Background of the UAE and the Wholesale Trade Sector  

•  The UAE is a federation of seven emirates (Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Qaiwain, Fujairah, and Ras Al-Khaimah) created in 1971.  
•  "Wholesale trade is a form of trade in which goods are purchased and stored in large quantities and sold, in batches of a designated quantity, to resellers, professional users or groups, but not to final consumers."  
•  Information on the wholesale trade sector was available for Abu Dhabi and Dubai, but not for the other five emirates, except for one statistic.  
•  One publication stated, "Almost half of SMEs in the UAE are in Dubai (45 percent), while 32 percent are in Abu Dhabi and 16 percent in Sharjah. The other Emirates account for seven percent."  
•   Abu Dhabi and Dubai governments differ in their definitions of Small and Medium Sized Enterprises (SMEs).  
•   Industry and government publications differ in their definitions of SMEs in Dubai.  
•  According to Dun & Bradstreet, there are over 4,000 wholesale companies in Dubai.  
•  A UAE government directory of wholesale companies included 20 pages of about 40 listings per page of categories of wholesale companies. There would be no useful way of characterizing the typical activities of wholesale companies other than to say that they buy and sell large quantities of goods.
• The challenges for SMEs in the UAE include getting loans from banks, making logistics arrangements, and dealing with government regulations in other countries.

Government Laws and Definitions for Wholesale Trade in Dubai

• Dubai conceives of its economy as divided into three sectors: the Manufacturing, Trading, and Services sectors. While it might seem logical to assume that wholesale trade is part of the Trading sector, that is not the case. Wholesale trade is part of the Services sector in Dubai.

• According to Frost.com, "The wholesale and retail trade sector is the largest contributor to Dubai’s GDP, with an estimated share of about 25–30 percent in 2016."
• The terms "trade" and "trading" as used by the government of Dubai are what Americans would mean by the terms "sales" and "selling". This language difference is important when reading the publications by and about the UAE.
• According to the government of Dubai, "Wholesale and retail trade constitutes the most important activity in the services sector in Dubai. The services sector also includes Transport and Storage, Housing, Accommodation and Food, Financial and Insurance and other activities. ... Wholesale and retail trade activities account for about one-third of the total services sector...."
• Defining SMEs is not a simple matter. Research identified three different sets of definitions of SME for Dubai. Presented below is the set of definitions published about 2009 by the government of Dubai. (Other sets of definitions can be found here, and here.)
• Within the services sector in Dubai, definition criteria for SME are: (1) " A micro business is any enterprise with less than or equal to 20 employees AND a turnover of less than or equal to AED 3 million [$750,000]; (2) "A small business is any enterprise with less than or equal to 100 employees AND turnover of less than or equal to AED 25 million [$6 million]; (3) "A medium business is any enterprise with less than or equal to 250 employees AND turnover of less than or equal to AED 150 million [$37.5 million]".
• The cutoff numbers for being a SME are having more than 250 employees "OR turnover greater than AED 150 million...."
• "Turnover is defined as the ‘top line’ component of the business’s Profit & Loss account and takes into consideration the value of income earned by the business by engaging in activities within the course of its normal business operations." "Turnover" is what Americans would call "revenue".
• In addition to the criteria of number of employees and turnover rate, the business must determine whether it is autonomous, partner, or linked. This criterion is referred to as the independence criterion.
• "Based on the independence criteria three classes of enterprise can be defined: (1) Autonomous Enterprise: "An applicant enterprise is considered ‘autonomous’, if it is completely independent or if it has minority partnerships with other enterprises (each less than or equal to 20 percent). In such a case, the business will only use the number of employees and turnover data from its own (unconsolidated financial statements) to check if it meets the applicable thresholds within the SME definition." (2) Partner Enterprise: "An enterprise which has partnerships with other enterprises involving participation greater than 20 percent and less than or equal to 50 percent are classified as ‘partner’ enterprises. If the applicant business is deemed to be a partner enterprise, a proportion of the other enterprise’s employee headcount and financial details must be added to the applicant’s own data to determine its eligibility for SME status. For example, if a business has a 30 percent controlling stake in another enterprise, it must add 30 percent of the other enterprise’s headcount and turnover to its own figures." (3) Linked Enterprise: "An enterprise is considered to be ‘linked’ if it holds more than 50 percent controlling stake in another enterprise or the other enterprise holds greater than 50 percent controlling stake in the applicant enterprise. In this case, the employee head count and turnover of the applicant enterprise would be 100 percent consolidated with the corresponding numbers of the other enterprise."
• AED is the currency of UAE called a "dirham" and is worth about 27 cents US today, May 18, 2020, according to Morningstar online.
• The challenges wholesale SMEs face in Dubai include "dependency on [the] expatriate workforce, [the] high cost of doing business, and [the] threat of counterfeits"....
• The opportunities for wholesale SMEs in Dubai include "its growing young population, spending capacity, shopping tourism, and EXPO 2020. World-class logistics and trade infrastructure facilities make the city an ideal hub for wholesale and retail trade operations."

Government Laws and Definitions for SMEs in Abu Dhabi

• According to the Abu Dhabi Chamber of Commerce, the Emirate of Abu Dhabi "strives to transform itself from an oil-dependent economy to a modern, knowledge-based market economy. The modern market economy, however, critically rests on SMEs. More than 99 percent of all companies in the typical market economy are SME."
• The Chamber goes on to state, "The government of Abu Dhabi has prioritized the development of the SME sector, thanks to the Ghadan 21 program and the related Hub 71 initiative. These will help mitigate lack of SME financing, an issue which frequently comes up in company surveys."
• In Abu Dhabi, "a small enterprise in trading has a turnover of less than AED50 million and employs between 6 to 50 people. A small enterprise in manufacturing has the same turnover threshold but a higher number of jobs—10 to 100—while a small services enterprise again has the lowest headcount—6 to 50 employees—and a lower turnover threshold of AED20 million."
• In Abu Dhabi, "The medium-size sector in manufacturing has up to 250 jobs and has a turnover of up to AED250 million. A medium-sized trading enterprise has the same threshold levels, while in services a medium-sized enterprise employs between 51 to 200 people and generates turnover of up to AED200 million."
• In Abu Dhabi, a micro business is one with fewer than five employees, and a small business has more than five employees but 19 or fewer. A medium-sized business is one with 20 or more employees but 49 or fewer, according to a decree issued by Abu Dhabi Executive Council on 30 June 2013."

Research Strategy

1) SMEs in Pakistan

• Similarly to most countries, SMEs represent over 90% of all businesses in Pakistan.
• The State Bank of Pakistan defines SMEs as having less than 100 employees in the case of trading companies.
• Their revenue can be up to Rs.800 million. This is equivalent to $5,002,069. 

• Almost 53% of all SMEs are active in the retail trade, wholesaling, restaurants and the hotel sector.
• SME classification in Pakistan combines both Wholesale, Retail and Services. 

2) Wholesale SMEs Typical Employee Numbers

• The average number of employees for Wholesale SMEs with large revenues in Pakistan is 27, and the average number of employees for SMEs with small revenues is 13.
• The calculation and assumptions used to find these numbers can be found at the end of this document in the Research Strategy section.

3) Wholesale SMEs Typical Activities Types

• Wholesale SMEs in Pakistan mostly have operating activities, the ones with the largest revenue (close to $5 million) are involved in operating activities such as luxury watch trading, construction contracting, food trading, cotton trading, raw materials trading, and chemicals trading.

4) Wholesale SMEs Nature of Business

•  Fruit and vegetables, Beer, Wine & Distilled Spirits, Chemical, Computer & Office Equipment, Drugs, Electrical, Plumbing & Hardware, Farm & Garden Equipment, Grain & Field Bean, Industrial Equipment, Lumber, Medical Equipment & Supply Wholesalers, Petroleum & Petroleum Products, Recyclable Material, Steel Service Centers and Tire.

5) SME Wholesale Opportunities

• In Pakistan, SMEs that can produce and make available complete and accessible information that can be used by banks for risk assessment will be able to have access to loans and credits from commercial banks, boosting their growth prospects.
• Power shortage issues that affect productivity can be solved by unlocking the potential of renewables in the country.
• The new government has placed the development of SMEs at the center of their economic policy. 
• Internationally, the China Pakistan Corridor could provide further opportunities to develop SMEs in Pakistan. 

6) SME Wholesale Challenges

• SMEs in Pakistan are faced with an unstable regulatory environment, caused by frequent changes of government in the country.
• The sector is largely unregulated and has low access to bank finance.
• Credit risk assessment for these companies is made difficult because of the absence of relevant information to be used for risk assessment.
• Power shortages is another important issue affecting SMEs in Pakistan, with frequent load shedding and blackouts affecting productivity. 
• Fiscal regulations in Pakistan are not suited to SMEs' needs as they only divide enterprises by income level and not by type of activity.
• A lack of a skilled workforce is also a constraint on these companies.

Research Strategy

Employee Numbers and Activities

• The wholesale trade sector in South Africa defines an average of 50 employees as a "small" enterprise, which increases to an average of 200 employees for "mid-size" enterprises.
• Ketso Gordhan, CEO of the SA SME Fund, noted that South African SMEs (in a general sense) usually employ between 50 to 100 people at a time.
• In practice, wholesale trade SMEs are exceptionally poor in employment numbers compared to other sectors; the vast majority (78%) have no employees other than the business owner.
• Wholesale trade businesses take out more loans than most other SME sectors in the country.
• This sector is the most lucrative in all of South Africa for "early stage entrepreneurial activity," which has led to its over-saturation with micro-vendors and informal traders, which in turn may provide an explanation for the remarkably low employment numbers noted above.

Business Nature

• Of 944,467 total "trade and accommodation" SMEs in the country, 757,669 of them are informal.
• Turnover thresholds are significantly higher in wholesale trade, compared to other sectors.
•  Clothing, textiles, and agriculture are the most prominent focuses in the wholesale sector, with the latter in particular thriving through the international expansion of South African grocery/supermarket chains.

Opportunities

• SME owners are looking to expand into different sectors to foster growth between businesses.

• According to the Small Business Institute, SMEs only employ 29% of South Africans, even though early stage investment opportunities in this sector are prolific.
• Only 6% of SME owners report receiving funds from the government, and 53% believe that restrictive regulations are a significant impediment to their investment opportunities.
• The International Finance Corporation aims to address these failing opportunities by situating the Department of Small Business as the "key coordinator" of SME support programs between government stakeholders; this is a direct endeavor to continually improve upon the complaints of low employment numbers and restrictive regulations.

Challenges

•  One third of SME owners report that they have been refused funding for various reasons, including "insufficient operating history, inadequate cash flow, and limited collateral," which is a particular problem for the highly-informal wholesale sector.
•  One third of owners also report their belief that South Africa's labor laws directly inhibit the growth of SMEs.
• A majority of owners believe that market access is one of the most significant challenges to their growth, especially since textiles and agriculture are such broad, highly-competitive markets.
• Technology/access to information is one of the most prominent obstacles; when asked if technological limitations posed an obstacle to their growth, 50% said yes and 50% said no. Of the affirmative responses, 60% indicated that a lack of stable, reliable internet access was their biggest problem.

Wholesale Trade Sector

• A book first published in 2011 called SMEs and Open Innovation: Global Cases and Initiatives talks about a micro, small, medium enterprises in Egypt. It notes that the multi-sector definition is based on fixed assets rather than total assets to avoid current assets valuations.
• The Central Bank of Egypt defines a SME as any with a 'business volume between EGP 1 million and 50 million to be small and those with a volume from EGP 50 million to 200 million to be medium-sized'.
• The wholesale and retail trade figures in 2019 according to the Ministry of Planning was reported at '237,030.727 EGP mn in Dec 2019. This records an increase from the previous number of 211,650.800 EGP mn for Sep 2019'.
• The above figures are reported as a total and are not split into wholesale and retail. However, a Census completed in 2008 — study — notes the wholesale trade as being 40.5% of the overall SME market.

Typical number of employees

• Most of Egypt’s businesses are micro-sized (97%) and employ fewer than 10 workers. Those that employ between 10 and 50 employees account for only 2.7% of businesses. 70% of Egypt’s 2.4 million businesses have only one or two employees.

• Government departments count the number of employees based on those who are registered for social security who are able to be determined. This would imply that there are a number of informal employees who are not registered and so do not feature in official figures.
• Up to date employee numbers for a wholesale SME have not been able to be defined. A paper from 2019 gives definitions for the number of employees of SME companies: micro businesses (1-9 employees); small businesses (10-49 employees) and medium-sized businesses (50-249 employees). However, from the information available it was not able to confirm exactly the number of typical employees of a wholesale trade SME.

Typical activities of a wholesale SME

• Wholesale trade SMEs in Egypt are involved in activities including clothing, furniture and electronics.
• They also have a presence in the food sector, in particular the dates and pickled goods area and the meat and produce sectors.

Opportunities

• Since 2018 The Central Bank of Egypt (CBE) set aside $1.7billion in loans in 2018 for SME. The figure was expected to increase to $2.8billion in 2019. The CBE has also directed commercial banks to increase the loans made to SMEs to 20% of their overall portfolio. This will have given SMEs generally more access to finance. Wholesale SMEs are likely to able to access this finance too.
• Egypt’s government is also providing support to SMEs through 'attractive free zone offerings'. These are zones built specifically for SMEs, located along the Suez Canal to allow light industries and services sector companies access to key global trade routes.

Challenges

• A paper from 2019 details challenges faced generally by SMEs in Egypt, again the information publicly available did not break down the challenges to show those specific to wholesale SMEs. The types of challenges the paper details include difficulties accessing finance because banks were historically not used to lending to these types of companies.
•  Banks prefer to lend to larger companies which are likely to be more profitable to them and have the required documentation and collateral to back up the loan. We found that 47 percent of SMEs in Egypt do not deal with banks and 22.4 percent have access banking facilities
• Egypt does not have specific laws for SMEs which makes it difficult for those setting up and maintaining businesses.
• The government has not set in place low tax rates for SMEs which is often the case in other countries and encourages the development of SMEs.
• SME owners often experience difficulties when contacting government departments to register their business or deal with custom or tax matters.
• The government system does not provide support to SMEs in things like developing their products, exporting and marketing.

Research strategy

Overview of SMEs

• Central Bank of Egypt (CBE) define SMEs as small and medium-sized enterprises that generate annual business volumes between EGP 1 million to EGP 200 million.
• According to Bank Audi, the wholesale and retail trade in Egypt is the second-largest business sector for the country after manufacturing sector. In 2018, the retail and wholesale trade contributed nearly 13.8% to the country's GDP.
• In Egypt, there are about 2.5 million SMEs comprising 95%-98% of all enterprises and employing nearly 75% of the total workforce. Moreover, about 95% of SMEs operate in non-agricultural projects.
• Egyptian SMEs represent about 80% of the country's economy, and majority of SMEs operate in the informal sector.

Number of Employees

• In Egypt, about 72% of all formal businesses are represented by sole-proprietorship firms, highlighting the dominance of micro small and medium enterprises in the private sector.
• Number of owners/partners: About 32% of retail SMEs have a single owner, while 20% of retail SMEs have 2 or more owners.
• It is noted that about 48% of retail SMEs are owned by members of a single family or relative or friend of the business owner.

Types of Business Activities

• According to a recent research, about 2.4 million of Egyptian micro and small enterprises comprised about 1.37 million (57.1%) of businesses from retail, wholesale, and auto repair sector. Moreover, other sectors representing the micro and small businesses included transformative industries at 15.9%, agriculture and fisheries at 1%, and other businesses at 26%, respectively.
• It is noted that about 22.1% of medium-sized enterprises belonged to the retail, wholesale, and auto repair sector. Alternatively, about 27.1% of medium-sized businesses belonged to the transformative industries, 0.7% belonged to the fisheries and agriculture sector, and other businesses accounted for 49.8% of medium-sized businesses in Egypt.
• As of 2018, more than 7000 food production units operated in Egypt, generating combined annual sales of $22.2 billion.

Nature of Businesses

• Egyptian retail sector is highly fragmented and majorly dominated by small traditional retailers. In Egypt about 115,000 retail outlets account for 98% of the total 119,000 stores in the country, and generate nearly 80% of the total sales.
• It is found that more than 80% of the retail distribution market is managed by small-scale grocery stores, which are located in local neighborhoods and offer convenience to customers.
• In Egypt, about 38% of retail SMEs are new businesses, while 15% of retail SMEs are 1-4 years old, and 47% are more than 6 years old.
• According to a recent report by MPRA, about 45% of retail SME owners started their do businesses to be their own boss, while about 10% started retail businesses due to termination of their previous employment, and about 16% owners started their retail SME due to lack of skills to join public businesses.

Key Opportunities

• In 2018, the Egyptian government dedicated loans valued at EGP 30 billions ($1.7bn) to SMEs. Further, the government planned to increase loan amount to EGP 50 billion ($2.8bn) in 2019.
• The Central Bank of Egypt (CBE) has directed commercial banks to increase the number of loans given awarded to SMEs to 20% of their total portfolio.
• The government also proposed allocating at least 10% of available land to SMEs and young entrepreneurs. The government will be providing EGP 10 billion to banks over the next four years to provide loans to SMEs and create about 100,000 jobs in agriculture, commercial and service industry with micro-financing.
• The government is also working to generate 20,000 job opportunities in small and micro-enterprises through a local development fund for women and young people and increase funding through the Central Bank of Egypt’s (CBE) SME-financing initiative

Key Challenges

• In Egypt, a majority of MSMEs are informal and not registered with the formal systems of MSME. It will require significant changes to develop and deliver systems that facilitate their development and seize domestic and global business opportunities.
• This SME retail segment is majorly dependent on a loyal neighborhood customer base and offer credit to local consumers. The segment is constrained by space (retail and parking) and cannot compete with larger retailers in terms of scale and economics.
• According to experts the money allocated to SMEs had been misallocated due to the inefficiency of implementation. Further, there is no dedicated body for SMEs to follow up on the performance of funded projects.
• It is found that about 64% of medium-sized businesses find difficult in financing projects.

Retail SMEs in South Africa

• Definition: SMEs in South Africa are classified based on their volume turnover in accordance with the National Small Business Amendment Bill. For the retail sector, a business is an SME if it has a volume turnover of 180.5 or less.
• Typical number of employees: Micro, small, and medium firms employed 3,863,104 people in 2016. With an estimate of 267,959 firms in the same study, that averages to 14.4 people at each firm (not specific to retail SMEs).
• Additional employee data: Almost half of all SMEs in South Africa employee between 2-5 people.
• Typical activities: For micro firms, the highest percentage (49 percent) sell products that they buy in the same form. The highest percentage of small businesses (31 percent) do the same. For medium businesses, the highest percentage (19 percent) render other services such as catering, car washing, or garden services, while 15 percent sell products that they buy in the same form. Other activities include selling products and adding value (12 percent, 10 percent, and 4 percent of micro, small, and medium firms respectively), and selling something that is crafted (5 percent, 3 percent, and 0 percent respectively).
• Typical nature of business: Many retail SMEs (39 percent) in South Africa consist of only one employee who is generally engaged in reselling products as they were purchased. Half of SMEs were funded by the owner/employee themselves or by borrowing from friends or family. Most of them want to make a positive difference in South Africa, including by helping to provide jobs when they are able to.
• Key opportunities in this sector: Retail SMEs that are entering the online realm for sales are doing very well with sales anticipated to double from 2016-2020. 2020's sales are expected to be R20 billion.
• Challenges in this sector: South Africa does not have a survey to track the performance of SMEs and thus has wildly varying estimates on how many there are and how much they contribute to GDP. The estimate ranges from 5.9 million (in 2010) to 1.5 million (in 2014) to 2.2 million (in 2016) to 267,969 (in 2018). This lack of certainty reduces the potential impact of policies and support initiatives.
• Additional challenges: About 60 percent of all SMEs in South Africa have been in operation for less than three years as of 2018, making the landscape filled with potentially unstable investments.

Calculations

Employees

• According to the State Bank of Pakistan, any business whose total workforce does not exceed 50 people is categorized as a small enterprise (SE).
• The State Bank of Pakistan reports that any trading business that has a total workforce of between 50 and 100 people is categorized as a medium enterprise (ME).

Activities

• The Small and Medium Enterprises Development Authority (SMEDA) shows that the SME industry in Pakistan is divided into clusters. SMEDA highlights the activities of SME's in each cluster including those that sit in the retail sector.
• Each cluster is composed of several SME's, including raw material suppliers, manufacturers and retailers. SME's in the retail sector serve both the local and the international markets.
• Some activities of SME's that sit within the retail sector include supply of agricultural implements, supply of aluminum utensils, supply of bed wear, and supply of ceramics.

Nature of Business

•  ResearchGate reports that over 96% of SME's in Pakistan are sole proprietorship, including those that sit in the retail sector. Most SME's in Pakistan do not have the capacity to become corporate because they lack expertise.  
•  FC College analyzes SME's in Pakistan including those that sit within the retail sector. The analysis shows that most SME's here are family owned and they have limited access to capital, technology and skilled labor.

Opportunities

• The Small and Medium Enterprises Development Authority (SMEDA) has plans to support SME's including those that sit in the retail sector in various ways, including offering them grants and providing training to enhance their efficiency.
•  ResearchGate reports on the state of SME's in Pakistan, including those that sit in the retail sector. The report shows some opportunities for these SME's, such as, creating international networks, taking advantage of the specialized industrial zones and having joint ventures with other firms.
•  ResearchGate shows that both the Pakistan Vision 2025 and the Pakistan Planning Commission Vision 2030 emphasize the importance of supporting SME's, including those that sit in the retail sector.

Challenges

•  SME Bank reports that the amount of guidance and support offered to SME's in Pakistan does not meet the needs of SME's, including those that sit in the retail sector. SME Bank indicates that most formal lending institutions in Pakistan tend to favor large businesses. 
• In a paper titled, 'Framework for SME Sector Development in Pakistan', Syed Akhtar Hussain Shah, highlights the challenges facing SME's in Pakistan, including those that sit in the retail sector. Some retail sector SME's listed include those retailing in bed wear, those retailing in ceramics and those retailing in auto parts.
• The Small and Medium Enterprises Development Authority (SMEDA) provides a detailed breakdown of how the SME industry in Pakistan is clustered and the breakdown includes SME's retailing in bed wear, in ceramics and in auto parts.
• The challenges listed by Syed Akhtar Hussain Shah include a highly regulated environment, low availability of skilled workers, poor access to modern technology, poor marketing strategies, lack of entrepreneurial skills and low access to financial support.
•  ResearchGate reports on the state of SME's in Pakistan, including those that sit in the retail sector. The report shows that some challenges facing SME's in Pakistan include a poor SME tax management system and a non-conducive political environment.

SMEs within the UAE’s Retail Sector

Definition of SMEs

• According to UAE's Cabinet Resolution No. 22 of 2016, a business is classified as an SME based on the number of employees or the company's annual turnover.
• Under SMEs, a company can be sub-classified as either a micro-enterprise, a small enterprise or a medium enterprise.
• For companies in the retail/trading sector, a micro-enterprise has no more than 5 employees or an annual revenue of not more than AED 3 million.
• A small enterprise has 6 to 50 employees or an annual turnover of AED 50 million.
• A medium enterprise has 51 to 200 employees or a yearly turnover of not more than AED 250 million.

Typical Nature of Businesses done by SMEs in the UAE's Retail Sector

• According to Dubai SME, an agency of the Department of Economic Development, "the key segments of the trading sector in Dubai are consumer goods trading, textiles & garments trading, IT and telecom products trading and general trading."
• SMEs are involved in different businesses such food supply, pharmaceuticals, ICT as well as fashion and design among others.

Characteristics of a typical SME Business in the UAE's Retail Sector

• SMEs in the retail sector have the highest international orientation and access to finance compared to SMEs in both manufacturing and service sectors.
• "The UAE was the only GCC nation to feature in the world’s top ten retail investment destinations as per AT Kearney’s Global Retail Development Index (GRDI) 2017."
• A typical SME in the retail sector has a very low orientation towards innovation and a moderate adoption of I.T. in business operations.
• The scalability potential of retail SMEs is low and so is their orientation towards corporate governance. Many businesses are family owned.

Activities done by SMEs in the UAE's Retail Sector

• Selling — SMEs participate actively throughout the supply channel. For instance, SNAK Foodstuff Trading, an SME certified organization, sell their food through retailers, wholesalers as well as van sales. Other channels of distribution used by SNAK include partnerships with other sectors such as the hospitality industry and the duty-free markets.
• Marketing — SMEs in the retail sector such as SNAK apply different marketing strategies to promote their brands.
• Logistics — Most SMEs in the retail sector have to deal with the issue of logistics directly. Activities of a logistical nature may involve transportation, warehousing and the use of technology to track products throughout the supply chain.

Key Opportunities

• One of the key opportunities for SMEs in the UAE's retail sector involves the adoption of technology to enable faster and more efficient business operations as well as communication.
•  29% of SMEs in Dubai lack an official website while 77% of them do not possess an e-commerce store.
• Growth in the SME retail sector is driven by growth in the tourism sector and a high purchasing power especially when oil prices are favorable.
• SMEs in the trading sector can heavily benefit from the training and development of employees to improve their skills and efficiency.

Challenges

• Lack of financing is a key challenge mainly faced by SMEs in the retail sector. According to The Khalifa Fund for Enterprise Development, "the SME share of bank lending in the UAE was only 4%." 
• According to a recent report, 91% of SMEs in the UAE are undergoing serious difficulties in international shipping and access to international markets.

Strategy

• To illuminate on the typical type of activities that SMEs are involved in, we used SNAK Foodstuff Trading as an example or case study.

Number of Employees

• Based on the definition by the UAE government, a small enterprise in the trading and service industries typically employs between 6 and 50 people, which has a sales turnover of less than AED50 million and AED20 million respectively. A medium-sized enterprise hires between 51 and 250 employees in the trade industry while employs between 51 and 200 employees in the service industry, which has a sales revenue cap of AED250 million and AED200 million respectively.
• Although in some cities like Dubai, the number of employees and the value of sales turnover in the trade and service industries differ from the above-mentioned definition, the number of people hired in these two industries is within the range of between 6 and 250, and their sales turnovers are between AED20 million and AED250 million.

Type And Nature Of Business Activities

• Businesses engaged in the restaurant, food and accommodation sectors provide room and food catering services to residents and tourists, which involves the procurement of food and hospitality products. The size of the accommodation and food services industry has gradually increased in value but its contribution to UAE's GDP declined slightly, from AED28.5 billion (2.2% of GDP) in 2016 to AED32.5 billion (2.0% of GDP) in 2018, representing a compound annual growth rate (CAGR) of 6.8%.
• Article 65 of the UAE Labour Law requires that adult employees are only allowed to work for a maximum of 8 hours a day or 48 hours a week. However, the maximal number of daily working hours is 9 in the retail trade, hotels, restaurants and similar commercial establishments.

• As part of the hospitality industry, the accommodation and food & beverage sectors represent the bulk of the business activities in the UAE. The industry consists of five primary sub-sectors, namely hotels, hotel apartments, restaurants, cafes, and catering firms.
• A limited liability company (DIFC LLC) is the legal form of business, which is usually used by retail commercial companies, such as restaurants and cafes. Companies registered under this form of business is not allowed to provide financial services, issue securities and raise capital through public offerings. The number of members or shareholders of the company should be between 2 and 50, with no minimum capital requirement to establish the business.

Industry Opportunities

• The hospitality industry in the UAE is estimated to grow by 5.3% in 2018, which has slowed down marginally from previous years when the industry grew by 5.7% and 6.1% in 2017 and 2016 respectively. The tourism industry is the primary growth driver of the hotel sector in the UAE and governments are expected to take the initiative to boost the demand for tourism, according to research published on Taylor & Francis Group in 2014.
• In 2020, it is expected to see an increase in more affordable hotels (below three stars) in Dubai, one of the major tourist spots in the UAE. With changing demographics of visitors and residents towards the Asian countries, this is expected to drive demand for low-end accommodations, such as hotel apartments, hostels and backpacker rooms.
•  Quick service restaurants have demonstrated outstanding performance over other forms of food and beverage businesses, for example, casual and premium restaurants have seen a significant decline in average footfall and spending.
• Due to the sluggish growth in sales revenue, food & beverage operators, such as delivery kitchens, are expected to leverage multiple mobile applications for food delivery services to expand sales channels. In comparison, dining restaurants are not expected to be actively using mobile delivery applications, as applications are not aligned with their offerings.
•  Expo 2021 is expected to be a boost to the food & beverage sector in the UAE and the accommodation sector in Dubai, which is an opportunity for local SMEs to showcase their products and services. The event is expected to welcome more than 25 million visitors and serve more than 300,000 meals per day between October 2021 and March 2022. Food and beverage businesses have planned to directly participate in the event and/or target visitors with marketing campaigns.
• The UAE Competitiveness and Statistics Authority has estimated that the size of the SME businesses is expected to increase from 49% of the UAE economy in 2018 to 60% in 2021. In Dubai, investment in the service sector is primarily driven by SMEs in the hospitality and transport & logistics industries.

Industry Challenges

• According to research published on Taylor & Francis Group in 2014, small and medium-sized hotels have faced the challenge of increased market competition and operational cost, the decline in demand, and the shortage of skilled workers. Due to some recent openings of new hotels, this has caused an oversupply of hotel rooms in 2020 and hotel owners, such as LEVA Mazaya Centre Dubai, are under pressure to offer promotions for staycations to the UAE residents and competitive monthly rates for guests who could stay longer, valid until late summer.
• Similarly, the food & beverage sector has also experienced an increased level of competition and subdued consumer spending in 2018, which has resulted in a decline or flat situation in sales. This also pushed down profitability due to rising operational costs.
• The area of retail space is expected to increase from 7.7 million square meters to 9.9 million square meters between 2017 and 2020, representing the CAGR of 8.7%. Together with the increased retail mix in many new retail destinations, the food & beverage sector is expected to see the increased level of competition concerning all types of businesses.
• Changing demographics is another factor that impacts the spending in the food & beverage sector. The 6.7% growth of tourists between 2014 and 2017 was driven by people from the Asian countries, who tend to be constrained by budgets and choose familiar cuisines. A similar shift in demographics was seen in resident expatriates, who represent approximately 80% of the population in the UAE.
•  Transport, tourism and retail sectors, which are the main drivers of economic growth in the UAE, has been significantly impacted by the COVID-19 global pandemic. This is expected to harm catering and accommodation services, which are driven by events and trips. For example, Expo 2020, originally scheduled for October 2020, has now been postponed to a year later.
• Both COVID-19 and Saudi Arabia entering the regional tourism market have exacerbated the situation of already over-supplied hotel markets in the UAE, which is expected to add the downward pressure on pricing and cause financial distress to hotel owners. However, from a consumer's perspective, this may well be a catalyst for hotel demand growth soon.

Research Strategy

Typical Number of Employees

• In Pakistan, small enterprises have less than 50 employees and Rs.150 million ($943,730). Medium enterprises in the services and manufacturing sector (where the restaurant/food and accommodation SMEs fall) are defined as business entities with 50-250 employees and between Rs.150 million ($943,730) and Rs.800 million ($5.03 million).
• The typical number of employees in the restaurant/food and accommodation SMEs in Pakistan would be between one and 250.

Challenges

• The Pakistani food market is flooded with food products from Iran, India, and other countries. Smuggled food products limit the potential of food SMEs to flourish. Other problems include high prices of raw materials, higher taxation, a complicated regulatory structure, and "high costs of doing business in Pakistan."
• According to the Small & Medium Enterprises Development Authority (SMEDA) in Pakistan, the key challenges faced by SMEs in the country are lack of financing (55%), shortage of qualified labor (39%), marketing/sales challenges (28%), corruption (21%), and problems finding business sites (38%).

Key Opportunities

• Based on SMEDA's pre-feasibility reports on the "Home Made Food Products," "Fast Food Restaurants," "Home Made Lunch Boxes," and "Bread Manufacturing Plant" segments, increasing demand for convenience among Pakistanis provides an opportunity for SMEs to adopt online order/sales and home delivery services. Also, there is an increasing demand for healthy, hygienic, and nutritious food products in Pakistan.

Typical Nature

• According to SMEDA, SMEs in the food/restaurant sector in Pakistan are classified into two industry categories: Services and Food & Beverages.
• A 2017 report states that most food SMEs in Pakistan are in the informal sector because of "higher taxation and the requirement to deal with multiple agencies." A 2020 report corroborates these findings by stating that a large majority of SMEs are outside the country's regulatory framework.
• Based on SMEDA's pre-feasibility reports on the "Home Made Food Products," "Fast Food Restaurants," "Home Made Lunch Boxes," and "Bread Manufacturing Plant" segments, food SMEs in Pakistan are mostly located in large urban areas such as Karachi and Islamabad, and target middle income groups.

Typical Activities

• Based on SMEDA's reports, SMEs in the Food & Beverages sector in Pakistan are involved in food manufacturing, preparation, and delivery activities.
• SMEs in the Services sector are involved in activities such as catering and home delivery services.

Research Strategy

Employees

• The typical number of employees for SMEs that sit within the restaurant, food and accommodation sector in South Africa is between 50 and 200 staff.
• Data from the International Finance Corporation indicate that the small firms in the food, restaurant and accommodations sector in the country have between 20 to 50 employees.
• South Africa's medium firms in the restaurant, food and accommodations sector employ 50 to 200 employees.

Activities

• The SMEs in the food, restaurant and accommodations sector in South Africa are involved in catering service activities.
• The firms are involved in activities related to the accommodation of clients in hotels and resorts. The activities include bookings, room service, laundry, meetings, exhibitions and special events, Bed & Breakfast and other activities that ensure the comfort of the clients.
• The SMEs in the sector are involved in activities related to providing food and beverage products to customers. The activities include serving, sales, bar services, among other activities.
• The firms are also involved in the distribution of food and beverages products. The firms order food from local manufacturers, wholesalers, processors, retailers and others.

Nature of Business

• The nature of business for SMEs in the food, restaurant and accommodations sector in South Africa include sale food and beverage products to tourists and locals.
• The firms are engaged in take away and fast food services. Restaurants are critical in the sector due to a high number of tourists in the country.
• Some firms in the industry distribute food and beverage products to hotels, restaurants, and the institutional food services sector.
• Other SMEs in the food, restaurant and accommodation sector are fast food franchises of renowned brands including KFC, Steers, and Debonair.

The Key Opportunities

• The SMEs in the food, restaurant and accommodation sector in South Africa can compete with established enterprises due to the injection of capital, infrastructure, and expertise by investors and the government.
•  Growing demand for accommodations from foreign and domestic tourists is a crucial opportunity for the SMEs in the food, restaurants and accommodations sector in the country to expand.
• The SMEs are set to benefit from R200 million Tourism Relief Fund that was availed to help the firms in the tourism and hospitality sector facing challenges due to the travel restrictions due to COVID-19 crisis.

Challenges

• The SMEs in the food, restaurants and accommodation sector in South Africa are experiencing a drop in businesses as a result of travel restrictions as a result of COVID-19.
•  Inadequate financing from banks due to lack of collateral, necessary financial records, and skills is a major challenge to the SMEs in the food, restaurant and accommodations sector in South Africa.

Number of Employees

• Based on the definition of SMEs by Egypt's small enterprise law, a small enterprise in all companies or facilities that are productive, commercial, or service-providing typically employ a maximum of 50 people, with a sales turnover of between 50,000 EGP and 1,000,000 EGP.
• In 2019, a paper titled SMEs Sector: A Key Driver to the Egyptian Economic Development with the MPRA Journal surveyed the SME sector in Egypt. The survey was conducted across the following industry verticals: manufacturing, construction, business services, agriculture, retail, transport, and food service. The food-service segment in Egypt is reported as food service — hotel restaurant institutional, which can also be referred to as the hospitality industry.
• According to the research, 26% of companies surveyed were under the food service industry. Therefore, based on the research, the number of employees in food service in Egypt include a range of 1-9 employees for micro-businesses; small businesses are 10-49 employees, and medium-sized businesses are 50-249 employees.

Types of Activities

• Typical activities of SMEs in the industry include the provision of meals through institutional sales channels like hospital patients, correctional inmates, military facilities soldiers, public and private universities, and others.
• Companies engaged in the industry provide room and food catering services to residents and tourists, which involves the procurement of food and hospitality products. The industry consists of two sub-sectors, namely hotels and restaurants.

Nature of Business

• In 2018, over 24 international hotel chains with 145 facilities and 43,545 rooms were in operation in Egypt.
• In 2018 and 2017, Egypt’s hotel and restaurant sector recorded a growth of 50% and 33% owning to recovering tourism and normalization of expenditure patterns among Egyptians.
• The size of the accommodation and food services industry has gradually increased in value, and its contribution to Egypt's GDP hit 11.9% in 2018. The sector provided 2.48 million jobs, accounting for 9.5% of total employment in Egypt that year.
•  Beef liver, natural milk, tree nuts, popcorn, frozen beef, whey protein, potato chips, pork and pork products, dogs and cat foods are some products in Egypt.

Industry Opportunities

• The tourism industry is the primary growth driver of the hotel sector in Egypt. This has created opportunities for hotel investors across the country.
• Egypt's hospitality industry is a key player in the wider growth of the economy; tourism is forecast to contribute 5.35% per annum to the country's GDP over the next five years.
• The primary driver of the growth in the hospitality industry was as a result of the devaluation of the Egyptian Pound, opening attractive opportunities in terms of overseas travelers seeking relatively cheaper holidays to Egypt.
• Another driver of this growth is the lifting of the ban on flights to Sharm El Shiekh by the United Kingdom in October 2019, allowing several airline operators the opportunity to re-introduce the city to their destination list, which is estimated to enhance the tourism from the United Kingdom to Egypt.
• The upcoming pipeline of capital-intensive luxury hotel developments in Egypt has created opportunities for both government reforms, incentives, and strong tourism in the Egyptian economy.
•  Egyptian government initiatives and large-scale tourism projects have provided the opportunity for the sector to continue to boost demand and drive investment in the market.

Industry Challenges

• SMEs in the food, restaurants, and accommodations sector in Egypt is experiencing a drop in businesses as a result of travel restrictions due to COVID-19. An example of the effect of the current pandemic is the opening of the Sphinx International Airport in Western Cairo and the Grand Egyptian Museum, which was scheduled for April 2020 opening but was postponed to 2021 due to the COVID-2019 pandemic.
• According to the MPRA research publication, SMEs in the restaurant/food and accommodation sector in Egypt are faced with the tax compliance burden, stating that the tax system should be easy to administer and comply with by SMEs.
• Another challenge faced by SMEs in the industry is the inflexibility of loan approval by financial institutions in the country.

Number of Employees

• A report by the Entrepreneurship and Sustainability Center states that according to the Central Agency for Public Mobilization and Statistics (CAPMS), there are 2.41 million firms in Egypt, 16% of which are in the manufacturing sector, amounting to 385,582.
• EMNES states that according to the Central Bank of Egypt, a firm is considered as "micro" when it has less than 10 employees, "small and medium" if it has between 10-200 employees, and "large" if the firm has more than 200 employees. It states that 91% are micro businesses, 8% are small and medium, while less than 1% are large firms.
• Based on the above findings, we can conclude that since there are 385,582 manufacturing companies, roughly 30,847 are SMEs (385,582*8%). With around 3,187,000 employees in the manufacturing sector, and 75% of the labor force employed in SMEs, we can estimate the average number of employees per SME manufacturing firm to be approximately 77 (3,187,000*.75/30,847).
• However, the average number of workers for MSMEs overall (i.e including micro firms) is 2.63.

Nature of Business and Types of Activities

• The majority of SMEs (10-250 employees) in the manufacturing sector are involved in food production (46.6%), followed by apparel (9.6%), and other non-metallic mineral products (6.5%).
• According to a study by the Munich Personal RePEc Archive (MPRA), 30% of manufacturing SMEs (including micro firms) in Egypt have one owner. It further states across all sectors, "34% of SME employers have two owners as a member of the same family or relative, 29% have one owner, with 6% have between three and five, and 6%, more than four."
• The National Bank of Oman has reported the following output per year values as a percentage of the total manufacturing sector output. The key business lines in the sector include: manufacturing of food products (30.55%), chemicals (21.85%) textiles (14.16%), rubber and plastic (6.65%), and metal products (6.05%).

Key Opportunities

• A report by Creative Associates International states that within the MSMEs textile industry, "cheap labor and low energy cost are the two most important factors that give the country a competitive advantage." In addition, it is one of the few manufacturing processes in Egypt with the complete supply chain within the country's resources.
• Developing industrial zones based on a cluster model brings SMEs from the same or complementary sectors "to benefit from enhanced supply chains, economies of scale and shared infrastructure." Currently, such enterprise development potential remains untapped since projects operate in isolation.
•  Other opportunities, not limited to the manufacturing sector include increasing support for innovation by multinationals, increasing number of public-private partnerships, alternative funding methods such as crowdfunding, angel investments and private equity, etc.

Key Challenges

• According to Mondaq, the manufacturing sector is facing increasing compliance and regulatory pressures, which has become a significant burden for SMEs. It states that "Egypt's legislative and regulatory structure has long been recognized as one of the major challenges to achieving economic development in general and industrial growth in specific."
• Creative Associates International confirms the above finding and states that despite institutional, regulatory, and banking efforts and reforms by the government, donors, and private sector, the major challenges faced by manufacturing MSMEs include "non-conducive legal, regulatory and supervisory frameworks."
• The Journal of Business and Economics states that smaller manufacturing firms face challenges accessing funds since larger firms with higher turnover, greater capital are more likely to benefit from banking facilities. It is reported that only 40.7% of manufacturing SMEs deal with banks compared to 50.9% of trade sector SMEs.

SME's — Manufacturing Sector: South Africa

Employee Statistics

• According to the most recent SMEs report published by the Savannah Economic Development Authority (SEDA), in Q1 of 2019, the South African manufacturing sector had approximately 953,905 workers, representing about 8.8% of the total composition of SMEs in the country.
• In total, the nation had 10,839,819 employees working in the SME sector in Q1 of 2019, an increase of 22% from the previous year's employment figures.

Type and Nature of Business Activities

• The most prevalent manufacturing activities in South Africa include activities relating to "basic metals, fabricated metal products, machinery, and equipment," which comprise about 22.13% of the nation's manufacturing sector. Its activities include office machinery, household appliances, fabricated metal products, casting of metals, etc.
• Next, is the food, beverages, and tobacco segment, which also holds among the biggest share of manufacturing at 20%. Activities under this sub-segment include the production, processing, and preservation of meat, fish, fruits, vegetables, oils and fats; dairy products, grain mill products; and other food products.
• The third popular activities in South Africa's manufacturing sector include coke, refined petroleum products, and nuclear fuel at 13.89%. Other sub-segments under it include plastic products and rubber products. Equally, the wood and products sector (11.29%) features other sub-segments and activities like publishing, printing, sawmilling, paper & paper products, etc.
• The transport and equipment segment holds around 9.83% of the manufacturing sector. Its activities and businesses include the manufacturing of motor vehicles & components, parts and accessories, building and repairing ships and boats, railways and tram locomotives, transport equipment, etc.
• The clothing and textiles sub-sector comprises about 7.21% of the manufacturing sector, and includes activities like tanning & dressing leather, preparing & spinning textile fibers, knitting and crocheting of fabrics, dressing & dying fur, etc.
• Other businesses and activities include the manufacturing of non-metallic mineral products, electrical machinery and apparatus, furniture manufacture and recycling, and radio, television, and communication equipment manufacturing.

Key Opportunities

• About 74% of South African businesspeople claim they started their businesses to impact the society signified they launched their businesses to have a positive impact in society (SME owners could give multiple answers to this question).
• Currently, the "demand for more manufacturing capacity" in South Africa is not showing any signs of slowing down. The government has been investing heavily in SMEs to stimulate their growth and development.
• Many more SME owners started their businesses after identifying opportunities in the sectors they were not operating in. In this regard, the barriers to entry for small businesses are therefore high in the manufacturing landscape, however, these companies can present opportunities like taking part as suppliers of goods and services to manufacturers.
• Also, initiatives like the Black Industrialist Programme, along with plans, such as the SA Automotive Masterplan are examples of opportunities likely to create new jobs and business opportunities.
• Generally, agriculture & manufacturing, followed by education, real estate, and technology were the most lucrative and attractive sectors presenting growth and development opportunities for SMEs.

Key Challenges

•  Challenging macro-economic conditions, along with increasing costs of inputs continue to affect the manufacturing sector, in particular, the local manufacturing activities, such as the rubber products manufacturing sector.
• Key players in the sector have identified competition, especially from "low-cost imports, load-shedding, high labor costs, low levels of spending on research and development" and low investment in new technologies as a significant reason undermining the growth of the sector.
• A total of 52% of SMEs in South Africa claim that they need a lot of help in identifying great market access opportunities. Moreover, about 40% of SME owners also claim that the manufacturing industry is highly competitive.
• Another 50% of SME owners claim that technological advancements also pose critical challenges to SMEs, while another 60% of the respondents indicated that their main obstacle relates to stable and reliable internet access.
•  High job losses in the manufacturing sector. According to research, the South African manufacturing industry lost about 7,000 jobs in 2019 alone.

Research Methodology

Number of Employees and Activities

• From the definition of small and medium enterprises (SME) by the State Bank of Pakistan, a manufacturing SME is one that employs 250 people or fewer. Based on the categories that make up the sector, as discussed in the next section, the number of employees could be as low as 10 people or even lower.
• A 2004 study by Gallup found that, manufacturing SMEs employed more than 1.2 million people, making up about 70% of the total labor force in the manufacturing sector.
• In Pakistan, small-sized enterprises typically have between 10-35 employees while medium-sized enterprises typically have between 39-99 employees.
• As with the broader manufacturing sector, the manufacturing SME sector is not homogeneous, but rather consists of a number of sub-sectors, each with diverse needs and characteristics. The sub-sectors are involved in the manufacture of: apparel; food products and beverages; basic metals; tanning and dressing of leather; fabricated metal products; chemical and chemical products; luggage and footwear; rubber and plastic products; paper, paperboard and products; medical, precision and optical instruments; watches and clocks; other nonmetallic mineral products; and sports goods.
• The activities from small scale manufacturing account for about 13.7% of total manufacturing, and 2% of the Pakistani GDP.

Nature of Businesses

• The SME manufacturing sector can be broadly classified in two, namely: household units and small units.
• Household units operate from the owner's house, mostly employ family members, and about 78% of them are found in rural areas. According to the Gallup study, there were approximately 160,000 such manufacturing units in the country in 2004.
•  Small units do not operate from the owner's residence but are (also) not registered under the Factories Act, typically employ less than 10 people, and 53% of them are found in urban areas. According to the Gallup study there were approximately 265,000 such manufacturing units in the country in 2004.
• Presently, there are approximately 800,000 manufacturing or industrial SME units in Pakistan, of which 41% of these industrial units are in urban areas and 59% are in rural areas.

Challenges Faced by the Sector

• Access to finance: a study that examined the flow of credit to Pakistan’s manufacturing SMEs found that the share of total industry credit declined drastically from 35% to 16% between 2006 and 2014. It also found that credit is concentrated in a few sub-sectors, mainly textiles and food products and beverages. Additionally, there is "significant information asymmetry" in the SME sector making it difficult for SMEs to apply for credit and other financial services from the 175 financial institutions in the country.
• Competition: due to stiff competition manufacturers turn to destructive pricing practices in order to attract customers, which leads to negative effects for the whole industry. The situation is exacerbated by the lack of competition laws in Pakistan.
• Other challenges include challenges in exportation due to lack of knowledge and relevant capabilities; high costs of doing business that affect profit margins and business sustainability; and use of out-dated technology and old methods of production.

Key Opportunities for the Sector

• The Ministry of Industries and Production in consultation with the Small and Medium Enterprises Development Authority (SMEDA) has prepared a draft National SME Policy, 2019. The policy is intended to serve as the Government of Pakistan’s master plan for providing support to catalyze growth in the SME sector. The policy will apply to all SMEs and the manufacturing SMEs will therefore also receive needed assistance in accessing finance, reduction of cost of doing business, and other facilitative initiatives.
• Only 26% of manufacturing SMEs export their products due to such factors as insufficient knowledge or awareness of the dynamics in international trade. With adequate support from the government and other organizations, there is an opportunity for Pakistani SMEs to export their products through such initiatives/programs as the Export Promotion Bureau of Pakistan.

Overview

• The manufacturing sector accounts for 5% of SMEs in the UAE. These include micro, small and medium businesses that are involved in manufacturing activities.
• Between 2015 and 2018, the sector registered a CAGR of 5.9%. In 2018 the number of SMEs issued with manufacturing licenses in the country was 9.7% higher than those of the previous year.

The Typical Number of Employees

• The average number of employees hired by UAE SMEs in the manufacturing sector varies with the size of the enterprise. For instance, micro firms hire an average of 9 or fewer workers while the workforce for small and medium enterprises ranges between 10-100 and 101-250 employees respectively.

Types of Activities they are Involved In

• The SMEs are involved in manufacturing structural steel products, wood products, furniture, paper products, pipes, wire products, electrical equipment, electronics, machinery, and transport equipment.

• Statistics show that SMEs involved in manufacturing structural steel products grew by 66.3% between 2015 and 2018. Moreover, firms that make wood and paper products increased by 61.8% and 41.5% respectively, in the same period.

Typical Nature of their Business

• According to the 2019 report on The State of Small & Medium Enterprises (SMEs) in Dubai, SMEs in the manufacturing space make products for both export and internal consumption. 80% of these SMEs export their products while 20% do not.

• Statistics show that between 2013 and 2019, the number of exporters in this sector increased by 1.5 times. The key markets where these companies export their products are the Gulf Cooperation Council (GCC) region, Middle East, Africa, and Eastern Europe.

• These SMEs use various approaches to promote their international operations. These include the cross-border supply of goods (95%), commercial presence in markets outside UAE (16%), temporary presence of employee(s) in target international markets (21%), and technical collaboration with other firms outside UAE (59%).

Key Opportunities in this Sector

• Only a small percentage of companies in this sector have export contracts with markets outside the UAE. This means that with strategic planning, the companies can tap more export opportunities for their products.
• Also, with only 54% of the companies implementing innovation activities, there are more opportunities for these firms to introduce new products or improve existing ones. This can go a long way in enhancing market penetration and revenue growth.

Challenges Facing Companies in this Sector

• Research shows that manufacturing SMEs in the UAE lack programmatic support to enable them to increase their exports. This has led to a low penetration rate in the export markets.
• For instance, companies in this sector that have export contracts in Africa are 12%. Additionally, only 21% and 11% of the firms have export contracts in the Middle East and Eastern Europe respectively.
•  40% of SMEs in this sector lack information on how to access the export markets. Moreover, 30% of exporters cite the high costs of cross-border operations as a major hindrance to international trade.
• Banks in the region prefer to lend to large companies as opposed to SMEs as they are considered high risk. Thus, most manufacturing SMEs (94%) fund their businesses with retained profits. Only 39% of companies use bank financing as a source of funding.

Number of Employees

• The definition of an SME in the UAE is “an enterprise that meets the thresholds of Employee Headcount and Turnover” as applied in its specific sector. Businesses are required to meet both parameters in order to qualify for the SME classification.
• Within the ‘Services’ industry, SMEs fall in these three categories, namely micro, small, and medium-sized enterprises. Micro-businesses have <=20 employees and a turnover of <=AED 10 million; small businesses have <=100 employees and a turnover of <=AED 100 million while medium-sized businesses have <=250 employees and a turnover of <=AED 250 million.

Activities

• An SME like Fetchr provides logistical services aimed at resolving the structural challenges faced in the UAE and most parts of the Middle East regarding mail delivery. The Dubai-based start-up company uses the concept of geolocation to enable customers to locate the pick-up and drop-off points. Fetchr's drivers use the client’s GPS location as an address to deliver the client’s package.
• For PR firm Inara PR, the gig workers provide a wide range of services to clients, including client communication needs, media coaching, and specialized requirements.

Nature of Business

• The leading SMEs in UAE’s ‘services’ sector spread across the travel and tours, ICT, transport and logistics, restaurants and catering, construction and contracting, professional services, and business services.
• Preliminary research established that most of UAE's 100,000 licensed freelancers provide transportation and logistical services. This insight is developed from the trends set by Uber and Deliveroo in the UAE though these two are not SMEs.
• The public relations and communications domain is another area where gig work is slowly gaining traction.
• The media industry is also another area where gig workers are finding employment, as most media houses close down and require their employees to work remotely due to COVID-19.

Key Opportunities

• The move by the Ministry of Human Resources and Emiratisation (MoHRE) to introduce a part-time working resolution to allow workers to work for more than one employer widens the scope for gig workers to get more jobs.
• Moreover, employers are also opening up to the idea of the gig economy. Research conducted by Oracle found that 64% of HR professionals in the UAE believe the gig working model will confer substantial benefits such as long-term cost reduction associated with the recruitment and training of employees. Another 48% of HR leaders felt that the gig economy would contribute to the development of a broader and more specialized range of skills.
• These findings suggest that the ground is gradually shifting, thereby creating a conducive environment for the rapid adoption of the gig economy model.
• The travel and tourism sector plays a crucial role in the UAE’s economy, accounting for 58% of services exports in 2015. With the latest data showing that the travel and tourism segment is expected to “become a key driver of the UAE’s growth between now and 2030,” this sector is a potential job source for gig workers.
• According to Ahmad Abdelaal, Regional Head of Corporate Clients Coverage MENA and Head of Commercial Banking, growth in the services sector—and especially within the travel and tourism segment—will be driven by technological advances, falling travel costs, and rising consumer spending.

Challenges

• The gig workers’ services sector is not wholly compatible with the UAE’s employment landscape. The country’s employment rules stipulate that in order to work and reside in the UAE lawfully, an expatriate “must be sponsored by a locally licensed and registered entity for UAE work permit and residency visa purposes.”
• This sponsorship is location and employer-specific, which means a worker can only work for the sponsoring employer and at the place where they obtained their visa.
• Gig workers offering transportation services are viewed as independent contractors. For this reason, they do not have the same rights, protections and benefits as regular employees. This trend favors the gig economy employer, not the worker.

Research Strategy

Number of Employees

• According to Payoneer’s Global Gig Economy Index, Pakistan has one of the fastest growth rates in terms of freelancer earnings. It is ranked fourth out of the top 10, globally. This data is presented by Payoneer, a digital money transfer service. 
• During the second quarter of 2019, in comparison to data from the same period in the previous year, freelancers saw a 47% increase in earnings. When comparing data from 2017 to 2019, the number of freelancers increased by an average of 42%, every year. 

• In a news article, the Punjab Information Technology Board stated that an estimated 150,000 people offer services on e-lancing platforms. 
• As Pakistan makes it to the fore-front of the global stage, it has become the third most-popular country to for outsourcing freelancers, virtually. Although India and Bangladesh lead the way, Pakistan is still ahead of the US and the Philippines.

Typical Types of Activities

• The activities in the gig economy may range from web development, crafts, or businesses. This job type is suitable for any age and enhances a healthier work-life balance. 
• Statistics have shown that the gig economy in Pakistan is primarily in these fields/industries. Software development and technology, sales and marketing support, creative and multimedia, clerical and data entry, writing and translation, and professional services.

The Nature of The Business

• The younger population is dominating the gig economy in Pakistan, resulting in the 47% expansion. 70% of Pakistanis in this industry are under 30 years of age. Additionally, 77% of the revenue generated in this industry was by freelancers aged 35 and below.
• This industry continues to thrive because of the notable increase in high-speed broadband, improvements in science, and improvements in technical education.

• The younger generation is driving growth as they seek for alternative work opportunities because of the domestic market's under-development.

Key Opportunities

• The government of Pakistan has paved the way by investing in the improvement of the digital skills of its citizens. These investments have empowered several individuals to earn a living. As 4G and broadband is rolled out to most of the country, freelancers now have increased access to various jobs.
• Although women make up only 25% of the labor market, the gig economy provides the flexibility that would be deemed convenient. Pakistani women are joining the 'sharing' economy, giving them a chance to be the breadwinner.

Challenges

• One major barrier is the low level of literacy in Pakistan. Additionally, people can use smartphones and laptops, keeping them connected, to these devices. The literacy level has declined: from 60% to 58%.
• Although women make up half of Pakistan's population, the workforce here has not been distributed unevenly. This country has the second largest gender gap, ranking 143 of 144. 

Research Strategy

Number of Employees

• In South Africa, a small business is one with 11-50 employees, while a mid-sized company can have 51-250 employees.
•  Reed Exhibitions has between 51 and 200 employees, Black Snow Projects and Events has 15 employees, Conference Consultancy has 10 employees, and The Event Planners has 18. Both espAfrika and 360 Degrees Production House have 16 employees, and TheSQUAD Creative Events has between 2-10 employees.

Typical Activities

•  The Event Planners state that they specialize in conferences and seminars, team building activities and corporate getaways, product launches, year-end functions, gala dinners, award ceremonies, and travel and accommodation, among others.
•  Conference Consultancy states they have conference planning, meeting planning, event planning and management, and conference training (including financial, risk, and project management, procurement, communication, marketing, sponsorships, exhibitions, and health and safety management).
•  TheSQUAD Creative Events specializes in corporate events, video, events, lighting design, decor, and couture catering.
•  Black Snow Projects & Events focuses on corporate events, events management, brand activations, event launches, and exhibition consulting.

Typical Nature of Business

• Reed Exhibitions is Southern Africa’s top venue management company and exhibition organizer, "with access to global trade and consumer event organizing expertise serving 44 industry sectors," and providing one of the best platforms for all industry sectors. They are dedicated to "producing world-leading exhibitions."

• The Event Planners pride themselves on giving clients the most memorable corporate events possible. They work to ensure events run flawlessly and efficiently, understanding that every function, launch, and gala dinner is an "extension of corporate image and philosophy."
• TheSQUAD Creative Events is on a mission to "produce brilliantly planned, well executed, events containing an element of surprise." The company wishes to leave a "lasting, uplifting legacy, as well as telling beautiful stories" with their work. They are event experts that strive for events with a tangible outcome, leaving a memory that lasts, and meeting creative challenges.
• Conference Consultancy South Africa has a team of skilled professionals to plan and manage any event. They specialize in macro meeting management, or medium to large conferences, with an "innovative, responsible, sustainable and client orientated" approach.

Key Opportunities in the Sector

• According to Trading Economics models and analysts expectations, population in South Africa is expected to grow to 59.83 million by the end of this year, and is projected to trend around 60.88 million in 2021 and 61.93 million in 2022. This population growth provides ever growing opportunities for more customers and potential business for event companies in the region.
• The Public-Private Growth Initiative and Tourism Business Council’s Tourism growth strategy formed in late 2018 shows a growing awareness of the potential for the growth of the tourist market in South Africa. With the right environment, the region believes it can double the number of international as well as domestic travelers, as well as increase the tourism sector's jobs and opportunities. This growth in tourism is a great opportunity for the event planning industry in the region, as many tourists will be traveling to the location for special occasions.

Challenges in the Sector

• There are several challenges which are faced by SMEs in general in the area including poor infrastructure, access to finance and credit, low levels of research and development (R&D), imposing labor laws, inadequate education for the workforce, high levels of crime, and lack of access to markets.
• Recent events with COVID-19 have placed significant strains on the region's economy, including the event planning and services sector. With the region recently reopening, it will be an indefinite and unknown amount of time until not only the region but the globe can recover enough financially for this sector to begin to thrive and grow in the region again.

The Typical Number of Employees

• Egypt ranks 10th out of the top 20 home gig workers in the global freelance economy.
• According to 6CATS International, in 2018, there was a 73% increase in the number of freelancers that were hired from January to May in Egypt.
• The gig economy contributes about 40% to Egypt's GDP.

The Typical Types of Activities

• From graphic design to translating, more Egyptians are finding a source of income in the gig economy. Other typical types of activities that they are involved in include marketing, bank editing, content writing, and driving in the ride-hailing services.
• The top activity among gig workers in Egypt according to an online labor index is software development and technology. Writing and creative/multimedia activities follow closely behind.

The Typical Nature of Their Business

• Gig workers tend to work in a sector that provides flexible working hours and the ability for one to become his or her own boss.
• The sector tends to pay less than what full-time workers receive, and most companies do not offer contracts. Some employers argue that giving contracts is a complex process that would take a long time to accomplish and force the worker and company to pay taxes, something workers would prefer not to do. Although the law in the country requires businesses to offer contracts, many don't obey the law as not doing so provides them with better freelancing deals.
• The gig workers services sector in Egypt tends to pay its workers in cash as workers prefer this kind of payment, as the income tends to bypass taxation. According to the Egyptian lawyer Abdallah Ahmed, gig workers and companies are required to provide the government with information on their activities and pay taxes, if they earn income that is above a certain threshold.
• The rising number of gig workers in Egypt has led to the popularity of freelancing websites that connect gig workers with companies. The websites ensure that clients pay gig workers the amount that was agreed on as soon as the task is completed. Many freelance websites do this for free. However, although they don’t charge a registration fee, some sites, such as FreelanceME and Upwork, charge gig workers a 5-20 percent of their income. Tutorama is another Egyptian online platform that connects students and private tutors from the country.

Key Opportunities in This Sector

• According to Freedom House, the internet connection in Egypt suffers from poor quality and low speeds. In March 2019, internet penetration in the country was 48%, up from 41.2% in 2017. The International Monetary Fund argues that expanding internet access to all Egyptians could enable women to take advantage of opportunities in the gig economy which offers flexible work arrangements as they do "5.4 hours per day of unpaid work, compared to men who do only 35 minutes."
• Companies such as Freelance Global Gigs now provide more than 97% of languages from all over the world into and out of Arabic. They enable people to sell or buy gig services over the internet in Arabic, and the posts are translated into more than 100 languages. This is a key opportunity as it provides the Arabic speaking world, including the Egyptian population, with access to freelance global gigs and an equal opportunity in the labor market.

Challenges in This Sector

• The lack of development for gig workers in Egypt is a big challenge. This is because gig workers do not get the opportunity to train and take courses as those employed by companies. Companies invest in their employees but gig workers must invest in themselves and pay for their own development, which can often be costly. The lack of development disadvantages gig workers, pushing them to the back of the ladder in the job market.
• Gig work is seasonal in Egypt as workers don't always have a constant flow of work and cash. The sector provides reduced access to benefits or secure employment. To overcome the challenge, gig workers must effectively manage their finances so that they end up with nothing to spend over the long run. This challenge can be dealt with when workers learn how to spot patterns in the availability of work and adjust accordingly.
• Gig working involves working for long hours in solitude and can lead to one being isolated and depressed. Those who work from home often find it difficult to differentiate between a rest space and a workspace and this can lead to workers getting tired and agitated.

Research Strategy