Move comes as small firms have often found it difficult to secure credit lines after banks reduced their exposure to the SME sector
The UAE Banks Federation (UBF) has stepped up its efforts to increase the level of financial awareness in the country by launching a financial literacy handbook for SMEs.
Representing over 60 percent of the country's GDP and employing 42 percent of its workforce, small and medium enterprises (SMEs) form the backbone of the UAE’s economy.
SMEs, which make up 94 percent of all companies operating in the country, also account for a significant share of the customer base of local banks, another cornerstone of the country’s economy.
“In an increasingly complex financial environment, it is essential for entrepreneurs - particularly owners of SMEs - to have a strong grounding in the principles of business finance to keep their business afloat. SMEs play a critical role in an efficient and competitive economy, and a thriving SME ecosystem will positively contribute to a society’s economic stability and development” said Abdul Aziz Al Ghurair, chairman of UAE Banks Federation.
The handbook highlights different aspects of business finance, including governance, financial management, access to finance and borrowing, and debt management.
“Financial education offers entrepreneurs a deeper understanding of business strategies and objectives, as well as the availability of financing options and support services. It also leads to proper financial planning, which enables small businesses to maximize their chances of business success by taking advantage of business opportunities and weathering business downturns," he added.
The handbook stresses that SME owners must acquire skills to distinguish between personal and business finances and possess sufficient knowledge of key accounting standards and book-keeping as well as legal and regulatory frameworks, rights and resources in order to become financially literate.
Small firms have often found it difficult to secure credit lines as banks reduced their exposure to the SME sector after several SMEs failed to sustain in the business and repay their loans.
With the objective of improving SME lending environment in the country, UBF has launched several initiatives including the ‘modus operandi,’ a mechanism to rescue SMEs in distress that meet specific qualifying criteria.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.