Monday 13, March 2017 by Jessica Combes

UBF & EEA discuss challenges growth of the SME sector

The ‘Entrepreneurs and Banks’ event hosted by Emirati Entrepreneurs Association (EEA), in partnership with the UAE Banks Federation (UBF) brought together more than 100 Emirati entrepreneurs and senior officials from the banking industry.

The forum, discussing key finance challenges facing SMEs and explored ways to support them to grow their businesses, was chaired by HE Abdul Aziz Al Ghurair, Chairman of UBF.

Al Ghurair addressed all the concerns raised by the entrepreneurs and offered guidance and advice on best practices to follow, in order to increase their access to finance, and to help them execute their development strategies and achieve their business objectives.

Acknowledging the importance of a healthy entrepreneurial sector in the UAE, HE Al Ghurair highlighted that while SMEs form around 90 per cent of the total number of registered companies in the UAE, a major portion remains to have limited access to finance.

“It is clear that there is a need for the financial sector to facilitate more effective SME-bank relationships through awareness initiatives that will enable companies to successfully secure the external financial support they need,” said Al Ghurair.

A number of recurring themes surfaced from the discussions with the participating entrepreneurs like absence of an organisational governance structure, in addition to the lack of appropriate training opportunities, innovation capabilities and business experience. Challenges associated with cash flow and pricing policies, limited access to technology, insufficient knowledge of the industry and market and failure to secure effective negotiations with external stakeholders were also identified as roadblocks.

With limited access to finance identified as a top challenge for SMEs and entrepreneurs, the discussions drew attention to reasons behind it which helped applicants better understand the screening process. Top reasons included: high operational costs, insufficient securities and credit records, inaccurate financial statements, lack of continuity and expertise, weak governance and low potential for financial independence.

“For SMEs to secure finance from banks, they first need to recognise market needs and the available investment opportunities. It is also crucial that they focus on a diverse service portfolio and not limit the scope of their business to only a few activities. Creativity is another important element for SMEs to cut through the clutter and stand out from the competition by continuously building their internal capabilities and competencies,” said Al Ghurair.

 He added that SMEs are the backbone of any country’s economic framework, so it is of the utmost importance that they receive adequate support in turning their entrepreneurial vision into a successful business proposition. A number of banks initiatives are already in place to support them financially, and the latest of which was the UBF’s Modus Operandi–a dedicated programme for financially-troubled companies, amongst others.

When asked about how the new Bankruptcy Law will affect the SME sector in the long term, Al Ghurair said the law can be both good and bad for SMEs. While it offers recourse for SMEs that are declaring bankruptcy, small business owners must remember that if their company is declared bankrupt, they will never be able to borrow from banks–they will always have that black mark against their name. They should seriously consider selling an asset, such as a car, to meet their loan repayments, or risk never being able to borrow from a bank again.

“SMEs face several challenges when trying to identify financing resources, and our initiative today, held in collaboration with the UAE Banks Federation, aims to target these challenges by offering a dedicated platform to fuel a solid discussion among entrepreneurs and banks. The open dialogue is aimed at facilitating stronger communication and collaboration channels for the benefit of all involved,” said Sanad Al Meqbali, Chairman of Emirati Entrepreneurs Association.

He added that providing SMEs with the required financing serves as an impetus to encourage innovation and proactivity among entrepreneurs, which can be further strengthened by extending all the support they need through co-ordination with the concerned parties, to help secure their sustainable growth and continuity.

The session was moderated by Jassim Al Bastaki, Secretary General, Emirati Entrepreneurs Association, who addressed the audience and thanked HE Abdul Aziz Al Ghurair, Chairman of UBF, for offering advice and guidance to aspiring entrepreneurs, which stemmed from his extensive experience in the business field and the banking sector, and which today contributes towards raising greater awareness among entrepreneurs and motivates them to develop their skills and abilities.

Al Bastaki pointed out that SMEs represent one of the main economic pillars of a nation, and their role and contribution in achieving a country’s economic and social objectives are widely recognised around the globe.

 “The relationship between banks and SMEs, with respect to financing, is currently facing a number of challenges, and is directly linked with the securities provided, the repayment periods, and the development of a financing service to meet the needs of the SME sector and support its long-term growth,” said Al Bastaki.



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