How Dubai aims to improve funding for vital SME sector

The Dubai Financial Services Authority (DFSA) has issued a consultation paper that outlines proposals for a regulatory regime that permits SMEs to list their shares on an authorised market institution (AMI) in the Dubai International Financial Centre (DIFC).

The DFSA said it is seeking to enable SMEs to access equity capital markets in or from the DIFC by providing appropriate and proportionate regulatory standards, while also providing adequate levels of investor protection.

The proposed regime is intended to simplify and streamline the approval process for SMEs to access equity markets, it said in a statement.

Eric Salomons, head of markets at the DFSA said: “The DFSA recognises that SMEs form a vital part of the UAE’s economy.  Protecting investors properly, while enabling easier access to equity financing for SMEs, is a way in which the DFSA can contribute to the further economic development of Dubai and the UAE. These proposals set out our plans to deliver this.”

The DFSA’s proposals align with government initiatives, including the Dubai Plan 2021 to support and grow the SME sector.

The DFSA invites comments from potential SME applicants, operators of AMIs and those providing legal, accounting, audit, or compliance services to SMEs in the DIFC, as well as from potential investors in listed SMEs. Comments must be provided by January 12, 2020.

More than 94 percent of the companies operating in the UAE are SMEs, and the SME sector provides jobs for more than 86 percent of the private sector's workforce.

Despite this, SMEs are known to experience difficulties accessing funding and the DFSA wishes to facilitate financing solutions that might bridge the funding gap and ease cash flow issues.