Another day, another headline.
Last week, there was pretty grim news from Kuwait on the state of small to medium enterprises (SMEs) in the country. Since the start of the pandemic, sales have dropped 59 percent. Even worse, profit margins have fallen by 66 percent. Covid-19 has hit every business out there, but it has disproportionately hurt SMEs. And that’s bad for all of us.
In essence, SMEs are the economy. Last December the governmental agency Dubai SME reported that SMEs in the emirate represented over 99 percent of all businesses. The same report added that SMEs make up 50 percent of Dubai’s gross domestic product and accounted for 52 percent of the total workforce.
SMEs are fighting for survival right now. And we’ve got to help as much as we can, all of us. Consumers can and should shop local. Larger businesses should prioritise preferential sourcing. I want to specifically address governments, as they can make the biggest difference to how SMEs fare this year. Here’s how.
1. No more offices
We’ve had no choice but to remote work this year, as lockdowns have come into effect. My feeling is that many people would like to continue working this way. Home working would also remove one of the largest overheads that any business has to pay. Yes, it’s office rents. Remote working could help SMEs slash their overheads.
Due to business regulations and visa requirements, most businesses don’t have a choice but to rent office space. If these policies are reworked, it could quite literally save SMEs. And there’s a precedent here too. Concepts such as Abu Dhabi’s Tajer program, which supported Gulf nationals wanting to set up a business from their homes, have been around for several years. Why not expand these programs to SMEs?
2. Let’s cut the red tape
We keep talking digital in the Middle East, but there’s a love of paperwork that just won’t go away. Do we really need office stamps or a company card? Why not go fully digital – for everything? Some government agencies were able to pivot to digital in a matter of weeks (take for example renewing car licenses in Dubai with the RTA). Why can’t all government bodies do this? Let’s go fully digital, and reduce costs for everyone, now!
3. Preferred vendors
The region’s governments are our economic powerhouses – they fuel our economies. While SMEs make up the majority of businesses in our economies, they often struggle to be listed as preferred vendors by governments and corporates due to their size. A government contract can be the basis for sustained growth over many years. Some governments have put in guidelines that force procurement teams to purchase products or services from SMEs. Let’s up those targets, and let’s ensure that all SMEs can benefit from government spending.
4. Delayed payments
One of the biggest headaches in the region is delayed payments. And government agencies are no exception. I’ve known friends wait years for monies owed. Not only does it destroy cash flows, it also sucks up valuable time as SME owners chase debts. There’s no other recourse available, other than to write the amount off. Everyone must get better on payment issues, especially governmental bodies. Let’s ensure that payments to SMEs are prioritised, so that the money is in people’s hands in weeks, not months or even years.
5. The banks need to change
Ask any SME owner to recommend a bank, I dare you. Ninety-nine times out of a hundred, you’ll see pain and anguish on that person’s face as they recall their banking nightmares. For a variety of reasons, banks here don’t like SMEs, and they make even opening an account an exercise in frustration and patience.
But SMEs need banks and their services. Governments have got to step in and find solutions to SME banking woes. It could involve more fintech, or it could be having a government-backed SME-focused bank being established. Whatever the solution, SMEs need banks that want them, and encourage them to succeed through offering them the financing that they need at rates that SME owners can afford.
I could go on, but what SME owners need right now are government interventions that’ll help them get through this year. Let’s do more to help SMEs, and let’s move faster.
Alex Malouf, communications professional and the only Chartered Communicator, Chartered Marketer, and Senior Communication Management Professional in the Middle East.
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