On the Importance of Small and Medium Enterprises (SMEs) in Dubai Mohamed TRABELSI March 18 th,...
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Transcript of On the Importance of Small and Medium Enterprises (SMEs) in Dubai Mohamed TRABELSI March 18 th,...
On the Importance of Small and Medium Enterprises (SMEs) in
Dubai
Mohamed TRABELSI
March 18th, 2015
Source: World Development Indicators (2014) and Dubai Statistics Center (2014)
Small and Medium enterprises (SMEs) in Dubai
SMEs in Dubai represent:
95% of all firms registered
42% of the labour force
40% of the emirate’s GDP
Figure (2): Whether the establishment applied or not for loans or lines of credit (%)
Source: Business Environment Survey (2012)
Figure (2): The ratio of SME loans to total loans in the MENA region (%)
From the point of view of enterprises (Business Environment Survey 2012)
The preference of SMEs to rely on their own funds may
be accounted for by insufficient collateral, i.e.
unacceptable or unsuitable collateral.
From the point of view of banks (survey covering 7 banks operating in Dubai)
The banks are agreeing that SME’s opacity or lack of
transparency is one of the major obstacles facing lending to
SMEs.
Credit information system is also important as the absence
of information on borrowers regarding their creditworthiness
leads to information asymmetry and creates a risk premium
for those who want to access bank finance.
Main Recommendations
Improving the current regulations on collateral requirements to
make them more flexible. This includes encouraging banking
institutions to accept movable properties as collateral which
needs a deep reform of secured transaction laws and registries.
The development of an independent institution that keeps
track of credit information on borrowers. The different
experiences across developing countries is an important
element in improving the access to finance to individuals’ and
corporates’ borrowing.
THANK YOU FOR YOUR ATTENTION