on SME financing

August 3, 2014

Staff Report



Dubai: The Dubai Economic Council (DEC) and its knowledge partners Pinsent Masons and Zawya have collaborated with Intelligent SME magazine to publish a report on the dynamics of financing Small and Medium Size Enterprises (SMEs) in the UAE.

According to the Department of Economic Development (DED) database, SMEs are crucial to the growth and development of UAE's economy as they account for 95 per cent of the total enterprise population in Dubai and employs approximately 42 per cent of Dubai's workforce, DEC said in a statement on Sunday.

It added that SMEs are faced with market imperfections and often encounter difficulties in attaining capital and credit, particularly whilst the business is in its infancy.

A survey carried out by the DEC among 18 banks operating in the UAE has assessed their current lending practices to SMEs as part of the report, and also evaluates the drivers and barriers to SME lending.

Regulatory framework

The report highlights the lack of an adequate security regime as a major reason for the lack of bank lending to the SME sector. It further recommends changes to the current legislative and regulatory framework surrounding the creation of security interests over assets and businesses, with an intention to encourage banks to further lend to SMEs, and in turn to improve their access to finance.

The DEC states that the report will be beneficial to SMEs in Dubai, as it will give them an overview of the SME sector, and familiarise them with information regarding their security rights and the challenges and obstacles they may or may not face while accessing finance.


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Source: Gulf News (United Arab Emirates)


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