Small and medium Enterprise (SME) sectors in the UAE have moved from a stage of resilience to prosperity after the Covid-19 pandemic, with two out of three expressing a positive view of the future business environment in the country, according to RAKBank SME Confidence Index.
Conducted by research company RFI Global, the survey covered over 1,000 SMEs in the country and responses were collected during November-December 2023.
With most of the industries in the report topping the index base score of 50, the report found an overall confidence index score of 61 among UAE SMEs.
The inaugural study found that UAE SMEs across the board experienced a period of robust growth, propelled by notable increases in revenue over the past two years, especially within key sectors such as construction, manufacturing and public services.
The RAKBank SME Confidence Index projected a steady recovery in factors such as hotel occupancy rates close to pre-pandemic levels, which signalled a rebound in the tourism sector that was contributing to the generally positive outlook among SMEs about their future revenue prospects and the business landscape in the next 12 months.
“Small and medium enterprises are the backbone of every healthy economy, and this is especially true in the UAE, where SMEs make up 94 per cent of companies and contribute over 50 per cent to the country’s GDP. That is why we centred this inaugural report around the SME sector, in line with our priority of supporting this flourishing segment through actionable insights to assist in their decision-making, towards greater business growth and success,” said Raheel Ahmed, CEO of RAKBank.
The number of SMEs in the country reached 557,000 at the end of 2022 and the aim is to increase them to one million by 2030-end, Abdullah bin Touq Al Marri, Minister of Economy, said earlier.
Small and medium companies accounted for around 63.5 per cent of the UAE’s non-oil economy.
The UAE government has taken a host of measures to support this important segment of the economy. Emirates Development Bank has allocated Dh30 billion for direct and indirect lending to 13,500 firms by 2025 in key sectors such as infrastructure, manufacturing, healthcare and technology.
According to RAKBank SME Confidence Index’s findings, the construction and manufacturing sector, with a confidence index score of 62, has seen the highest revenue increase over the last two years compared to other industries. Transport-dependent SMEs, with an index score of 60, show a cautiously measured optimism due to pricing adjustments, but a clear intention to explore new operational channels.
Public Services SMEs and professional services SMEs also stood out with a confidence index score of 62, thanks to significant revenue growth. Meanwhile, consumer and retail services SMEs and trading firms saw a more subdued trend, reflected in a lower but still significant confidence index score of 59 among the businesses surveyed in these industries.