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Going global: Why SMEs are the key to UAE export growth

Despite predictions of a post-pandemic global economic slowdown, the UAE is showing great promise in its plan to diversify away from an oil-based economy. In 2022, the Emirate’s non-oil foreign trade hit a record-breaking AED 2 trillion mark, up 17% from the previous year.

What’s more, non-oil national exports increased by 6%, touching AED366 billion for the first time in history. That’s a contribution of 16.4% to the UAE’s total foreign non-oil trade.

These impressive figures affirm the UAE’s commitment to forming strategic global trade partnerships to drive sustainable economic growth.

Small and Medium Enterprises are vital to the growth of UAE’s non-oil exports. SMEs represent over 94% of all companies operating in the UAE, making up 86% of the workforce and contributing over 60% to the GDP.

It’s no surprise, then, that SMEs and startups are particularly valued and receive special attention from the forward-thinking UAE government. This focus includes exciting initiatives to help companies expand their markets on an international scale.

Exporting overseas is vital for company growth

General benefits for companies that export include:

  • Resilience and longevity – SMEs are 8.5% less likely to go out of business than non-exporting companies.
  • Protection – expanding to global markets means companies have more protection against local market fluctuations.
  • Boosting revenue – exporting is crucial for increasing profits, which can create more jobs.
  • Lower production costs – a bigger market means more supplies and materials are needed. Buying in bulk can often be cheaper, helping to cut production costs.
  • More competitive – around 51% of SMEs in the UAE export to other countries, 40% of which generate more than 50% of their sales from international markets. If you’re one of the 49% non-exporters, you’ll be losing out.

Key markets for UAE SMEs

The UAE’s Ministry Economy has set up an agenda to improve the capacity of UAE exports and raise awareness of UAE products for foreign markets, while increasing SME competitiveness in global markets.

For these reasons, the agenda has prioritised 14 key sectors with the aim of raising national exports by 50%.  

These include:

  • Metal
  • Building materials
  • Financial services
  • Educations services
  • Logistics
  • Food
  • Renewable Energy
  • Pharmaceutical and Health
  • Innovation and E-Services
  • Hotel and tourism services

The UAE is also among the world’s top 20 exporters, reaching more than 180 countries across the world. Currently, the UAE’s top non-oil export markets are:

  • Saudi Arabia
  • India
  • Switzerland
  • Oman
  • Kuwait
  • Iraq
  • Turkey
  • China
  • United States
  • Singapore

According to a 2019 report by the Government of Dubai’s SME support and information agency, Dubai SME, manufacturing SMEs have the largest propensity to export compared to trade and services sectors – 80% compared to 44% and 35% respectively.

However, , Dubai SME also reports that despite their efforts to internationalise, many SMEs are not yet able to harness their export potential further than the GCC.

Therefore, a targeted programmatic support is needed to allow SME exporters access to opportunities further afield in underpenetrated export markets.

The top two pain points for UAE SMEs looking to internationalise are lack of information on export regulations and opportunities, and the high costs associated with export operations.

In order to support SME export challenges, the UAE Government has responded with a number of new initiatives.

UAE support to boost SME export capacity

Research shows that, as well as keeping up with digitalisation, committing to decarbonisation and finding critical talent, SMEs that wish to internationalise need to grow. But in many developing countries, a lack of resources, training, support, and reliable market research means that many struggle to expand beyond their home markets and only experience marginal growth.

The UAE, however, is already well known for its initiatives to support SME growth and success. Among these are several programmes specifically focused on export operations.

EAP – Export Assistance Programme

Launched by Dubai Industries and Exports, the Export Assistance Programme (EAP) helps SMEs with funding and support for their export operations.

In line with the Dubai Plan 2021, the programme creates and develops opportunities for eligible UAE SMEs to promote and expand their exports outside the UAE. The aim is to increase the numbers of local exporters in international markets and enhance the capacity of manufacturers and service providers in key industry sectors.

ScaleUp Export

ScaleUp Export comes under the Government’s Entrepreneurial Nation scheme, an initiative to facilitate the growth of UAE-based enterprises and their global expansion.

ScaleUp Export is a collaboration between the UAE Ministry of Economy and leading global logistics and shipping company UPS. The initiative is designed to help increase the export capacity of UAE startups and SMEs, providing specialist mentoring and training opportunities.

In 2022, 32 successful applicants benefitted from access to expert consultations and technical workshops, as well as special pricing from UPS to ship their products to foreign markets.

Operation 300bn

Launched by the Ministry of Industry & Advanced Technology (MoIAT) in 2021, Operation 300bn aims to boost the UAE’s industrial sector, enhancing its regional and global competitiveness.

The 10-year strategy seeks to double the industrial sector’s contribution to the GDP from AED 133 billion to AED 300 billion by 2031.

The “Make it in the Emirates” campaign makes a valuable contribution to the Operation 300bn strategy. It is a first-of-its-kind initiative in the UAE, aiming to help global investors, developers and innovators develop, manufacture and export their products from the UAE.

In collaboration with the MoIAT, the Emirates Development Bank (EDB) has allocated AED30 billion to Operation 300bn. Over a five-year period, the EDB is also financing several schemes to support more than 13,500 SMEs in their growth, generating thousands of new jobs in the industrial sector.

Khalifa Fund

The Khalifa Fund, a non-profit organisation set up by the Abu Dhabi Government, has partnered with Etihad Credit insurance (ECI) to boost the export capabilities of SMEs in the UAE.

Businesses registered with the Khalifa Fund can gain access to a range of ECI’s export credit, financing and investment insurance products. ECI’s aim is to support the global growth plans of SMEs, helping them to enter high-growth markets.

ECI is the first company in the MENA region to offer a trade credit solution, helping UAE SMEs secure trade and export to more than 50 countries.

Exporting: a win-win for both company and country

Inevitably, dependence on oil will become a thing of the past as the UAE begins a new chapter in its fascinating history. The exponential growth of the UAE’s non-oil exports is largely due to the country’s commitment to its support for SMEs. As such, small and medium enterprises will play a significant role in its future success.

In the Government’s own words, SMEs are “vital for the economic diversification and growth and also because they help in building national human resources”.

By providing SMEs with opportunities to expand beyond its borders, the UAE can build on its vision of moving towards self-reliance by creating a solid and sustainable economy. In turn, SMEs can benefit from being based in one of the best countries in the world for international business operations.

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