SME Business Segments

Part
01
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Part
01

SME's - Wholesale Trade Sector: UAE

The wholesale trade sector for SMEs in the UAE is a complex area. Two emirates of the UAE (Dubai and Abu Dhabi) have significant numbers of SMEs but different ways of defining them. The other five emirates appear not to have developed accessible plans for SMEs until the last two or three years, and published very little information about them. Presented here are the differences between the Dubai and the Abu Dhabi SMEs, and an explanation of the required information needed to determine a business's proper category. Challenges to UAE SMEs in general are listed, along with opportunities.

Background of the UAE and the Wholesale Trade Sector

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

Locating information on SMEs in the seven emirates of the UAE proved to be difficult. We were able to provide information for only two of the seven emirates, despite a vigorous search for materials about SMEs in the other five. We searched through materials from UAE and US governments, trade organizations, industry publications, blogs, statistical reports, marketing summaries, and language discussions. The UAE concept of business is different from the US concept, and that complicates the task of writing about the UAE findings. The list of UAE wholesale activities that we found extended to 20 pages, with about 40 entries per page, so there was not a simple way to summarize that extensive range of activities to characterize the "typical nature of their business." See source 14 for a sampling of 20 of the categories of wholesale trade from the UAE directory. Understanding how to do business in the UAE would seem to require an extensive investment of time and concentration for development of mastery.



Part
02
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Part
02

SME's - Wholesale Trade Sector: Pakistan

Wholesale SMEs in Pakistan employ an average of 25 employees. Companies in this sector mostly have operating activities, with little finance or investment activities. They are active in a multitude of sectors such as the food and drink industry, the drug and chemicals industry, as well as the energy and steel industry. The sector is challenged by a lack of access to finance, skilled workers, and power outages, but has opportunities to grow thanks to the government's new policies, and the implementation of IT systems to gather information.

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.

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

4) Wholesale SMEs Nature of Business

Wholesale SME companies in Pakistan are involved in the following sectors:
  • 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

As most information about Pakistan considers both retail and wholesale sectors together, specific information about wholesale SMEs was scarce. However, we found a list of 317 wholesale companies in Pakistan in an industrial database. To filter the SMEs from the large companies, we used the threshold revenue of $5 million. We used this filtered results to derive the information for the first three questions. Out of these 317 companies, around 212 have a revenue equal or inferior to $5 million. The typical number of employees has been obtained by averaging the number of employees for a sample of 50 companies (25 with the highest revenue and 25 with the lowest revenue, excluding companies over 100 employees) which starting from SONRAJ INTERNATIONAL (PRIVATE) LIMITED to Capricorn Associates (their employee numbers are : 12, 29, 49, 26, 28, 28, 28, 45, 30, 30, 30, 39, 26, 15, 21, 17, 26, 20, 39, 30, 28, 12, 24, 20, 20 and their average is 672/25=26,88) and then from GREATPAK SCIENTIFIC COMPANY to SUN IMPORTERS and EXPORTERS (their employee numbers are: 8,12,8, 11, 4, 6, 10, 9, 6, 5, 3, 3, 5, 4, 3, 24, 4, 4, 25, 1, 75, 7, 30, 12, 35 and their average is 314/25=12,56). In Pakistan, most of the information about challenges and opportunities is related to SMEs in general, without making a distinction between sectors. Therefore, we made the assumption that they would also apply to wholesale companies.
Part
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Part
03

SME's - Wholesale Trade Sector: South Africa

The wholesale trade sector in South Africa represents a very large share of the country's SMEs. Most of these businesses are focused on textiles and agriculture, have fewer than 5 employees, and are considered informal. Additional findings surrounding their activities, opportunities, and challenges are detailed below.

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.

Part
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Part
04

SME's - Wholesale Trade Sector: Egypt

Limited information was publicly available specific to wholesale trade SMEs in Egypt. They typical number of employees could not be defined. Some detail about the number of employees in SMEs in Egypt is noted below. Information about the typical activities was able to be provided. Detail about opportunities and challenges for SMEs in Egypt are given, however, these are also not specific to wholesale trade SME due to the limitations on the information available.

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

The opportunities found that SMEs could benefit from were not specific to wholesale SMEs in Egypt but these companies are likely to be able to benefit from the ones noted below:
  • 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

The research looked at official websites like The Central Agency for Public Mobilization and Statistics and The ministry of finance Egypt. However, although they were found to produce various charts and figures in relation to SME companies there was nothing that defined the information requested. Central Bank of Egypt website have completed studies but again they did not provide the specific information requested. The chamber of commerce website was reviewed for details as well as news articles to find detail relating to the wholesale trade SMEs in Egypt. Reports were found which gave some detail regarding SMEs, the opportunities and challenges, however, there was limited publicly available information which was about wholesale trade SMEs.
Part
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Part
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SME's - Retail Sector: Egypt

Retail SME's account for nearly 57% of all small businesses in Egypt. Single-owner retail SME's account for 32% of all retail SMEs in Egypt. The CBE has directed commercial banks to award 20% of loans in their portfolio to SMEs. Some challenges faced by the sector include inefficient funds utilization.

https://egyptianstreets.com/2020/05/16/protecting-small-businesses-and-reducing-unemployment-egypts-covid-19-recovery-efforts/

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.
Part
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Part
06

SME's - Retail Sector: South Africa

This report provides information on SMEs in the retail sector in South Africa. While not all available information related to the retail sector, the wholesale or retail sector is the largest one in the country. Most of them engage in buying products and selling them in the same form. Online sales are increasing, but support from the government is lacking. Full details are provided below.

Retail SMEs in South Africa

Calculations

To determine the average number of employees, the following calculations were performed:
685,264 micro firm employees + 1,549,411 small firm employees + 1,628,429 medium firm employees = 3,863,104 people
3,863,104 people / 267,959 firms = 14.4 people
Part
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Part
07

SME's - Retail Sector: Pakistan

SME's that sit within the retail sector in Pakistan typically have less than 100 employees and are mostly family owned. 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. Pakistan has plans in place to improve the performance of SME's that sit within the retail sector.

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

Opportunities

Challenges


Part
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Part
08

SME's - Retail Sector: UAE

Small and Medium Enterprises (SMEs) are the UAE's economic backbone considering they account for at least 94% of all registered companies in the country. SMEs contribute 40% towards UAE’s GDP and employ approximately 72% of the country’s labor force. The UAE has approximately 350,000 SMEs employing 3.4 million workers.

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

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

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.

Part
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Part
09

SME's - Restaurant/Food and Accommodation Sector: UAE

The research analyzes the hospitality industry of the UAE, where restaurant and accommodation sectors represent the bulk of the business activities. The hospitality industry has contributed a relatively small percentage to UAE's GDP, but the SME businesses are expected to be the growth driver of the industry in the future. In addition to existing business challenges faced by SMEs, recent COVID-19 global pandemic has cast a negative impact on industry growth.

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

The research focused on the hospitality industry in the UAE and reviewed a variety of research reports and news, regarding the activities and contribution of SME businesses to the industry. As information is some cases on the industry or sectors in general, we treat them applicable to SMEs as well, such as industry opportunities and challenges.
Part
10
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Part
10

SME's - Restaurant/Food and Accommodation Sector: Pakistan

Food SMEs in Pakistan are facing an influx of smuggled food products from India, lack of financing, shortage of qualified labor, marketing/sales challenges, corruption, and problems finding business sites. Below is an overview of the findings.

Typical Number of Employees

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

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

The research team searched for information on the typical number of employees, types of activities, nature of business, key opportunities, and key challenges within the restaurant/food and accommodation sector in Pakistan. Our research entailed searching through the public domain for any data from media, SME-focused resources, and industry resources, surveys, and reports. Our research produced some information on food SMEs in Pakistan; however, we noticed that they all seemed to rely on the Small & Medium Enterprises Development Authority (SMEDA) for information. There was nothing on the accommodation segment. We, therefore, scoured through SMEDA to find the required information. Our research only produced insights on the food segment, and there was totally nothing regarding the accommodation/hospitality sector despite searching through all industry classifications. We have provided information on the restaurant/food SMEs in Pakistan. Notably, we have had to rely on some older sources and some information on the general SME sector in Pakistan because of there were no recent sources in most cases.
Part
11
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Part
11

SME's - Restaurant/Food and Accommodation Sector: South Africa

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 workers. The SMEs in the sector are involved in activities related to providing food and beverage products to customers. The activities include serving food, sales, bar services, among other activities. 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.

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 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.
Part
12
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Part
12

SME's - Restaurant/Food and Accommodation Sector: Egypt

Hotels and restaurants are the main sub-sectors of the restaurant, food and accommodations industry in Egypt. In 2018, the industry accounted for 11.9% of the country's GDP, with a CAGR of 6.2%. 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.

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.


Part
13
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Part
13

SME's - Manufacturing Sector: Egypt

The manufacturing sector accounts for 51.1% of SMEs, and 16% of all firms in Egypt. Based on our findings, there are approximately 77 workers employed by a typical manufacturing SME. This sector comprises of food production (46.6%), followed by apparel (9.6%), and other non-metallic mineral products (6.5%). Some of the key challenges faced by the industry include access to finance, and regulatory pressures.

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.
Part
14
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Part
14

SME's - Manufacturing Sector: South Africa

In Q1 of 2019, manufacturing small and medium-sized enterprises (SMEs) in South Africa employed about 953,905 workers, equivalent to 8.8% of the total composition of SMEs in the country. Some challenges facing the manufacturing sector, specifically regarding SMEs include high competition, low investments in research and development, poor market access, among other examples.

SME's — Manufacturing Sector: South Africa

Research Methodology

Your research team explored different SMEs reports that focus on the manufacturing sector of South Africa. We came across reliable reports such as those published by the Savannah Economic Development Authority (SEDA), along with other reports published by South African Market Insights, SMEs South Africa, Business Wire, and Biz Community. These reports featured comprehensive analyses of the South Africa SMEs landscape, including opportunities and challenges facing the manufacturing sector. We also checked information published on the official business and finance articles, blogs, and news releases to unearth more detailed findings regarding the sector. Overall, the sources examined provide an in-depth overview of the performance of the industry, along with opportunities available and the challenges to overcome.
Part
15
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Part
15

SME's - Manufacturing Sector: Pakistan

Businesses in the manufacturing SME sector in Pakistan account for 2% of the country's GDP, and the sector is made up of different sub-sectors including textile, manufacturing, and metal fabrication. A manufacturing SME employs 250 people or fewer, and these SMEs are broadly categorized as either household units or small units. A detailed overview of the research findings follows below

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.
Part
16
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Part
16

SME's - Manufacturing Sector: UAE

Manufacturing SMEs in the UAE include micro, small, and medium enterprises. The firms are involved in various activities such as manufacturing of structural steel and paper products. They also focus on both internal and export markets. The following is an in-depth analysis of these companies.

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.
  • 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

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.
Part
17
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Part
17

SME's - Gig Workers Services Sector: UAE

The gig economy—based on short-term, flexible jobs—is expanding across the world. In the UAE, the nature of the employment landscape continues to hinder the development of ‘gig work.’ However, experts contend that the allure of a flexible working model and a fluid talent pool could drive the growth of the ‘gig workers’ segment in the UAE. The information obtained for SMEs sitting within the gig workers services sector is as follows:

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

The gig economy model is only just finding footing in the UAE. The sources reviewed in this research underscored this point, hence the inability to develop an exhaustive list of SMEs sitting within the gig workers services sector.
Part
18
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Part
18

SME's - Gig Workers Services Sector: Pakistan

This research presents insights into the gig economy in Pakistan. This research will focus on factors such as the number of employees in the gig economy, the types of activities, the nature of business, key opportunities, and threats/challenges.

Number of Employees

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

Our research team was unable to find data/information for Pakistan that was specifically for SMEs within the gig economy. Our thorough research of industry reports from trusted institutions like the World Bank and trusted news media sources like the Forbes revealed that there are insights into the general gig economy. The findings that we have presented are exclusive to Pakistan.
Part
19
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Part
19

SME's - Gig Workers Services Sector: South Africa

This research examined the following top event companies to form a typical view of companies in the sector: Reed Exhibitions, Black Snow Projects and Events, Conference Consultancy, The Event Planners, espAfrika, 360 Degrees Production House, and TheSQUAD Creative Events. Each of these companies fit the requirement to be classified as a small to mid size enterprise or SME, and were chosen as representative companies based on their presence on the top of the list in a local search in South Africa for event companies, as well as the high ratings they have received by customers.

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.
Part
20
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Part
20

SME's - Gig Workers Services Sector: Egypt

The typical types of activities that gig workers in Egypt are involved in include marketing, content writing, and driving. The sector tends to pay less than what full-time workers receive, and most companies do not offer contracts. Expanding internet access to all Egyptians could enable women to take advantage of opportunities in the gig economy. One challenge in the sector is that gig work is seasonal and workers don't always have a constant flow of work and cash. Detailed information is below.

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

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

The research team was unable to find data for Egypt that was specific for SMEs within the gig economy. Thorough research of trusted news media sources like Forbes and industry reports from trusted institutions like the International Labor Organization and the International Monetary Fund revealed that information on the general gig economy is available. The findings that we have presented are exclusive to Egypt.
Sources
Sources

From Part 01
Quotes
  • "Definition: 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. This corresponds to the NACE Rev. 1 Division wholesale trade and commission trade, except of motor vehicles and motorcycles. It includes the following Groups: — wholesale on a fee or contract basis; — wholesale of agricultural raw materials and live animals; — wholesale of food, beverages and tobacco; — wholesale of household goods; — wholesale of non-agricultural intermediate products, waste and scrap; — wholesale of machinery, equipment and supplies; — other wholesale. "
Quotes
  • "The wholesale and retail trade sector is the largest contributor to Dubai’s GDP, with an estimated share of about 25–30% in 2016."
  • "For the wholesale sector, Dubai Municipality has initiated projects worth AED 530 million toward the development of food consumables storage and marketing facilities. As the Emirate’s climate is not suitable for growing crops, most of the fruits and vegetables are imported to meet the local demand. Per capita meat and fish consumption is also among the highest in the region. Hence, storage is of utmost importance to meet the growing demand."
  • "Dubai Wholesale City has been planned with an investment of AED 30 billion to service key global traders. This new global hub will comprise specialized integrated trading parks that meet all the requirements of wholesale traders under one roof, while also providing an international trade facility. In spite of all these measures, dependency on expatriate workforce, high cost of doing business, and threat of counterfeits pose challenges for this sector."
  • "The key drivers of the wholesale and retail industry in Dubai are 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."
Quotes
  • "Contribution of the Wholesale and Retail Trade to GDP The wholesale and retail trade’s significant growth is reflected in the increase in its share of GDP over time. In 2017, this sector repre-sented 26.6 per cent of GDP (in constant prices), the largest sector share of GDP, although it fell by 1.8 per cent from of 27.1 per cent in 2016. (Figure 5.1)"
  • "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. The services sector as a whole is the largest contributor to the GDP of Dubai, with 79.7 per cent in 2017 compared to 78.9 per cent in 2014. This contribution has not been less than 78 per cent of GDP since 2010. Wholesale and retail trade activities accounts for about one-third of the total services sector, as shown in. (Table 5.1)"
  • "Wholesale and Retail Trade as % of GDP 2010. 27.0. 2011 28.0 2012 27.4 2013 28.1 2014 27.5 2015 27.8 2016 27.1 2017 26.6"
Quotes
  • "The UAE is a federation of seven emirates (Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Qaiwain, Fujairah, and Ras Al-Khaimah). The individual emirates founded the UAE in December 1971. Over the last 38 years, the UAE has developed into the second largest economy in the Arab world."
  • "Despite possessing substantial petroleum reserves, the UAE has pursued free market, trade liberalizing policies to diversify its economy away from a dependence on fossil fuel. Rapid growth in the nonoil economy reduced oil's share of GDP from 60 percent in 1980 to 35.8 percent in nominal terms in 2007. The U.S. and UAE entered into a Trade and Investment Framework Agreement (TIFA) in 2004, which established a formal dialogue to promote increased trade and investment between the two countries."
  • "United Arab Emirates is currently our 30th largest goods trading partner with $24.6 billion in total (two way) goods trade during 2018. Goods exports totaled $19.5 billion; goods imports totaled $5.0 billion. The U.S. goods trade surplus with United Arab Emirates was $14.5 billion in 2018."
  • "U.S. goods exports to United Arab Emirates in 2018 were $19.5 billion, down 2.4% ($471 million) from 2017 but up 35.6% from 2008. U.S. exports to United Arab Emirates account for 1.2% of overall U.S. exports in 2018."
  • "The top export categories (2-digit HS) in 2018 were: aircraft ($3.8 billion), vehicles ($2.6 billion), electrical machinery ($2.6 billion), machinery ($2.4 billion), and precious metal and stone (diamonds) ($1.4 billion). U.S. total exports of agricultural products to United Arab Emirates totaled $1.0 billion in 2018. Leading domestic export categories include: tree nuts ($304 million), hay ($88 million), prepared food ($77 million), other snack foods ($62 million), and beef & beef products ($60 million)."
  • "The top import categories (2-digit HS) in 2018 were: mineral fuels ($1.5 billion), aluminum ($1.5 billion), special other (returns) ($789 million), precious metal and stone (diamonds) ($199 million), and iron and steel products ($142 million). U.S. total imports of agricultural products from United Arab Emirates totaled $33 million in 2018. Leading categories include: snack foods ($7 million), processed fruit & vegetables ($5 million), live animals ($4 million), tea, including herb ($3 million), and essential oils ($2 million)."
Quotes
  • "So why are SMEs so important for Abu Dhabi? The Emirate 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% of all companies in the typical market economy are SME. "
  • "Abu Dhabi’s SME sector is about the same size—98%, if micro enterprises are counted in the SME basket. Although SMEs generate less economic activity in Abu Dhabi. The sector accounted for 29% of GDP, or 44% of the nonoil economy (counting in micro enterprises again). As a comparison, the SMEs in the US economy account for close to 50%. "
  • "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. "
  • "The United Arab Emirates (UAE) government has issued a definition for SMEs with the two relevant criteria being annual turnover and the number of jobs. "
  • "In addition, SMEs are classified depending on the sector they are operating in—trading, manufacturing, and services. Different thresholds apply for a company to classify it as a SME. Manufacturing enterprises tend to be larger in terms of annual revenue and the number of jobs compared with the average trade or services enterprise ("
  • "Based on that definition, 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."
  • "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. "
  • "The UAE Competitiveness and Statistics Authority estimated the size of the SME sector at 53% of the UAE economy in 2019—up from 49% in 2018. The federal government wants to lift that share to 60% in 2021"
  • "Employment in SMEs has been higher in the overall economy compared with the SME contribution in terms of GDP. Of all employees in the Abu Dhabi economy, 43% received their main salary from a company categorized as a SME in 2017, which compares with the 29% share for total gross value added. "
Quotes
  • " SMEs account for 95% of the enterprise population in Dubai and are responsible for 43% of the total workforce and 40% of the total value added in the emirate. This is based on the official definition of SMEs unveiled by Dubai SME in 2009, which serves as a reliable metric to estimate and ascertain the size and state of the Dubai SME sector and compare it with other economies. "
  • "An SME in Dubai is defined as any enterprise which meets the thresholds of Employee Headcount AND Turnover, as applicable to the sector it belongs to (Trading / Manufacturing / Services). Further, the classification of enterprise size (Micro, Small and Medium), is based on unique thresholds for each sector."
  • "an enterprise is defined as ‘an entity engaged in an economic activity, with a legal form i.e. registered as a business either with a Commercial Registry (e.g. DED) or with a free zone / industrial zone authority. "
  • "Services. Micro Small Medium Employees <=20 <=100 <=250 Turnover<=AED 10mn <=AED 100mn <=AED 250mn"
  • "Within Services: • 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. • 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. • 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 .• Any enterprise with greater than 250 employees OR turnover greater than 150 million will be considered ‘large’"
  • "Based on the independence criteria three classes of enterprise can be defined: • Autonomous Enterprise 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%). 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. • Partner Enterprise Partner Enterprise – An enterprise which has partnerships with other enterprises involving participation greater than 20% and less than or equal to 50% 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% controlling stake in another enterprise, it must add 30% of the other enterprise’s headcount and turnover to its own figures • Linked Enterprise Linked Enterprise – An enterprise is considered to be ‘linked’ if it holds more than 50% controlling stake in another enterprise or the other enterprise holds greater than 50% controlling stake in the applicant enterprise. In this case, the employee head count and turnover of the applicant enterprise would be 100% consolidated with the corresponding numbers of the other enterprise."
  • "SECTION III. FINANCIAL HEALTH OF DUBAI’S SMESThis section provides a detailed analysis of the financial health of SMEs in Dubai based on an analysis of key financial ratios for a sample of SMEs across the Manufacturing, Trading and Services sectors. A sample of 307 SMEs is analyzed with the following sector-wise split: • 120 Trading SMEs • 157 Services SMEs • 30 Manufacturing SMEs"
  • "Services Sector Firms providing Real Estate, Renting and Business Services account for a majority (33%) of the Service firms in Dubai, followed by Construction & Contracting firms (at 27%). Another 17% of the establishments in the Services sector are Transportation and Telecommunications firms and around 10% belong to the Hotels and Restaurants sector. Further, 63% of the Service firms in Dubai have between 1 and 10 employees, while another 19% firms have between 11 and 25 employees. Real Estate, Renting and Business Services account for 34% of the gross value-add by the Services sector, followed by another 28% of gross value-add contributed by the Construction & Contracting industry.8 From 2009 to 2012, Real Estate, Renting & Business Services accounted for a majority (38%) of the new licenses issued within the Services sector9 followed by Construction & Contracting industry (accounting for 31% of the issued licenses). During the same period, the Tourism segment (excluding hotels) witnessed the highest growth (CAGR10 of 32%) amongst all the key segments within the Services sector"
  • "Trading Sector The key segments of the Trading sector in Dubai are Consumer Goods Trading, Textiles & Garments Trading, IT and Telecom Products Trading and General Trading.11 89% of the Trading firms in Dubai have between 1 and 10 employees, while another 9% employ between 11 and 25 workers.12 From 2009 to 2012, Consumer Goods Trading accounted for a majority (25%) of the licenses issued within the Trading sector, followed by Textiles and Garments Trading (accounting for 16% of the issued licenses). During the same period, licenses issued for Food & Beverage Trading witnessed the highest growth (CAGR of 30%), followed by licenses issued for General Trading (CAGR of 25%)."
  • "Contribution to Employment by SMEs15SMEs account for 42% of the total workforce in Dubai. Of this, Micro, Small and Medium firms account for approximately 14.6%, 16.4% and 11%, respectively, of the total workforce Service SMEs account for a majority (51%) of the total workforce employed within SME enterprises in Dubai, followed by Trading (33%). The Manufacturing sector is estimated to contribute another 16% to the total employment within the SME sector."
  • "Trading SectorThe margin ratios vary across various trading sub-segments, classified by product categories (as summarized in Table 3). Net margins are the highest in the case of SMEs engaged in the trading of building materials (net margin ratio ranges between 10-14%). Conversely, SMEs engaged in the wholesale of jewelry and precious metals have the lowest margins (net margin ratio between 2-7%). Although businesses trading in machinery and equipment have the highest gross margins (gross margin ratio ranges between 30-40%), their margins erode significantly at an operating level due to a high salary expense structure of these businesses (operating margin ratio ranges between 10-15% and net margin ratio ranges between 6-12%)."
  • "2 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."
Quotes
  • "Small and medium enterprises are the backbone of Dubai’s economy, represent-ing 99.2% of the number of establishments in the Emirate. These businesses play a pivotal economic role, accounting for 51% of the workforce and contributing around 46% of Dubai’s GDP"
  • "The total number of SME establishments in Dubai is estimated at 151,875 and has registered a 9% CAGR since 2008 when the SME business count was estimated at 72,695. Micro firms account for 61% of the total business count in Dubai, followed by Small and Medium firms, that account for 36% and 2% of the total number of enter-prises in Dubai, respectively. "
  • "In terms of the Segment-wise split, Services account for a majority of SMEs (48%), fol-lowed by Trading (47%) and Manufacturing (5%)."
  • "The Services Segment is the highest con-tributor (47% contribution) to the aggregate Dubai SME sector GVA aggregate. The Segment’s GVA contribution has gone up from 41% in 2008 to 47% in 2017. On the other hand, the proportionate GVA contribu-tion of Trading and Manufacturing SMEs has reduced by 3% each over the same period"
Quotes
  • "In the UAE, the second biggest GCC economy, SMEs are defined by number of staff and the annual turnover of the enterprise in trading, manufacturing and services sectors."
  • "A company with six to 50 employees and a turnover of Dh50m in the trading sector will be considered a small company. In manufacturing the requirement is 10 to 100 employees and revenue of Dh50m. In the services sector its between six and 10 employees and annual revenue of Dh20m, according to Dubai SME, the government body which facilitates development of SMEs in the emirate."
  • "In the trading sector a company with six 51 to 250 employees and revenues of Dh250m is considered a medium-sized company. For manufacturing the requirement is 101 to 250 employees and a turnover of Dh250m. In services it's 51 to 200 employees with a turnover of Dh200m. Any enterprise above that is a large company and below the threshold is a micro business in the country."
  • "Ensuring growth of the SME sector is at the top of the agenda for decision makers across the Arab world. Lenders in the aftermath of three-year oil price slump that began 2014 (but is now rebounding) tightened lending to SMEs impeding their growth or survival. But policy makers, including the International Monetary Fund’s Christine Lagarde are pushing for improved access to finance for SME businesses in the Arab world, that could boost regional economic growth by up to 1 per cent a year and generate 15 million new jobs by 2025."
  • "Ms Lagarde this week called on regional governments and financial institutions to help close the funding gap for SMEs, noting their access to finance is the lowest in the world: lending to SMEs in the region is only 7 per cent of bank lending."
  • "Within the UAE, there are several initiatives being implemented both at federal and emirate level. One example is Emirates Development Bank Dh100 million ‘Credit Guarantee Scheme’ for SMEs across the country."
Quotes
  • "Small- and medium-sized enterprises (SMEs) account for 94 percent of all companies in the UAE and 90 percent of the workforce, according to the Khalifa Fund for Enterprise Development."
  • "Their estimates suggest that there around 300,000 SMEs across the country and the UAE Ministry of Economy says that, together, they contribute 60 percent of the country’s GDP. The vast majority of them, 73 percent, are in trade and retail, while 16 percent of SMEs operate in services and 11 percent in the manufacturing sector, says the Khalifa Fund."
  • "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. But how they are defined depends on where you are in the UAE."
  • "Abu Dhabi definition of an SME 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."
  • "The Dubai SME definition According to Dubai SME, the definition is dependent on the sector the company operates in. A micro business in the trading sector, for example, is one with nine or fewer employees and a turnover of AED 9 million or less. However, in manufacturing, a micro SME is one with 20 or fewer employees, with a turnover of less than AED 10 million. In services, a micro business is one with 20 or fewer employees with a turnover of less than AED 3 million. There are also differences in small- and medium-sized companies."
  • "data on SMEs elsewhere in the UAE is scarce, but in Dubai they are highly export-orientated, with more than half, 51 percent, generating a “significant part” of their revenues outside the Emirates, according to a 2014 report by Emirates NBD. And the percentage is highest with trading SMEs, 68 percent of which have revenues from international markets."
Quotes
  • " What is the SME Programme? The National SME Programme was established according to Federal Law No. 2 of 2014 (Arabic, PDF 150 KB) under the umbrella of Ministry of Economy. The programme is supervised by the UAE SME Council to Empower Small And Medium-Sized National Entrepreneurs. The council coordinates with federal and local government bodies and the private sector to market the products of the national companies members of the National MSE program, and to provide them with benefits and incentives. "
  • "Benefits of the National SME Programme Below are some of the benefits of joining the National SME Programme: Business support - get access to facilities and incentives, as well as expertise, training, and administrative and technical support in various fields to develop the business. Participation in foreign exhibitions - receive a suitable space to display locally-made products at international exhibitions. Financing - members receive financial support to grow their businesses and overcome obstacles, allowing them to achieve better project returns and enhance their presence in local and foreign markets. Marketing – the programme coordinates with federal and local government bodies and the private sector to market the products of the National MSE program members, both inside at outside the UAE, and to provide benefits and incentives for members' projects. Providing information - members receive access to the programme's specialised database containing up-to-date information on foreign markets. This helps them to identify opportunities and make informed decisions. Business training - in coordination with the relevant entities, the programme provides training, seminars and workshops to empower and educate SME owners. "
Quotes
  • "A significant chunk of business in the shipping and logistics industry come from small and medium sized businesses. While the number of these SMEs are high, they also work with limited capital, thereby having limited exposure and access to international markets."
  • "However, even though they do want to ship internationally, 91 percent of them face challenges in doing so — from logistics to regulations — based on a global study including 100 UAE SMEs by Shipa Freight, reported by Logistics Middle East."
  • "However, they face a myriad of issues when shipping abroad. 49 percent of SMEs across the world site economic risk to be the heaviest burden, followed by 46 percent agreeing to political unrest. Trump-China trade war, for example, is a prominent example of this risk that has seen stock markets decline, customers becoming vary or additional tariffs and increasing end costs, and much more."
  • "On the contrary, for SMEs in the UAE, it is all about regulations. While the strict laws are to ensure compliance with international trade regulations and quality control, they often also pose an economic issue. The limited working capital of SMEs, insurance costs, delay in payments cause much harm to the continuity of business, leading to owners searching for loans"
  • "But loans too become difficult to issue, as the documents become challenging to assess owing to the complexity of international trade. These challenges have not gone unnoticed by the UAE government, who has eased regulations and introduced schemes to help SMEs grow their presence internationally."
  • "In fact, technology is the answer to helping SMEs cut down on costs and focus more on shipping and trade. Digitisation has seen SMEs around the world reduce costs and improve businesses. However, SMEs in the UAE have been slow to embrace and invest in technology. As per Shipa’s research, only 15 percent of them use online rate quotations and booking tools, which is the second lowest percentage after the UK."
Quotes
  • "His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai has launched the Dubai Wholesale City which is said to be the world’s biggest wholesale city in the region. The cost of development and investment for the city is Dh30 billion and will occupy an area of 550 million sqft. Shaikh Hamdan Bin Mohammad Bin Rashid Al Maktoum, Dubai Crown Prince was also present during the announcement. The new advancement is expected to expand UAE’s share of the global wholesale trade sector which is currently at $4.3 trillion and anticipated to cultivate to $4.9 trillion by 2019."
  • "The new worldwide center will contain concentrated coordinated trading parks that meet all the needs of the local and international wholesale merchants in one place as the same time it will also be an international exhibition facility. This project will involve around 15,000 wholesale traders and aims to be a wholesale capital."
Quotes
  • "Find detailed information on Wholesale companies in Dubai, United Arab Emirates, including financial statements, sales and marketing contacts, top competitors, and firmographic insights. Dun & Bradstreet gathers Wholesale business information from trusted sources to help you understand company performance, growth potential, and competitive pressures. View 4,121 Wholesale company profiles below."
  • "RAJESH TRADING CO. LLC is located in Dubai, Dubai, United Arab Emirates and is part of the Wholesale Sector Industry. RAJESH TRADING CO. LLC has 65 employees at this location. There are 2 companies in the RAJESH TRADING CO. LLC corporate family. "
  • "AEROPARTS AOG LIMITED is located in Dubai, Dubai, United Arab Emirates and is part of the Wholesale Sector Industry. AEROPARTS AOG LIMITED has 28 employees at this location. "
  • " GENERAL TRADING LLC is located in Dubai, Dubai, United Arab Emirates and is part of the Wholesale Sector Industry. I GENERAL TRADING LLC has 200 employees at this location. "
Quotes
  • "«G» Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles New Passengers Vehicle Trading4510101 Buses and Trucks Trading4510102 Cars Trading for Specialized Purposes4510103 Electrical Carriages Trading for Specialized Purposes4510104 Tradeing, private cars for transport security4510105 New Trailers Trading4510106 Car Body Trading4510107 Train Bodies and Carriages Trading4510108 Trippers Dump Body Trading4510109 Race Cars Trading4510110 Trading in new Semi-Trailers etc."
  • "Maintenance and Repair of Motor Vehicles Wholesale of agricultural raw materials and live animals Wholesale of food, beverages and tobacco Wholesale of household goods (includes clothes and shoes) Wholesale of other household goods Wholesale of machinery, equipment and supplies Wholesale of agricultural machinery, equipment and supplies Wholesale of equipment and other electrical machinery Wholesale of tools and workshop equipment and plants Wholesale of transportation equipment and the like Other non-sale machines nec Other specialized wholesale Wholesale of solid, liquid and gaseous fuels and related products Wholesale of construction materials, hardware, plumbing and heating equipment and supplies Waste and Scrap Wholesale Chemical Materials Wholesale Other Intermediate Products Wholesale Non-specialized wholesale trade 20 pages of listings of different items to be wholesaled"
Quotes
  • "Successfully navigating the funding landscape while forming a company or expanding the business has been the core challenge faced by the Small and Medium Enterprises (SMEs) in the UAE. However, securing finance has proven to be the biggest challenge small and medium businesses face in the UAE. "
  • "The UAE banks started cutting lending to the SME sector after the slowdown in economic growth that resulted from a collapse in oil prices a few years ago."
  • "Bankers in the UAE consider the SMEs as business entities that are not bankable. Weak business plans, unsystematic financial records and a lack of collateral are the key hurdles that banks cite for not lending loans to SMEs. The following are some of the key issues that banks cite while SMEs Lack of Financial Transparency Lack of Proper Credit History Failure to Maintain Proper Books Lack of Real Assets Vulnerable to Market Fluctuations The Reputation of Bad Debts in the Sector Non-performing loans surged from 2.5% of total loans in 2008 to 7.5% by the end of 2010. The ratio slipped to 6.4% by 2016, however, it shot up to 6.7 % by the end of 2017."
Quotes
  • "His Highness Sheikh Humaid bin Rashid Al Nuaimi, Supreme Council Member and Ruler of Ajman, on Mondayday issued Law No.1 for 2020 on small and medium-sized enterprises, SMEs, in Ajman. The law aims to promote economic growth, support local SMEs, and encourage the country's citizens to engage in economic activity and create more job opportunities. The law stipulates several definitions related to establishments and projects considered SMEs, including those noted in Cabinet Resolution No.22 for 2016 or any other relevant federal legislation."
  • "The law stipulates that projects registered under the programme must follow a set of conditions. They must be fully owned and supervised by UAE nationals, registered and based in the emirate, and their licences must be valid for three years."
  • "Owners must also not have more than five commercial licences, and their establishments must not benefit from exemptions granted by the Khalifa Fund for Enterprise Development or any other similar local funds."
  • "The law also stipulates that the Department of Economic Development, in exchange for the programme's registration, will collect a registration fee for the first five years only of Dh1,000 for the first three years and Dh2,000 in the fourth and fifth years, provided that members are exempt from all local fees charged by government authorities and the Ajman Chamber of Industry and Commerce, with the exception of public cleaning services fees included in Emiri Resolution No.5 for 2017."
  • "The law specifies a set of facilitations and incentives for the programme's members, including allocating 10 percent of contract tenders and auctions undertaken by government authorities annually to meet their purchasing, services, consulting and priority needs, in the event that the increase or decrease in the value of financial offers does not exceed 5 percent of the best acceptable offers, and those renting real estate owned by government agencies will be given discounts of no less than 10 percent of estimated rental values decided by leasing agencies during the first three years of their registration in the programme."
  • "The law established a set of penalties that do not contradict more severe penalties stipulated in other legislation. Members will be fined Dh10,000 if they violate any of the law's provisions, and this value will be doubled in the event of a repeat violation within one year."
Quotes
  • " mainly UK the activity of buying and selling goods and/or services: She doesn't approve of Sunday trading (= stores being open on Sunday). "
From Part 02
From Part 06
Quotes
  • "The DTI classifies enterprise size according to their annual turnover in terms of the National Small Business Amendment Bill. These cut-off points differ among the economic sectors. "
Quotes
  • "A forecast by World Wide Worx shows that online retail sales figures in South Africa are expected to more than double from 2016 to almost R20-billion by 2020. "
Quotes
  • "It means that policies and support initiatives for small business are built on architecture based on assumptions and estimates"
Quotes
  • "The majority of South African small businesses generate revenue of less than R200,000 annually and nearly half of SMEs employ between two to five employees, according to the SME landscape report, An Assessment of South Africa's SME Landscape: Challenges, Opportunities, Risks & Next Steps' 2018/2019. "
Quotes
  • "The table shows the distribution of MSMEs by business activity and reflects firm size, measured using annual turnover, to provide a more detailed view of the types of business activity undertaken by micro, small34 and medium firms. "
From Part 12
Quotes
  • "According to Egypt's Small Enterprise Law (No. 141, 2004,) SMEs are defined as "all companies or facilities with productive, commercial, or service-providing economic activities, with a minimum capital of 50,000 EGP, a maximum capital of 1,000,000 EGP, and a maximum of 50 employees.""
Quotes
  • "ales in Egypt’s hotel and restaurant sector grew by 33 percent in 2017, recording a total output of US$3.6 billion and representing around two percent of Egyptian GDP."
Quotes
  • "The revenue per average room in Egypt grew by about 12.9% in 2019 compared to the previous year, while the overall occupancy increased by 6.5% and the average daily revenue saw a growth of 6.2% for the same period."
Quotes
  • "Egyptian gross domestic product (GDP) hit 11.9 percent of the total economy during 2018. The sector provided 2.48 million jobs, representing 9.5 percent of total employment, with expectations to jump to 3.222 million in 2029. "
Quotes
  • "The Egypt Food Service - Hotel Restaurant Institutional (HRI) sector’s sales grew in 2018; reaching $17.4 billion, representing about seven percent of Egypt’s gross domestic product (GDP) of $251 billion."
  • "Egypt’s hotels and restaurants sector have shown 50 percent growth in 2018 due to the recovering tourism and normalization of expenditure patterns among Egyptians."
Quotes
  • "A recent pick-up in both tourism and trade has driven significant recovery to Egypt’s wider economy, with GDP now forecast to grow by 5.35% per annum on average over the five years to 2023. "
  • "A liberalisation of the local currency in November 2016 resulted in a strong devaluation in the Egyptian Pound, opening attractive opportunities in terms of overseas travellers seeking relatively cheaper holidays to Egypt."
From Part 15
Quotes
  • "SBP characterize SME as, “any private economic establishment engaged in manufacturing, trading or service providing business with net annual turnover or sales up to Rs.300 million in the current fiscal year; or any manufacturing entity having total assets up to Rs.100 million excluding land and buildings with maximum 250 employees, or any trading or service concerning total assets up to Rs.50 million excluding land, buildings and with maximum 50 employees."
Quotes
  • "To provide impetus to SME sector and enhance its competitiveness, the present government is developing National SME Policy 2019, which will serve as Government of Pakistan’s master plan for providing support to catalyze growth of the sector."
Quotes
  • "Of the total SMEs (Manufacturing) 41 % are Urban and 59 % are Rural. The majority of Household units are in rural areas, whereas the majority of Small and Medium units are in the urban areas."