1. Dubai SMEs Issues & Challenges Essa Al Zaabi, Senior Vice President Dubai Chamber 21 May 2014

2. Business friendly environment for business startup and growth UAE top ranks on global indices: Ease of Doing Business Global Competitiveness Index Trade Facilitation Index Logistics Performance Index Dubai SMEs is a strategic segment of Dubai’s economy Access to finance is a key constraint to SMEs globally Dubai SME Environment

3. No official definition of SMEs in UAE Dubai SME defined SMEs across 3 main economic sectors by employment size and turnover Micro Small Medium Employees Turnover < =9& < = AED 9 mln <=35 & <= AED 50 mln <=75 & <= AED 250 mln Employees Turnover < =20& < = AED 10 mln <=100 & <= AED 100 mln <=250 & <= AED 250 mln Employees Turnover < =20& < = AED 10 mln <=100 & <= AED 100 mln <=250 & <= AED 250 mln Source: Dubai Chamber based on Dubai SME Definition of Dubai SMEs Trading ManufacturingServices

4. Over 90% are SMEs Source: Dubai Chamber database Dubai Chamber Members

5. Dubai Chamber Members: Trade Statistics 2013

6. SME Contribution to Dubai Economy SMEs contributed on average 40% of Dubai total GDP Source: Dubai Chamber database

7. Significance of SME’s to Dubai Economy Dubai’s SMEs are significantly contributing to Dubai total employment Source: Dubai Chamber based on Dubai SME

8. Significance of SME’s to Dubai Economy Dubai’s SMEs dominate number of establishments Source: Dubai Chamber based on Dubai SME

9. Actual SMEs lending penetration is very low in most of GCC. however, target rates are promising Source: Dubai Chamber based on “Bank lending to SMEs in MENA Survey Report, World Bank and Union of Arab Banks, 2010” UAE SMEs Access to Finance

10. Access to finance remains a key constraint Private equity and venture capital are not mature options for SME finance 77% of Dubai SME’s have no access to bank lending 80% of Dubai start-ups are self- financed SMEs mainly demand bank finance for: 59% working capital 37% capital expansion/investment 4% short term financing UAE SMEs Access to Finance Source: Dubai Chamber based on Dubai SME

11. Supply Side Banks remain cautious about lending to SMEs sector due to: o Lack of credit information on SMEs o Risky and costly lending to SMEs o SMEs lack of business and financial skills o Lack of guarantees or collateral availability Primary Constraints to SMEs Financing

12. Demand Side Dubai SMEs access to bank finance is constrained due to: o High transaction and setup costs. o Unclear borrowing requirements. o Lack of awareness on being ‘bankable’ o SMEs are offered the most expensive mode of financing such as the overdraft and the credit line Primary Constraints to SMEs Financing

13. Financing is still a major constraint for SMEs in Dubai and UAE Larger share of SMEs in a bank’s lending portfolio is expected to enhance banks‘ returns and is necessary to diversify risk Dubai Chamber has always supported SMEs with financial and non-financial issues Our dedicated business support unit has SMEs training programs, credit rating and events organization to support segment growth Dubai Chamber has launched Tejar Dubai Initiative to support and train young local Dubai entrepreneurs Challenges and Way Forward

14. Inclusive banking services for SMEs: Provide incentives for banks to lend to SMEs. Upgrading banking officers skills for improved ME’s credit evaluation Broadening financial infrastructure base: Launching credit bureaus and credit rating agencies to improved SMEs transparency Alternate funding options: Private equity Crowd funding Training: Designing and launching training programs with banks for SMEs on how to become more bankable. Enhancing Dubai SMEs access to finance through:

15. Thank you Essa Al Zaabi, Senior Vice President Dubai Chamber 21 May 2014