Abu Dhabi: Authorities in Sharjah are aiming to turn the emirate into the Middle East’s hub for start-up businesses within the next four years, with the government and private sector entities joining forces to create the right ecosystem for start-ups.
According to Sara Al Madani, board member at Sharjah Chamber of Commerce and Industry, the start-up scene in Sharjah is already growing, with more Small and Medium Enterprises (SMEs) expected to enter the market over the next few years.
“It [Sharjah] has the affordability factor as well as positioning. We have ports positioned in prime locations, which makes exports and imports very easy, and they’re used by a lot of businesses. So, we’ve got the ports, the access, the facilities, the affordability, and the economy here is still young and it’s booming, so the competition is healthy and it’s a good market to tap in,” she told Gulf News in an interview.
Al Madani said that since the launch of new initiatives in Sharjah to support start-ups, the emirate’s Gross Domestic Product (GDP) has seen year-on-year growth, with double digit in the SME sector specifically.
Asked about challenges in the macroeconomic picture such as slower economic growth and lower oil prices, Al Madani said SMEs can weather these hurdles better due to their higher cost efficiency.
“What happens [when growth slows down] with bigger businesses is they let go of staff and they cut down their costs, so it’s a long process but for start-ups and smaller businesses with five to 50 employees, this is simplified. That’s why when the economy [slows down], the concentration of governments and banks go to small businesses and start-ups,” she said.
Last month, the UAE Cabinet approved the long-awaited draft of a new bankruptcy law, which is likely to come into effect in early 2017. The new law, which has been hailed by many analysts and industry experts, will pave the way for companies in financial distress to restructure.
This will particularly aid the SME sector, which is expected to account for 70 per cent of the UAE’s non-oil Gross Domestic Product (GDP) by 2021, according to Sultan Al Mansouri, the country’s Minister of Economy. Al Mansouri said in December that the SME sector accounted for 60 per cent on non-oil GDP in 2014, and the government was looking at ways to raise that figure to 70 per cent.
So, what’s missing to drive up the sector? Financial knowledge and business education for the entrepreneurs building up their SMEs, Al Madani, said.
To boost that knowledge, the Sharjah Chamber of Commerce recently launched an initiative providing assistance for start-ups during their first two years of operation. The programme covers operational aspects of running a business as well as financial courses.