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Optimal financing for SMEs

Dubai Chamber organises a roundtable on improving financing options for small and medium enterprises (SMEs)
Dubai, UAE: The Dubai Chamber of Commerce and Industry recently initiated a roundtable discussion between representatives of small and medium enterprises (SMEs) from various economic sectors and top officials from Dubai-based banks to discuss optimal SME financing arrangements.

SMEs, which are defined as businesses having less than 250 employees and a turnover of less than AED 250 million (with varying thresholds based on industry group and enterprise category), are a thriving source of growth for the economy of Dubai, and the UAE as a whole. As part of the Chamber 's objective of supporting business development, and due to the crucial role that SMEs play in the economy, the roundtable brought together banks and business representatives to explore ways of improving SME development through increased access to finance and lower rates.

Attending the meeting were delegates from HSBC , Mashreq, RAK Bank, Lloyds and Standard Chartered Bank; as well as representatives from Dubai-based SMEs.

Dr. Belaid Rettab, Senior Director, Economic Research and Sustainable Business Development Sector, Dubai Chamber , highlighted the important role that SMEs play in the economy, noting that SMEs contribute to 30-35% to the country's GDP. He said that SME lending can be seen as a profitable growth segment for Dubai-based banks, pointing out that the proportion of lending to this sector currently represents about 4% of total loans in the UAE, while the average in the Middle East and North Africa (MENA) region is double that level.

Key to Dr. Rettab's message was the importance of ensuring that banks and SMEs are on the same page in terms of reporting requirements for SMEs to obtain financing. The roundtable provided a fertile ground for representatives from both sides to discuss challenges, with the possibility of reaching an agreement on standardised minimum financial reporting requirements for various financial products. Such reporting requirements, if clear to both sides, would promote transparency in the industry and facilitate access to finance.

Bank representatives discussed various facilities provided by their respective banks that focus on the SME sector. Ms. Aya Taha, Senior Relationship Manager, Business Banking, HSBC , said: " HSBC is fully supportive of a coordinated industry approach to highlight challenges and opportunities in the critical SME sector here in the UAE. In April of this year, HSBC UAE launched the second HSBC UAE SME Fund, of an additional US$100m, to directly address many of the obstacles which SMEs face, and has already seen great success."

She added: "We firmly believe that bringing together local insight and knowledge, combined with international experience and presence, will enable us to work together to deliver the right solutions for these businesses, and for the overall economy, in line with the strategic direction of the Federal Government, and we remain committed to delivering the best advice and solutions for small and medium businesses. HSBC would like to thank and congratulate the Dubai Chamber for this particular event."

Mayank Upadhyaya, Acting Head of Small and Micro Enterprises at Mashreq, said: "Mashreq's participation is in line with the bank's commitment towards supporting the SME sector in UAE. Our priority is to provide entrepreneurs the right tools to achieve their goals and become partners in their success. Through renewed offerings we continue to show that our focus remains on enabling emerging businesses to become an integral part in the growth of the economy." Mr. Upadhyaya added that Mashreq is looking forward to participating in similar events organised by the Dubai Chamber .

Khalid Saqr, Business Development Manager, Commercial Banking, Lloyds TSB, said: "At Lloyds TSB our customers choose us because we offer a unique niche proposition - UK banking expertise based upon relationship management and with a local perspective. We offer successful businesses simple and straightforward banking and expect a high level of transparency in return."

The outcome of the roundtable was the decision to form taskforce teams to tackle issues pertaining to four important subsectors of SME financing: general financing issues, letters of credit, bank guarantees, and collateral requirements. Dubai Chamber is now in the process of convening these teams and plans to involve members of the SME business community, bank representatives, and accountants on each taskforce team.

The Business Support Department, which organised the roundtable discussion at Dubai Chamber , works to improve the business environment and to provide business support services by organising seminars, roundtables, training workshops and market analysis, as well as providing business counselling and credit rating services.

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Established in 1965, the Dubai Chamber of Commerce and Industry is a non-profit public entity, whose mission is to represent, support and protect the interests of the business community in Dubai by creating a favourable business environment, supporting the development of business, and by promoting Dubai as an international business hub.

© Press Release 2011