The UAE is famous for its super-sized malls and vast oil reserves, but the backbone of the economy is actually formed by something much smaller.
Small- and medium-sized enterprises (SMEs) account for 94 percent of all companies in the UAE and 90 percent of the workforce, according to the Khalifa Fund for Enterprise Development.
Their estimates suggest that there around 300,000 SMEs across the country and the UAE Ministry of Economy says that, together, they contribute 60 percent of the country’s GDP.
The vast majority of them, 73 percent, are in trade and retail, while 16 percent of SMEs operate in services and 11 percent in the manufacturing sector, says the Khalifa Fund.
Almost half of SMEs in the UAE are in Dubai (45 percent), while 32 percent are in Abu Dhabi and 16 percent in Sharjah. The other Emirates account for seven percent.
But how they are defined depends on where you are in the UAE.
Abu Dhabi definition of an SME
In Abu Dhabi, a micro business is one with fewer than five employees, and a small business has more than five employees but 19 or fewer. A medium-sized business is one with 20 or more employees but 49 or fewer, according to a decree issued by Abu Dhabi Executive Council on 30 June 2013.
The Dubai SME definition
According to Dubai SME, the definition is dependent on the sector the company operates in. A micro business in the trading sector, for example, is one with nine or fewer employees and a turnover of AED 9 million or less. However, in manufacturing, a micro SME is one with 20 or fewer employees, with a turnover of less than AED 10 million. In services, a micro business is one with 20 or fewer employees with a turnover of less than AED 3 million. There are also differences in small- and medium-sized companies.
|Turnover, AED m||Trading||Manufacturing||Services|
According to the Dubai Statistics Centre:
- SMEs account for 95 percent of the total enterprise population in Dubai
- SMEs employ around 42 percent of Dubai’s workforce
- SMEs contribute 40 percent of Dubai’s value add.
Figures are hard to come by for Abu Dhabi or, indeed, anywhere else in the UAE, but according to the 2013 Dubai SME survey, micro businesses make up the bulk of the number of SMEs in Dubai, at 72 percent, but just 15 percent of the workforce. Small companies account for 18 percent of the SMEs in Dubai and 16 percent of the workforce. And medium companies comprise five percent of SMEs and 11 percent of the workforce.
Again, data on SMEs elsewhere in the UAE is scarce, but in Dubai they are highly export-orientated, with more than half, 51 percent, generating a “significant part” of their revenues outside the Emirates, according to a 2014 report by Emirates NBD. And the percentage is highest with trading SMEs, 68 percent of which have revenues from international markets.