Only 2 % of bank loans in the Gulf are given to SMEs

Dubai, United Arab Emirates, 25th November, 2010: According to a study by Arab Union Bank and International Bank, only 2 percent of bank loans in the Gulf are given to SMEs, which reflects the dominance of big companies in this area. This will be one of the key topics be discussed at the 2nd SME Expo & Conference to be held between Dec 13-15, 2010 in Dubai.

Satish Khanna, General Manager, Al Fajer Information & Services, organizer of the event, said: “Today in GCC, there is emergence of hundreds of small and medium enterprises engaged in diverse traditional innovative concepts, backed by latest technology and integrated systems.”

He added: “The Western economies realized decades ago that it is the SMEs that drive the economy and though big businesses are important, they have very big problems of their own. Gigantic corporations of the earlier eras have increasingly lost their edge to nimble, fast-moving, smaller organizations as they have sprouted all over the Western landscape.”

A new turning point has been reached in the GCC region, as mega corporations which were formerly the only drivers of economic movements are now increasingly being over-shadowed by small and medium enterprises.

Khanna added: “Today, now that recession is almost over, Dubai and GCC open golden opportunities to the global business communities of the world. The business activities in the region are increasing at record pace by the day. Right now, Dubai International Exhibition Centre, the largest centre in Middle East, has 365 days of bookings for major fairs, exhibitions and conferences, millions of people are coming in to interact, exchange ideas and form alliances. Sellers form all over the globe in search of business from this region.”

“Easy access to ownership of one’s own business, property and no taxes have made this a top location, and SMEs are coming in huge numbers,” Khanna added.

This SME EXPO will be visited by some 10,000 members of the SME community of this region and the world. There will be some 150 SME related businesses showcasing their strengths and innovative ideas at the show.

In the SME Conference, there will some 200 delegates who will hear the top 20 speakers in this field. The theme is “Making Innovations happen in SMEs: Financing, Networking, Innovation and Technology” to offer a platform to create new alliances and to team-up for greater exportable opportunities throughout the Middle East and MENA.

“We are finally ready to tackle this new frontier and we invite businesses from all over the world to come and explore the vast opportunities this region has to offer to SMEs”, says W. Gagan, the Exhibition Manager of the SME Expo.

SME Expo and Conference is a dynamic new platform of Networking and Business Matching running for three days. Banks and Financial Institutions are participating to help entrepreneurs and young individuals how to avail financial support, including ADCB, NBAD, RAKBank, Standard Chartered Bank, Union Nat’l. Bank as well as Investment Free Zones.

SMEs losing crucial business opportunities due to lack of adequate financial support

Zed ayesh Flagship

Dubai, UAE, 02 November 2010: An international financial expert has urged Arab banks to raise the ratio of lending to Small and Medium Enterprises (SMEs) in order to revitalize the economic movement in Arab countries which are largely driven by this sector.

According to a study conducted by the Union of Arab Banks in association with the World Bank on “SMEs Bank Loans in the Middle East and North Africa”, it has been revealed that  the percentage of loans provided by banks to the SMEs does not exceed 8% of total lending operations in MENA region.

Zed Ayesh, the General Manager of Flashship Consultancy, commenting on the study, said: “SMEs are not provided funds for many reasons, and therefore they lose great opportunities to boost their market share.”

This study covered 139 banks in 16 countries in the Middle East and North Africa, including  6 from GCC, and  76 national banks and 34 foreign banks, as well as 29 banks belonging to the state and 110 private banks.

“These companies have enough management and marketing capabilities to enter foreign markets if only they were supported through appropriate loans from the government and private banks,” Ayesh added.

The study clearly showed that the share of loans for this type of companies in the GCC does not exceed 2%, at a time when other companies in the region have a share of 14%.

Ayesh added: “The Arab economies should unify their administrative and economic criteria when dealing with SMEs but the truth is that Arab countries lack the kind of unity seen in Europe or North America.”

“Strengthening the relationship which governs between SMEs and the banks is part of the solution to increase the quantum of loans granted to these companies,” added Ayesh. “This will promote their integration with the international financial organizations and create a sense of trust between the two parties.”

“The growth of SMEs in the Gulf region is dependent on the willingness of banks to financially support these companies,” Ayesh warns.

He said: “Our SMEs are among companies that are playing a pivotal role in accelerating the pace of recovery from the recession. The United States of America, which is the world largest economy, built its economic system through 75% contribution of SME companies.”

Ayesh said: “The best way to promote the Arab economy is to open new financing plans and to make the credit mechanism easier in addition to strengthening relations between banks and SMEs and enhance transparency of these companies.”

The study showed that the factors behind the lack of growth among SMEs is illustrated in the lack for transparency toward these companies and a weak financial infrastructure due to poor insurance provided.

Ayesh added: “The recession has seriously hit large companies, while SMEs have shown stronger immunity, an indication of the critical role these companies can play in strengthening Arab economies.”

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