We often hear about the data points that highlight the importance of small and medium enterprises to the local economy, among them that they account for 95 per cent of companies in the UAE and employ 86 per cent of the workforce.
These are remarkable numbers that attest to the UAE's achievements in creating a business-friendly hub developed over a long history of mercantile activity, one that has sought to cultivate an environment of entrepreneurship, today a key component of the national agenda. The government recognises the importance of SMEs as a driver of entrepreneurship to help advance economic diversification.
From the launch of Dubai SME in 2002 and the Khalifa Fund in 2007, through to a 2014 SMEs law and the debut of the Emirates Development Bank a year later, many initiatives have been rolled out over the past two decades to support SMEs.
The EBD’s mandate was, and still is, to provide financial support through a variety of credit offerings that conventional banks don't normally extend to small companies. The stimulus measures deployed by the Central Bank of the UAE during Covid-19 to support SME liquidity has also bolstered the sector during the recent macroeconomic challenges.
However, the 2019 annual report by the Central Bank of the UAE acknowledges that almost two-thirds of the SMEs surveyed felt "financially constrained" and unable to access credit at a reasonable cost.
Lenders tend to focus on balance sheet data at the expense of analysing cash flow profiles and, moreover, reportedly underutilise resources such as the Al Etihad Credit Bureau, a points-based credit rating system to help assess creditworthiness.
Enter the pandemic. The government and central bank's stimulus and monetary support response was swift.
A business survey by the central bank found that the underwhelming use of AECB, the Etihad Credit Export Insurance (a government trade credit provider geared towards SMEs) and the Moveable Collateral Registry (a repository on which collateral can be registered and searchable by lenders) "may be testament to the lack of awareness about the importance of these services to help reduce borrowing costs and ease access to credit".
Systemic improvements under the purview of a federal "small business administration" agency that standardises SME borrowing eligibility and provides a level of risk mitigation can help incentivise bank lending and increase financial support for deserving SMEs but with reasonable protections in case plans go wrong and a default looms.
And what do banks do in the face of a default? The options are:
- Do nothing and hope for the best;
- Enforce on security and assume the laborious task of monetising assets that lenders would rather not own or manage;
- Sell the debt (to the extent there is a secondary market);
- Embark on a consensual restructuring.
Option 1 is too often the reality outside of large-scale distress scenarios when it, of course, is option 4 that best preserves value, avoids uncertainty and preempts insolvency.
But restructurings require a new business plan or a strategic divestiture of assets, all of which demands meaningful stakeholder engagement. SMEs are often inadequately advised on these matters, and thus unable to develop sustainable solutions with stakeholder buy-in.
They may even be unaware of the "business rescue" principles now reflected in the UAE’s insolvency regime, with the federal bankruptcy law allowing distressed companies to pursue court-sanctioned negotiations with creditors to arrive at a financial restructuring.
Restructurings require a new business plan or a strategic divestiture of assets, all of which demands meaningful stakeholder engagement
This system has come a long way with modern insolvency laws, including those of Abu Dhabi Global Market and Dubai International Finance Centre.
No matter the sophistication of the insolvency laws, creditors and borrowers alike will always prefer to avoid the vagaries of a court process and hammer out a deal if there is a deal to be had.
A consensual outcome enhances debt recovery in more cases than not, but requires pragmatism and patience. A cohesive framework for greater risk sharing between banks and government would help SMEs, as would SMEs being wise to the fact that, small though they may be, they have more leverage vis-a-vis their creditors than they think.
Hessam Kalantar and Phumzile Mdakane are managing partner and counsel, respectively, of Kalantar Business Law Group
Oppenheimer
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The Florida Project
Director: Sean Baker
Starring: Bria Vinaite, Brooklynn Prince, Willem Dafoe
Four stars
Results
- Brock Lesnar retained the WWE Universal title against Roman Reigns
- Braun Strowman and Nicolas won the Raw Tag Team titles against Sheamus and Cesaro
- AJ Styles retained the WWE World Heavyweight title against Shinsuke Nakamura
- Nia Jax won the Raw Women’s title against Alexa Bliss
- Daniel Bryan and Shane McMahon beat Kevin Owens and Sami Zayn
- The Undertaker beat John Cena
- The Bludgeon Brothers won the SmackDown Tag Team titles against the Usos and New Day
- Ronda Rousey and Kurt Angle beat Triple H and Stephanie McMahon
- Jinder Mahal won the United States title against Randy Orton, Rusev and Bobby Roode
- Charlotte retained the SmackDown Women’s title against Asuka
- Seth Rollins won the Intercontinental title against The Miz and Finn Balor
- Naomi won the first WrestleMania Women’s Battle Royal
- Cedric Alexander won the vacant Cruiserweight title against Mustafa Ali
- Matt Hardy won the Andre the Giant Battle Royal
more from Janine di Giovanni
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Meatless Days
Sara Suleri, with an introduction by Kamila Shamsie
Penguin
It's up to you to go green
Nils El Accad, chief executive and owner of Organic Foods and Café, says going green is about “lifestyle and attitude” rather than a “money change”; people need to plan ahead to fill water bottles in advance and take their own bags to the supermarket, he says.
“People always want someone else to do the work; it doesn’t work like that,” he adds. “The first step: you have to consciously make that decision and change.”
When he gets a takeaway, says Mr El Accad, he takes his own glass jars instead of accepting disposable aluminium containers, paper napkins and plastic tubs, cutlery and bags from restaurants.
He also plants his own crops and herbs at home and at the Sheikh Zayed store, from basil and rosemary to beans, squashes and papayas. “If you’re going to water anything, better it be tomatoes and cucumbers, something edible, than grass,” he says.
“All this throwaway plastic - cups, bottles, forks - has to go first,” says Mr El Accad, who has banned all disposable straws, whether plastic or even paper, from the café chain.
One of the latest changes he has implemented at his stores is to offer refills of liquid laundry detergent, to save plastic. The two brands Organic Foods stocks, Organic Larder and Sonnett, are both “triple-certified - you could eat the product”.
The Organic Larder detergent will soon be delivered in 200-litre metal oil drums before being decanted into 20-litre containers in-store.
Customers can refill their bottles at least 30 times before they start to degrade, he says. Organic Larder costs Dh35.75 for one litre and Dh62 for 2.75 litres and refills will cost 15 to 20 per cent less, Mr El Accad says.
But while there are savings to be had, going green tends to come with upfront costs and extra work and planning. Are we ready to refill bottles rather than throw them away? “You have to change,” says Mr El Accad. “I can only make it available.”
In-demand jobs and monthly salaries
- Technology expert in robotics and automation: Dh20,000 to Dh40,000
- Energy engineer: Dh25,000 to Dh30,000
- Production engineer: Dh30,000 to Dh40,000
- Data-driven supply chain management professional: Dh30,000 to Dh50,000
- HR leader: Dh40,000 to Dh60,000
- Engineering leader: Dh30,000 to Dh55,000
- Project manager: Dh55,000 to Dh65,000
- Senior reservoir engineer: Dh40,000 to Dh55,000
- Senior drilling engineer: Dh38,000 to Dh46,000
- Senior process engineer: Dh28,000 to Dh38,000
- Senior maintenance engineer: Dh22,000 to Dh34,000
- Field engineer: Dh6,500 to Dh7,500
- Field supervisor: Dh9,000 to Dh12,000
- Field operator: Dh5,000 to Dh7,000
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
The biog
Name: Shamsa Hassan Safar
Nationality: Emirati
Education: Degree in emergency medical services at Higher Colleges of Technology
Favourite book: Between two hearts- Arabic novels
Favourite music: Mohammed Abdu and modern Arabic songs
Favourite way to spend time off: Family visits and spending time with friends
Result
2.15pm: Maiden Dh75,000 1,950m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).
2.45pm: Handicap Dh80,000 1,800m; Winner: Tailor’s Row, Royston Ffrench, Salem bin Ghadayer.
3.15pm: Handicap Dh85,000 1,600m; Winner: Native Appeal, Adam McLean, Doug Watson.
3.45pm: Handicap Dh115,000 1,950m; Winner: Conclusion, Antonio Fresu, Musabah Al Muhairi.
4.15pm: Handicap Dh100,000 1,400m; Winner: Pilgrim’s Treasure, Tadhg O’Shea, Satish Seemar.
4.45pm: Maiden Dh75,000 1,400m; Winner: Sanad Libya, Richard Mullen, Satish Seemar.
5.15pm: Handicap Dh90,000 1,000m; Winner: Midlander, Richard Mullen, Satish Seemar
