Everyone asks: What is the real engine that fuels economic growth and makes it more resilient and sustainable? The answer lies in the Small and Medium-sized Enterprises (SMEs) sector.

In the UAE, these companies are not just part of the business landscape; they are the fundamental pillar driving development, contributing more than 63.5% to the country’s GDP.

In this article, we’ll explore the definition of SMEs in the UAE by sector, highlight their economic importance, and outline the key government steps taken to support them.

What is definition of SMEs in the UAE?

SMEs in the UAE are defined based on key criteria that are related to the number of employees and annual revenue of the enterprise itself.

These standards vary depending on the economic sector in which the company operates.

Companies are classified into three main categories: micro, small, and medium, which depends mainly on the number of employees and annual revenue for the trade, industry, and services sectors.

Trade Sector

This sector includes any activity related to selling various products. Companies are classified as follows:

• Micro: The number of employees does not exceed 5 people, OR annual revenue does not exceed AED 3 million.
• Small: The number of employees is between 6 and 50 people, OR annual revenue does not exceed AED 50 million.
• Medium: The number of employees is between 51 and 200 people, OR annual revenue does not exceed AED 250 million.

Industrial Sector

This sector involves converting raw materials into manufactured products. The classification criteria here are:

• Micro: The number of employees does not exceed 9 people, OR annual revenue does not exceed AED 3 million.
• Small: The number of employees is between 10 and 100 people, OR annual revenue does not exceed AED 50 million.
• Medium: The number of employees is between 101 and 250 people, OR annual revenue does not exceed AED 250 million.

Services Sector

This sector includes any work provided for a fee, such as construction and contracting projects. Companies are classified as follows:

• Micro: The number of employees does not exceed 5 people, OR annual revenue does not exceed AED 2 million.
• Small: The number of employees is between 6 and 50 people, OR annual revenue does not exceed AED 20 million.
• Medium: The number of employees is between 51 and 200 people, OR annual revenue does not exceed AED 200 million.

This precise classification shows the government’s commitment to providing appropriate support to each category of these companies, tailored to their size and nature of work, which ensures their continued growth and development.

How Do SMEs Support the UAE’s Economy?

SMEs are a vital and central part of the UAE’s economy, playing a major role in achieving sustainable development.

Their importance and positive impact on the country are highlighted through the following points:

• Strong Contribution to GDP: SMEs contribute more than 63.5% of the UAE’s GDP, which underscores their role in boosting economic growth and diversifying income sources away from oil.
• Widespread Job Creation: SMEs provide a significant number of jobs, employing 86% of the private sector workforce.

This makes them a key driver of the job market and a contributor to lowering unemployment rates, especially among youth.

• Innovation and Flexibility: These companies are known for their capacity to present new products or services and their speed in responding to market changes, making them an essential component of a dynamic and vibrant economy.
• Empowering Women and Fostering Entrepreneurship: SMEs promote a culture of entrepreneurship and are an important platform for empowering women economically. In the UAE, women lead 50% of SMEs, reflecting economic inclusion and supporting female participation.
• Economic Diversification: These companies play a crucial role in diversifying the economy by developing new sectors and offering innovative products and services, which enhances the national economy’s competitiveness.

Thus, SMEs in the UAE are not just a part of the economic fabric; they are its foundation, ensuring sustainability and continuous progress.

What Steps Has the Government Taken to Support SMEs in the UAE?

The UAE government pays great attention to supporting SMEs through a series of initiatives and legislation aimed at stimulating their growth and enhancing their contribution to the economy.

The key steps taken by the government in this area can be summarized as follows:

1. Legislative and Regulatory Framework

The first and most fundamental step was to establish a strong legal framework to regulate and support the sector. The government issued Federal Law No. 2 of 2014, which primarily aims to:

• Develop SMEs: To make them a core supporter of economic development.
• Stimulate Innovation and Entrepreneurship: By encouraging a culture of creativity and research.
• Enhance Competitiveness: To enable these projects to provide valuable and competitive job opportunities.
• Coordinate Efforts: To ensure all relevant parties work in harmony to support the sector.

2. National Initiatives and Programs

Support was not limited to the legislative side but extended to practical programs that provide direct assistance to entrepreneurs.

• The National Program for SMEs: This program offers a range of privileges and facilities necessary for business development, in addition to providing technical, administrative, and expert support.
• The UAE SME Council: This council was established to take a leadership role in developing plans and strategies, coordinating policies, and monitoring the performance indicators (KPIs) of various programs to ensure their effectiveness.

3. Funding and Technical Support

Recognizing the importance of funding as a key component for project growth, the state has taken effective steps to provide financial and technical support:

• The “300 Billion Project”: As part of this project, the Emirates Development Bank will finance more than 13,500 SMEs, providing a lifeline to thousands of projects.
• The Government Procurement Platform: The Ministry of Possibilities developed this platform to direct government procurement operations towards supporting national entrepreneurs who own SMEs, opening new markets for them.
• The National Cybersecurity Strategy: This strategy aims to support local startups in the cybersecurity sector, fostering innovation in a vital technological field.

ATMACSS: Management Consultation Company in the UAE

Do you ever feel that succeeding in the UAE’s business world is a significant challenge, especially with so much competition and a variety of regulations?

The truth is, you are not alone on this journey, and ATMACSS Management Consulting is your strategic partner. We understand the challenges you face, which is why we are here to provide you with the support you need.

Through our expertise, we help you analyze your problems, offer practical management and technical solutions to problems, and guide you to fully benefit from every government initiative designed to support your sector. Contact us now.