Details

-SMEs need fresh real estate momentum

-Al Mazaya: Hopes pinned on Cityscape Global 2018 to augment real estate sector’s contribution to macro-economy

-SMEs key catalyst to UAE GDP

Small and medium-sized enterprises (SMEs) have become increasingly important as developing and emerging economies chart their development plans and strategies on account of their positive impact on financial and macroeconomic performance.

According to the weekly real estate report of Al Mazaya Holding, there have been no SMEs-oriented investments for a long time. This, according to the report, has led to delaying the completion of various developmental plans and adversely impacted financial performance, despite the fact that this type of project has proved its ability to sustain economic performance, survive financial & economic challenges and crises, and has contributed to the protection of the social fabric over the long-term.

The report emphasises the importance of building sustainable structures for SMEs that address political, social and economic challenges besetting the region, as this type of projects is able to protect economies from risks and contribute to creating economic mobility. This is why the development of SMEs  has become very important to all stakeholders in all countries because of their potential to create jobs.

In this regard, the report states that many challenges and obstacles still limit the development of the SMEs sector, especially those related to financing and supporting existing SMEs. Moreover, the policies and plans of financial inclusion in the regional countries are not yet mature and need time to reach a clear definition of SMEs to ensure adequate funding and provision of necessary allocations and integrate them into the government’s long- and short-term development plans.

With regards to the UAE, Al Mazaya Holding’s weekly real estate report indicates that the pace of SME-related activity in the UAE has been affected by macroeconomic pressures that are part of regional challenges. Most of the SMEs are adversely impacted by these financial and economic pressures, despite the government and private sector’s efforts to protect existing projects and find appropriate solutions to ensure the continuity of these activities and their positive contribution to the gross domestic product (GDP).

Al Mazaya’s report says hopes are pinned on Cityscape Global in its new version of 2018 to stimulate the pace of activity in the real estate sector as it is expected this year that the sale of projects within the UAE will be allowed directly on site during the exhibition for the second year in a row. During the exhibition days, many new projects and many updates to existing projects are expected to be launched and announced.

Al Mazaya stressed that SME is the main driver of the UAE economy, accounting for more than 94% of the total number of companies operating in the UAE, providing more than 86% of the total private sector workforce and contributing more than 60% of GDP, with plans underway to increase this to 70% by 2021. In addition, SMEs entrepreneurs have the capacity to obtain 10% of the total contracts and purchases of federal departments.

In Jordan, Al Mazaya reported that the SMEs in the Hashemite Kingdom of Jordan are the main drivers of the local economy, accounting for 97% of the operating companies, contributing 70% of job opportunities being created and 45% of the volume of manufacturing exports, while getting only 5% of available credit. The government efforts are aimed to stimulate the growth of the sector and enhance its productive and competitive capabilities, while leading companies that have financial stability and ability to grow and export, creating more job opportunities, with more support being provided, especially for those companies that are active in the sectors of plastics, engineering, chemicals and tourism. The surest thing in this respect is the fact that SMEs in the Kingdom are one of the most important ways to provide employment opportunities in the absence of the ability of the government sector to provide such opportunities and, therefore, the coming period requires the development of current laws to meet market requirement as the current laws are adding more burdens and contribute to weakening the business environment.

All industry data and indicators show that financing burdens are a major constraint to the growth of companies in this sector, which requires adopting more flexible policies that contribute to reducing credit burdens and collateral requirements.

Oman’s SME development plans have been associated to Oman Vision 2020, which focuses on reducing the state’s economic role, including privatisation, developing the legislative structure, economic diversification, enhancing the role of the private sector, and optimising the use of natural resources. In addition, SMEs in Oman enjoy allocation of 10% of the tenders and government procurement, and 5% of loans in addition to the allocation of sites and land in all governorates to SMEs. However, despite the progress made so far, SMEs still face many obstacles and challenges, as  the institutional support related to marketing and finance is missing, in addition to the need for further training. However, the sector still enjoys the support of the community and is on the rise, a fact which means that SMEs are able to achieve more successes in the future.

Al Mazaya reiterated the importance of SMEs in the Egyptian market. It stressed that these projects should be the focus of the current and upcoming government plans and strategies, including the development of robust laws to govern this vital sector of the economy. Government plans in Egypt are set to carry out 335,000 projects in 2022 and provide 460,000 new jobs. At present a new law is being drafted to ensure the commitment of state departments to allocate at least 10% of the available land to SMEs investments. In addition,  efforts are underway to facilitate access to loans and increase the volume of financing directed to these projects, to 20% of the total funding available.

In addition, the report said, the government plans to increase the operational capacity of the agricultural sector, being one of the efficient income-generating sectors in addition to bolstering conventional rural industries to enhance productive capacities in Egyptian villages.

Al Mazaya stressed that the coming period will require more efforts and focus on all projects that contribute to boosting GDP competitiveness. The report indicated that financial challenges remain the biggest obstacle to the growth and expansion of SMEs, following in importance of bylaws and legislations that are badly needed to support these sectors, ensure their survival and increase their contribution, taking into account that what has been achieved so far on this level runs short of the expectations and don’t match the size of budgets, plans and strategies that have been adopted.