It has been widely accepted that investment in small and medium-sized enterprises (SME) is vital if the UAE, and the Gulf in general, wants to increase the number of nationals working in the private sector.
Achieving that goal requires the development of a culture of entrepreneurship and innovation as well as investment in infrastructure. While this may seem an inopportune time to be learning lessons from the once widely-admired European model, given the current economic crisis inside the EU, a way forward is perhaps suggested by the burgeoning social enterprise sector in the UK and elsewhere. These countries are neatly fusing entrepreneurial zeal and innovative thinking with a social conscience.
Social enterprises can be characterised as businesses that serve some social function (be it working with disadvantaged communities or people, improving health or dealing with environmental issues). While on the surface they share much in common with charities, as with traditional businesses they aim to make a profit through their activities.
Social entrepreneurship is not only an ideal focus of SME development. There are three other key areas where social entrepreneurism should be considered fully as adding value to an economy, such as with the UAE, in the growth and development stage. The first is the ongoing attempt to diversify the economy, as outlined in the various government initiatives, including Plan Abu Dhabi 2030. In a 2007 survey, it was estimated there were 62,00 social enterprises in the UK contributing £24 billion (Dh138.21bn) to the economy and employing 800,000 people. Median turnover for those businesses was £240,000.
Social enterprise can also contribute to reducing the percentage of the workforce in public-sector employment. The large disparity between the proportion of the local population employed in the public sector and the private sector is economically unsustainable. Gulf governments, including in the UAE, have long worked for the nationalisation of the jobs market, to varying degrees of success. For local economies to remain stable in the long-term, and mitigate the socio-economic challenges that accompany economic success, governments have realised the need to ultimately cut the size of the public sector, and at the same time, provide job opportunities where locals can flourish and be productive.
In the UK there have been a large number of services moved out of public sector ownership that are now run as for-profit social enterprises. These include a health provider that moved from the National Health Service and is now responsible for half a million people in northern England, providing a range of primary health services. Another such is a thriving sports management service that runs more than 100 leisure centres across the country. It started life as a failing local authority service.
Furthermore, data from the UK shows social enterprises employ more people relative to turnover than other small businesses and so could have a disproportionately large impact on creating jobs than their numbers would indicate.
Finally, both research and experience show social enterprise provides opportunities for creating opportunities for female citizens. In the UAE, this constituency is both willing and able to play a role in the development of the economy and the renationalisation of the home workforce. All the more so as Emirati women are at least as well educated as men and make up a larger proportion of recent university graduates.
But they still find it difficult to break into traditional sectors of the economy. Today, an estimated 69 per cent of all university graduates are female, but only 12 per cent of the workforce consists of women. Social enterprise offers a viable way of addressing this deficit because it builds on traditional female roles in education and medicine but does so by adopting a private-sector approach that could result in a new class of female social entrepreneurs. It is striking to note among UK social enterprises, 86 per cent of leadership teams include at least one female director.
To capitalise on these opportunities, the UAE should provide students (male and female) with the social entrepreneurship skills to set up their own businesses as an alternative to becoming public employees.
Education is an important component required to enable a seamless transition.
A recent study into entrepreneurs and business owners in UAE showed higher education correlated with the likelihood of starting up a business.
Many of those same practical skills required for success in any private venture - basic accountancy, business law, basic economics, marketing and advertising - are also vital for social enterprise.
The creation and development of an active social entrepreneurship sector in the UAE will be gradual and take a number of years to achieve. However, it is a sector where almost all those employed will be nationals and if done properly will provide real potential to generate jobs and increase productivity.
At the same time, it will help reduce the size of the public sector, while reinforcing both a community spirit and national identity within the population.
Although not offering a panacea to problems of employment and diversifying the economy, exploring social entrepreneurship does seem to offer a number of solutions that have been proven to work elsewhere.
They may well, therefore, play an important role in addressing these challenges in the Gulf.
Professor Rory Miller is the director of Middle East and Mediterranean studies at King's College in London, Mark Napier is the managing director of the UK's Centre for Public Innovation, and Ghanem Nuseibeh is the founder of Cornerstone Global Associates in London
