SMEs are essential to global economies. In the UAE, strategic initiatives empower these businesses, drive economic diversification and promote sustainable trade practices, highlighting the nation’s commitment to innovation and global leadership, writes Her Excellency Raja Al Mazrouei, CEO of Etihad Credit Insurance.
In today’s global landscape, defined by resilience, sustainability and innovation, small and medium-sized enterprises (SMEs) are increasingly recognised as the backbone
of economies worldwide. These enterprises collectively form the bedrock of global business, constituting around 90% of all businesses and employing over 50% of the workforce globally.
Amidst this transformative era, the United Arab Emirates (UAE) has emerged as a beacon of commerce, innovation and tourism. The economic development model of the UAE has been at the forefront of the global economy, fuelled by its strategic location, world-class physical and digital infrastructure, proactive adoption of cutting-edge technologies and business-friendly legislations as well as innovative government initiatives.
The success of this model is evident in the UAE’s non-oil foreign trade reaching AED3.5tn in 2023, underscoring the country’s resilience post-pandemic.
Central to the UAE’s development strategy is a steadfast commitment to empowering SMEs and promoting sustainable trade practices, ensuring that these enterprises not only thrive domestically but also contribute significantly to global trade networks. This focus is not just strategic, it aligns with the UAE’s broader vision of sustainability, innovation and global leadership.
Role of SMEs in economic growth and sustainability
With SMEs constituting over 94% of active enterprises in the UAE, employing 42% of the workforce, and contributing 40% to GDP, these enterprises play a critical role in driving economic diversification and prosperity. As of mid-2022, there were 557,000 SMEs in the UAE, contributing 63.5% to the non-oil GDP. By 2030, it is projected that the number of SMEs will reach 1 million, marking a significant expansion facilitated by robust government initiatives such as ‘The National Programme for Small and Medium Enterprises’, ‘Khalifa Fund for Enterprise Development’, ‘Mohammed Bin Rashid Fund for SMEs’ and ‘UAE Government Procurement Program (Emiratisation)’.
The government has also undertaken substantial regulatory reforms to streamline business processes and enhance the ease of doing business for SMEs while establishing numerous business incubators and innovation hubs nationwide to provide these enterprises with access to cutting-edge facilities, mentorship, networking opportunities and funding support.
According to the World Bank Group, 600 million jobs will be needed by 2030 to absorb the growing global workforce, making SME development a top priority for many governments. This is because SMEs are major job creators, especially in emerging markets, generating seven out of 10 formal jobs. Therefore, fostering SME growth is essential for social stability and reducing unemployment, while also driving competition and productivity through their agility and innovative spirit. SMEs are crucial in sectors like digitalisation and climate tech, where new solutions are essential for sustainability goals.
Additionally, SMEs can significantly contribute to achieving sustainability targets by adopting green technologies, enhancing resource efficiency and reducing their carbon footprint. This supports UAE’s net-zero goals and contributes to climate change mitigation. Strengthening SMEs also enhances economic resilience, as demonstrated during crises like the Covid-19 pandemic, where resilient SMEs helped mitigate economic shocks and facilitated faster recovery.
Facilitating international expansion for SMEs
To facilitate SMEs in their global expansion endeavours, the UAE government has launched various export promotion initiatives and trade facilitation programmes. Organisations like Etihad Credit Insurance (ECI) provide SMEs with innovative credit solutions, facilitate easy access to finance, provide expert market insights and foster strategic collaborations. This enables SMEs to explore new markets and enhance their global competitiveness.
ECI’s focus on innovative credit solutions and strategic collaborations has significantly boosted the competitiveness of UAE enterprises worldwide, diversifying the country’s economic landscape and accelerating non-oil exports. Notably, SMEs constitute over two-thirds of ECI’s beneficiaries, with large corporations making up another 20.9%. This underscores ECI’s significant contribution to the UAE’s progress towards its 2031 foreign trade targets.
Aligned with national objectives to reach AED800bn in non-oil exports over the next decade under ‘We the UAE 2031’ vision, ECI recently launched the Xport Xponential initiative to further advance domestic trade and enterprise expansion. This initiative supports UAE-based companies in exporting their products, contributing to economic sustainability and resilience while diversifying national resources. It empowers UAE-based enterprises to bolster the competitiveness of their offerings in targeted markets, seize opportunities and expand across diverse sectors, thereby fortifying the UAE’s prominent position in the global commercial sphere.
Additionally, the initiative offers access to a vast database of over 300 million companies worldwide and provides significant facilities to enter the markets of countries that are part of the Comprehensive Economic Partnership Agreements. ECI’s partnerships with leading government entities across the UAE also ensure that businesses benefit from streamlined processes and receive invaluable industry-specific support tailored to your needs.
Promoting sustainable trade practices
The UAE is actively working towards promoting sustainability within the trade sector by integrating green energy solutions and fostering environmentally responsible practices across industries. The country has launched various programs and initiatives in this regard, including ‘We the UAE 2031’, ‘Net Zero by 2050’ and ‘Project 300bn,’ in line with its commitment to the UN Sustainable Development Goals (SDGs).
The UAE Net Zero by 2050 Strategic Initiative aims to achieve near-zero greenhouse gas emissions by 2050, utilising renewable energy, energy storage, low-carbon hydrogen, carbon capture and storage and green materials. The UAE’s Long-Term Strategy outlines ambitious plans to reduce emissions economy-wide, accompanied by specific policies and regulations to facilitate decarbonisation.
Continuing its ‘Year of Sustainability’ in 2024, the UAE reaffirmed its commitment to fostering a sustainable and prosperous future for all. ECI aligns with this goal by supporting net-zero greenhouse gas emissions and advocating for a just transition. ECI has made significant headways in supporting sustainability through its mandate to nurture non-oil trade, contributing to the ‘We the UAE 2031’ vision, ‘Project 300bn’ and the ‘2030 Agenda for Sustainable Development.’ This dedication is evident in ECI’s efforts to integrate sustainability into its core operations, ensuring a positive impact on the UAE’s economic landscape. A key component of ECI’s future strategy is the ‘Sustainability Framework’, which guides its commitment to sustainable practices, aiming for a positive economic, social and environmental impact.
ECI has formed and maintained partnerships with government entities, financial institutions, brokers and technical partners to promote sustainable development. These relationships are leveraged to ensure effective and resilient service delivery, fostering sustainability within the UAE’s exporter community and beyond. By providing clients with risk assessment, trade credit insurance and market intelligence, ECI supports the adoption of sustainable practices in alignment with the SDGs. Through reinsurers, ECI strengthens risk management and financial resilience, providing security and backing for large risks, thereby enhancing its capacity to support sustainable projects and global development.
In collaboration with international partners, ECI also promotes sustainable trade and supports large-scale projects, including renewable energy investments, which are essential for global sustainability. Similarly, the expertise of technical partners in big data, artificial intelligence and risk assessment enables ECI to innovate and tackle trade challenges efficiently and sustainably.
This collaboration ensures that ECI remains at the forefront of promoting sustainable practices in trade and economic development.
ECI joined the UN Environment Programme Finance Initiative-convened Net-Zero Credit Agencies Alliance as an affiliate member last year. A subset of ECI’s MoUs – including with the Export-Import Bank of Korea, Exim Bank of India, US Exim, Sinosure, African Trade and Investment Development Insurance, UK Export Finance and BPI France, to name a few – also focus on sectors such as green energy, reaffirming our commitment to sustainable trade solutions.
UAE’s leadership in Africa’s green industrialisation
The UAE has taken a leadership role in advancing green energy solutions in Africa through the Africa Green Investment Initiative (AGII), a private, public and development capital from UAE’s climate champions including Masdar, Abu Dhabi Fund for Development, AMEA Power and ECI, with Africa50 as the strategic partner. The goal is to deploy US$4.5bn for 15GW of clean power capacity in Africa by 2030, showcasing the UAE’s commitment to supporting Africa’s green industrialisation. ECI plays a pivotal role within AGII, committing US$500mn in credit insurance to accelerate Africa’s transition to clean energy in order to provide better access to electricity in rural areas with limited or no access.
The UAE’s commitment to SME empowerment and sustainable trade practices is evident in its comprehensive support programmes and initiatives. Empowering SMEs is vital for economic growth, job creation and innovation, while sustainable trade practices are essential for long-term prosperity and environmental protection. This model of combining economic development with sustainability offers a roadmap for other nations aiming to achieve inclusive and resilient growth in the 21st century.
