We often hear about the data points that highlight the importance of small and medium enterprises to the local economy, among them that they account for 95 per cent of companies in the UAE and employ 86 per cent of the workforce.
These are remarkable numbers that attest to the UAE's achievements in creating a business-friendly hub developed over a long history of mercantile activity, one that has sought to cultivate an environment of entrepreneurship, today a key component of the national agenda. The government recognises the importance of SMEs as a driver of entrepreneurship to help advance economic diversification.
From the launch of Dubai SME in 2002 and the Khalifa Fund in 2007, through to a 2014 SMEs law and the debut of the Emirates Development Bank a year later, many initiatives have been rolled out over the past two decades to support SMEs.
The EBD’s mandate was, and still is, to provide financial support through a variety of credit offerings that conventional banks don't normally extend to small companies. The stimulus measures deployed by the Central Bank of the UAE during Covid-19 to support SME liquidity has also bolstered the sector during the recent macroeconomic challenges.
However, the 2019 annual report by the Central Bank of the UAE acknowledges that almost two-thirds of the SMEs surveyed felt "financially constrained" and unable to access credit at a reasonable cost.
Lenders tend to focus on balance sheet data at the expense of analysing cash flow profiles and, moreover, reportedly underutilise resources such as the Al Etihad Credit Bureau, a points-based credit rating system to help assess creditworthiness.
Enter the pandemic. The government and central bank's stimulus and monetary support response was swift.
A business survey by the central bank found that the underwhelming use of AECB, the Etihad Credit Export Insurance (a government trade credit provider geared towards SMEs) and the Moveable Collateral Registry (a repository on which collateral can be registered and searchable by lenders) "may be testament to the lack of awareness about the importance of these services to help reduce borrowing costs and ease access to credit".
Systemic improvements under the purview of a federal "small business administration" agency that standardises SME borrowing eligibility and provides a level of risk mitigation can help incentivise bank lending and increase financial support for deserving SMEs but with reasonable protections in case plans go wrong and a default looms.
And what do banks do in the face of a default? The options are:
- Do nothing and hope for the best;
- Enforce on security and assume the laborious task of monetising assets that lenders would rather not own or manage;
- Sell the debt (to the extent there is a secondary market);
- Embark on a consensual restructuring.
Option 1 is too often the reality outside of large-scale distress scenarios when it, of course, is option 4 that best preserves value, avoids uncertainty and preempts insolvency.
But restructurings require a new business plan or a strategic divestiture of assets, all of which demands meaningful stakeholder engagement. SMEs are often inadequately advised on these matters, and thus unable to develop sustainable solutions with stakeholder buy-in.
They may even be unaware of the "business rescue" principles now reflected in the UAE’s insolvency regime, with the federal bankruptcy law allowing distressed companies to pursue court-sanctioned negotiations with creditors to arrive at a financial restructuring.
This system has come a long way with modern insolvency laws, including those of Abu Dhabi Global Market and Dubai International Finance Centre.
No matter the sophistication of the insolvency laws, creditors and borrowers alike will always prefer to avoid the vagaries of a court process and hammer out a deal if there is a deal to be had.
A consensual outcome enhances debt recovery in more cases than not, but requires pragmatism and patience. A cohesive framework for greater risk sharing between banks and government would help SMEs, as would SMEs being wise to the fact that, small though they may be, they have more leverage vis-a-vis their creditors than they think.
Hessam Kalantar and Phumzile Mdakane are managing partner and counsel, respectively, of Kalantar Business Law Group
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The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
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Read part three: the age of the electric vehicle begins
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• Architecture is over - here's cybertecture
• The National announces Future of News journalism competition
• Round up: Experts share their visions of the world to come
• Remittance charges will be tackled by blockchain
• UAE's monumental and risky Mars Mission to inspire future generations, says minister
• Could the UAE drive India's economy?
• News has a bright future and the UAE is at the heart of it
• Architecture is over - here's cybertecture
• The National announces Future of News journalism competition
• Round up: Experts share their visions of the world to come
TOURNAMENT INFO
Women’s World Twenty20 Qualifier
Jul 3- 14, in the Netherlands
The top two teams will qualify to play at the World T20 in the West Indies in November
UAE squad
Humaira Tasneem (captain), Chamani Seneviratne, Subha Srinivasan, Neha Sharma, Kavisha Kumari, Judit Cleetus, Chaya Mughal, Roopa Nagraj, Heena Hotchandani, Namita D’Souza, Ishani Senevirathne, Esha Oza, Nisha Ali, Udeni Kuruppuarachchi
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Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
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- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
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EMERGENCY PHONE NUMBERS
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
The specs
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
School uniforms report
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Part three: an affection for classic cars lives on
Read part two: how climate change drove the race for an alternative
Read part one: how cars came to the UAE
The team
Photographer: Mateusz Stefanowski at Art Factory
Videographer: Jear Valasquez
Fashion director: Sarah Maisey
Make-up: Gulum Erzincan at Art Factory
Model: Randa at Art Factory Videographer’s assistant: Zanong Magat
Photographer’s assistant: Sophia Shlykova
With thanks to Jubail Mangrove Park, Jubail Island, Abu Dhabi
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Dubai works towards better air quality by 2021
Dubai is on a mission to record good air quality for 90 per cent of the year – up from 86 per cent annually today – by 2021.
The municipality plans to have seven mobile air-monitoring stations by 2020 to capture more accurate data in hourly and daily trends of pollution.
These will be on the Palm Jumeirah, Al Qusais, Muhaisnah, Rashidiyah, Al Wasl, Al Quoz and Dubai Investment Park.
“It will allow real-time responding for emergency cases,” said Khaldoon Al Daraji, first environment safety officer at the municipality.
“We’re in a good position except for the cases that are out of our hands, such as sandstorms.
“Sandstorms are our main concern because the UAE is just a receiver.
“The hotspots are Iran, Saudi Arabia and southern Iraq, but we’re working hard with the region to reduce the cycle of sandstorm generation.”
Mr Al Daraji said monitoring as it stood covered 47 per cent of Dubai.
There are 12 fixed stations in the emirate, but Dubai also receives information from monitors belonging to other entities.
“There are 25 stations in total,” Mr Al Daraji said.
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Titanium Escrow profile
Started: December 2016
Founder: Ibrahim Kamalmaz
Based: UAE
Sector: Finance / legal
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Investors: Founder's friends and Family
Tomorrow 2021
Defence review at a glance
• Increase defence spending to 2.5% of GDP by 2027 but given “turbulent times it may be necessary to go faster”
• Prioritise a shift towards working with AI and autonomous systems
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• Number of active reserves should be increased by 20%
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Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
- Life in the royal residences with Sheikha Osha bint Nahayan
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Stormy seas
Weather warnings show that Storm Eunice is soon to make landfall. The videographer and I are scrambling to return to the other side of the Channel before it does. As we race to the port of Calais, I see miles of wire fencing topped with barbed wire all around it, a silent ‘Keep Out’ sign for those who, unlike us, aren’t lucky enough to have the right to move freely and safely across borders.
We set sail on a giant ferry whose length dwarfs the dinghies migrants use by nearly a 100 times. Despite the windy rain lashing at the portholes, we arrive safely in Dover; grateful but acutely aware of the miserable conditions the people we’ve left behind are in and of the privilege of choice.
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Explained
ICC Women's T20 World Cup Asia Qualifier 2025, Thailand
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May 9, v Malaysia
May 10, v Qatar
May 13, v Malaysia
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May 18 and 19, semi-finals
May 20, final
