The UAE government has approved the use of crowdfunding as the Emirates aims to open more streams of funding for smaller businesses and broaden the country's liquidity pool.
Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said the Cabinet approved crowdfunding activity for both the public and private sectors.
“Crowdfunding is one of the best means to support the financing of new innovative business ideas … it will open a door for young people and entrepreneurs to finance their ideas,” he said on Twitter.
The National looks at the concept of crowdfunding and the possibilities it presents.
What is crowdfunding?
Crowdfunding — a type of alternative finance — refers to the practice of funding a project or venture by raising small amounts of capital from a large group of people, usually through the internet.
The global crowdfunding market is predicted to triple in size to $39.8 billion by 2026 from $13.9bn in 2019, according to Statista. The concept, which originated in the US, is gaining traction in the GCC's six-member economic bloc.
Why is it important for SMEs?
Start-ups and small and medium enterprises are moving towards crowdfunding as they explore funding options.
Abu Dhabi and Dubai are home to a number of tech start-ups that have based their headquarters in the UAE due to its business-friendly legislation.
The SME sector represents more than 94 per cent of total companies and employs over 86 per cent of the private sector workforce in the UAE, according to a Dubai Chamber report released in November 2020.
Within Dubai, SMEs account for 95 per cent of companies and employ 42 per cent of the workforce, contributing 40 per cent of the emirate’s economy, the report added.
Khalifa Fund data shows that nearly 50 per cent to 70 per cent of the SME applications for funding are rejected by conventional banks. Loans to SMEs account for just 4 per cent of the outstanding bank credit in the UAE, below the Middle East and North Africa average of 9.3 per cent.
Conventional lenders are sometimes unwilling or unable to support SMEs given their limited assets or lack of a track record.
Hence crowdfunding could help the UAE to support SMEs.
Where does the UAE stand in crowdfunding so far?
In May, Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, launched “Dubai Next” — a digital crowdfunding platform for supporting entrepreneurs and start-ups.
The initiative was aimed at stimulating “positive competition and encouraging youth to put forward innovative ideas as well as obtain community support through crowdfunding”, Sheikh Hamdan said at the time.
In September 2020, Dubai SME, part of Dubai's Department of Economic Development, said it was partnering with peer-to-peer lending platform Beehive to allow individuals to invest in SMEs in the country through crowdfunding.
In August 2017, the Dubai Financial Services Authority launched a regulatory framework for loan and investment-based crowdfunding platforms.
UAE start-ups leading in crowdfunding
The Dubai-based equity crowdfunding platform Eureeca led $1.3 million funding in pay-per-minute car rental platform Udriv in January last year.
Eureeca is one of the first global equity crowdfunding platforms that enables members of its investor network to buy shares in growth-orientated businesses.
Dubai's fresh snack company Fruitful Day is among smaller businesses that have used crowdfunding. The firm raised Dh3m ($816,771) in two successive funding rounds in November 2020, attracting investors from as far away as Switzerland and Singapore, as well as from Saudi Arabia and the UAE.
UAE start-up Rent-a-Towel, which currently rents towels and bed linen to 20 Dubai hotels, has invited sustainability-conscious small investors to part-fund inventory through a Germany-based crowdfunding platform.
Dubai-based Stake allows people to buy small stakes in properties starting from few hundred dollars. Described as a “digital-first property investment and asset management company”, Stake aims to fix the problems of property ownership “by democratising property investment”.
It finds competitively priced apartments in prime locations with high demand on the secondary market — avoiding potential new-build delays. It enables members to invest as little as Dh500. Investors receive regular dividends from rental income, in addition to expected long-term capital appreciation.
GCC getting serious about crowdfunding
Last January, the Saudi Central Bank rolled out new rules governing crowdfunding-based activities.
At that time, the kingdom's central bank set a minimum capital requirement of 5 million Saudi riyals ($1.33m) for entities looking for a licence for crowdfunding activities. It updated the crowdfunding rules in January.
The Central Bank of Bahrain has also rolled out crowdfunding regulations.
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Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
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4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
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Transmission: 8-speed auto
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Price: From Dh149,900
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Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
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RESULTS
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The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
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Section 375
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UAE currency: the story behind the money in your pockets
