The United Arab Emirates (UAE) has achieved remarkable progress in promoting an enabling environment for start-up businesses and entrepreneurial activities, ranking 25th among 42 countries, up from 41st position last year, according to the UAE-Global Entrepreneurship Monitor (GEM) 2007 Report that was released in Dubai today.
The UAE is rated first as well among 42 countries for hosting start-ups that have 25 per cent to 75 per cent of customers from overseas markets (export or re-export). The country has also moved up from 29th to 17th position out of 42 countries in the number of start-ups businesses that took off in 2007, underlining a robust business and development activity through last year.
Akil Kazim, Director - Operations, Mohammed Bin Rashid Establishment for Young Business Leaders, said: "We are glad to introduce the GEM Report UAE 2007 as a valuable informative reference to all stakeholder concerned with entrepreneurship in our country. This year's edition of the UAE-GEM Report is a comprehensive study that presents incisive information on the entrepreneurship landscape of the UAE.
"Through identifying key drivers and challenges facing small and medium enterprises (SMEs), the report provides clear guidelines for policy makers and key stakeholders on the necessary steps for enhancing innovation and entrepreneurship across the country."
On his behalf, Dr. Kenneth Preiss, School of Business Sciences, Zayed University said: "This comprehensive study shows that the UAE has not only taken on a leadership role in both national and international entrepreneurial activity, business start-up rates are growing at a faster pace that most other nations. Still, market demand for innovative products and services outstrips supply.
"Thus, attention must be given to nurturing entrepreneurial activity, including expatriate activity, into sustainable high growth ventures if the nation is to maximise returns on the effort expended, whilst also satisfying market expectations. This includes reducing the very high incidence of small business closures," he added.
The UAE-GEM Report 2007 has also highlighted UAE-based budding entrepreneurs are faced with impediments such as bureaucracy, inflation, lack of funding, inconsistent information and soaring operation costs. The report stressed that procedures of registering new businesses need to be simplified.
Despite the significant increase in the range of enabling services and financial support from a number of leading establishments, including the Mohammed Bin Rashid Establishment for Young Business Leaders, fear of failure still stands as one of the primary hurdles hampering an aggressive development of the entrepreneurial landscape in the UAE, the report pointed out.
The high incidence of businesses ceasing operations in the UAE is due to prevailing perceptions of entrepreneurship as a part-time activity, stated the report. Focusing on the high rate of closure of new ventures, the study called for the proper identification of sustainable business opportunities to help reduce churn rates among start up businesses.
With more than 50 per cent of the UAE sample of 3,000 respondents in the study indicating good opportunities for new start-ups over the next six months, the report stressed the importance of developing the necessary knowledge and skill sets to closely identify the nature of available opportunities for guaranteeing business continuity.
Gender-wise, the number of male entrepreneurs in the UAE has grown by two per cent over 2007, while businesswomen starting a new venture or owning a new business has jumped from 0.1 per cent to 2.4 per cent, even though the absolute number of women entrepreneurs remained very low.
The report has also highlighted the banking and finance sector provided only a limited contribution of 11.5 per cent of the funds to start-up ventures in 2006, while the sector literally ceased to be a source of funds in 2007.
On the other hand, the number of ‘Business Angels' providing start-up funds has doubled over the last year, with the ceiling of start-up funds jumping from AED2 million in 2006 to AED5 million in 2007. The GEM Report has stated that despite the significant increase in government support programmes for budding entrepreneurs, government funding institutions are not seen as a major source of venture capital.
Highlighting several improvement areas, the report has recommended the introduction of new programmes to increase the involvement of women in entrepreneurial ventures, and to enhance business development capabilities among the fledgling entrepreneurs.
Emphasizing the role of education as a key driver for promoting entrepreneurship in the UAE, the report has demanded the local media to consolidate its efforts in spearheading awareness about entrepreneurship and reinforcing its position as a viable career option.
Referring to federal and local efforts to develop the education system and integrate entrepreneurship into the higher school curriculum, the report said it could take longer than expected for realising a tangible impact of this valuable development.
The report concluded with a positive note on UAE's entrepreneurial landscape with its perspective: "On a broader front, the UAE is well placed to re-write the entrepreneurship model as it is currently experiencing the ‘juxtapositioning' of two most critical aspects - opportunity and resources, including capital."
About GEM
Directed by Babson College, GEM reviews entrepreneurial activity and perceptions of 42 countries and is the world’s largest research project focusing on entrepreneurs and how they affect national economic growth. No other research exists that can provide consistent cross-country information and measures of entrepreneurial activity in a global context.
GEM is a consortium of national teams, participating in the Global Entrepreneurship Research Association. Contact details and national teams’ micro-sites can be found on www.gemconsortium.org. A selection of GEM data is available including an updated list of the growing number of peer-reviewed scientific articles based on GEM data.
About Mohammed Bin Rashid Est. for Young Business Leaders
The Mohammed Bin Rashid Establishment for Young Business Leaders was launched in 2002. The vision of the Establishment is to nurture the entrepreneurial spirit among UAE nationals and catalyze the development and growth of the small and medium size enterprises.
The Establishment's core mission is to encourage and facilitate the development of local start up businesses across the UAE. To this end, the Establishment offers a wide range of incentives, enabling services and training programmes. The services of the SME extend to both entrepreneurs with existing businesses as well as budding entrepreneurs.
Contact: Noora Yousef; A'Sidrah Public Affairs; 971 4 3642196; noora.yousef@asidrah.ae
