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60% of UAE’s GDP originate from SMEs
95% of Dubai enterprises belong to SME category
Ministry of Finance and IFC to singed recently a project service agreement to launch Movable Asset Registry (MAR) Project. During the ceremony, HE Younis Al Khouri, Undersecretary of the Ministry of Finance explained that the project’s team worked hard during the last few months to develop a catalyst for entrepreneurship in particular, and national economy in general.
“SMEs play a vital role in UAE economy, as a major contributor to GDP, and as a major employer. It is estimated that around 60% of our GDP originate from SMEs, and that 95% of Dubai enterprises belong to this category,” Mr Khoury said.
“Access to funds is crucial for economic growth being the engine of private sector. Therefore, the establishment of movable asset registry, facilitates using these assets as collateral for loans. This project assumes due importance since inability to access funds is one of the main inhibitors to SME growth in developing economies, where only a limited number of SMEs can finance their operations or expansion through loans. It is actually half the number of their counterparts in OECD.”
A WB study on MENA revealed that only 25% of companies secured credit facilities, while it is around 57% in East Europe and Central Asia, 55% in Latin America and the Caribbean, and 45% in South Asia. The study also showed that 34% of MENA companies perceive inability to access funds as a chief hindrance to their development. This impediment is ascribed basically to lack of assets suitable to be used as collateral for loans.
In this context, the Ministry of Finance is joining hands with IFC, one of the eminent international organizations which has considerable experience in launching similar projects in a number of countries, for long term partnership and cooperation. The project spans two years, and it encompasses the development of institutional, legal, and technical frameworks required for setting up MAR, towards catalyzing the national economy, and preserving creditors and debtors rights, capitalizing on success stories from many countries, that experienced more access to funds at reduced costs and lower default rates.