Today's Edition
KHALED AL KHAWALDEH (ABU DHABI)
Two of three small- and medium-sized enterprises (SMEs) say the future of business environment in the UAE is favourable, demonstrating confidence in the sector and a remarkable uptick in performance post COVID-19.
According to RAKBANK’s SME Confidence Index, launched on Monday, the UAE’s SMEs are largely optimistic about the future, with businesses across several sectors scoring above 50 in banks rankings.
The Index utilised thousands of surveys conducted across the banks sizable SME portfolio to categorise and rank the sentiments of partitioners in the industry space. It found that the major factors that contributed to the positive outlook included a 45% increase in revenue over the last two years as reported by SMEs, 73% hotel occupancy and 5.70% overall expected Gross domestic product (GDP) growth in 2024.
“They are exploring new markets. Second, they’re exploring new products and services and third, they’re not weary of trying new channels for their service or business, further embracing technology as a platform,” RAKBANK CEO, Raheel Ahmed told reporters at an event in Dubai on Thursday.
“The good news is that they’re still growing.”
The index found that whilst most businesses were optimistic, caution remained regarding increasing input costs and the introduction of corporate tax. The biggest concerns cited in the report included the 18% fall Brent Oil Futures prices fell from 2022 to 2023, downward pressure on consumer services, increasing costs of doing business underpinned by rising cost of labour and raw materials and the introduction of corporate tax.
Nevertheless, the report found that across all industries more than half of firms surveyed still expected to increase revenues in the next year. This was particularly pronounced in the public and professional service sectors where 82% and 69% believed they would increase revenues in the next year.
“It is very clear that the main points of concern were the higher energy prices, higher labour cost and then, basically, high operating costs. So, if anything happens around the world, we’ll see the big changes including in trading commodities,” Ahmed said.
“But what our report also shows is that they also know how to navigate through the troubled waters. It’s true, they have a high degree of correlation with supply chain issues, but they were involved in directing the rebalancing, and calculating that.”
The index is an initiative by the bank to both record and publicise the often-overlooked SME space and create a market benchmark for its progress within the UAE. Recorded yearly, it hopes to be able to provide investors with a clearer view of how businesses are feeling within the emirates.
“SMEs are the backbone of the economy, and while these results provide us with significant room for optimism, we must continue to adapt to evolving challenges facing SMEs to best support their needs moving forward,” the report concluded.
