By Ramy Jallad
Ras Al Khaimah is the northernmost Emirate in the UAE. While not in the global spotlight as much as its neighbours Dubai and Abu Dhabi, it has nevertheless been working quietly to transform itself into a hub for entrepreneurs.
Small and medium enterprises (SMEs) are, in effect, the backbone of national economies, generating employment, fostering innovation and delivering inclusive growth. In the UK, one study last year suggested they accounted for 51% of private sector turnover. Another study in the US claimed they generated more than half the country’s jobs.
The Gulf is a region people don’t associate with SMEs. They can think certain industries dominate, assume legislation is oblique and support is limited. In 2019 they couldn’t be further from the truth.
As well as playing a significant role helping oil-dependent economies diversify, the SME sector is fuelling fantastic opportunities for growth in the region, helping tackle the growing challenge of creating jobs for the 20 million young people in the region expected to join the workforce by 2025.
A case in point is Ras Al Khaimah, the northernmost Emirate in the UAE. While not in the global spotlight as much as its neighbours Dubai and Abu Dhabi, it has nevertheless been working quietly to transform itself into a hub for entrepreneurs.
While the UAE has the seventh largest oil reserves in the world, Ras Al Khaimah has never been able to rely on oil and consequently had to start the process of diversification fairly early on. This head start has given the Emirate a thriving industrial, real-estate, and manufacturing sector, and a growing tourism industry. And all of that has led to a dynamic environment for a rapidly expanding SME sector.
You might think that because they are SMEs they aren’t international but actually to many, Ras Al Khaimah is their second home. In Ras Al Khaimah Economic Zone (RAKEZ), the Emirate’s fast-growing business hub, primary source markets for investments are India, Egypt, Jordan, France, Italy and Germany. Reliable infrastructure, strong government institutions, and excellent domestic and international transport links have had a huge role to play in making the Emirate a draw for global entrepreneurs.
The UAE has had a historically close relationship with the UK, with a large expat population and high levels of trade and investment between the two countries. The UAE is already home to around 5000 UK-based businesses in sectors such as infrastructure, FMCG, fintech, media and ICT. As the country grows and diversifies, more opportunities are available in food and beverage, trading and education. Also appealing to expats is Ras Al Khaimah’s ‘small town’ feel and low rents and general cost of living as compared to other cities in the region.
In RAKEZ alone, a large proportion of the 14,500 companies hosted are SMEs. Recognising the need to attract and sustain entrepreneurs, RAKEZ was an early pioneer in offering co-working spaces, accelerators and incubator programmes, which have really taken off. For example, the Mubader Package, aimed at entrepreneurial young graduates and final year students has been receiving high enquiries and demand so far. It offers low-cost packages that include operating licences, shared workspaces, and a gamut of additional support services that are vital for a small business.
Women entrepreneurs are yet another resource for the SME sector. According to the Melinda Gates Foundation, only 2% of venture funding goes to women-led start-ups globally. This is a barrier that needs to be dismantled. Encouragingly, in the Middle East, we are seeing an increasing trend in the venture capital community to look at gender diversity as an important investment criterion.
In the UAE, women are pivotal to our economic future – they make up around 70% of university graduates and 44% of the workforce. Recognising this, RAKEZ has just launched a first-of-its-kind initiative in the UAE to encourage more women to get into business. The RAKEZ BusinessWomen Package provides simplified set-up processes, fast-track visas and licences, and cost-effective office space for women entrepreneurs. RAKEZ already has over 900 women-owned businesses in fields spanning FMCG to media. Since the launch of the initiative, more than a hundred additional applications have been received, and the number is steadily increasing.
However, the UAE can confound entrepreneurs with the same barriers they face throughout the world, most notably securing financing and seed capital. According to a recent World Economic Forum report, while SMEs in the MENA region represent about 96% of registered companies and about half of employment, they account for only 7% of total bank lending – the lowest level
in the world.
Governments across the region are looking at solutions to close that gap, including the UAE. In Ras Al Khaimah, RAKEZ recently hosted Startup Weekend, a global congregation of entrepreneurs with experience of setting up start-ups. Not only did it provide a meeting ground for like-minded entrepreneurs to learn from each other’s experiences, but it also offered access to venture capitalists, which is crucial. At a government level, the National Bank of Ras Al Khaimah is one of the few banks in the region to maintain its focus on SME lending; in fact, it is the largest small business bank in the UAE.
Ras Al Khaimah has created a unique economic ecosystem that thrives on diversity and fosters the growth of SMEs from anywhere and everywhere. So committed is the government that it has launched RAK International SME Fair 2019 organised by the Emirate’s Chamber of Commerce and Industry. Running from 14th-16th November, this is set to be a huge international event with SMEs from all corners of the globe coming together to network, build relationships, meet potential partners and investors, and exhibit new ideas and products.
All this suggests the environment for SMEs has never been more conducive – particularly in places like Ras Al Khaimah. For those businesses hungry for growth, footholds in new markets mean access to new customers, fresh talent and ambitious innovation.
About the Author
Ramy Jallad is the Chief Executive Officer of RAKEZ. His role is to develop and drive strategic growth, creating a thriving commercial and industrial business hub that attracts and welcomes investors from all around the world.
Mr Jallad has over 25 years of professional experience, where he has developed and led various commercial and industrial free zones, business parks and mixed-use real estate developments. Mr Jallad holds a Bachelor of Science degree in Mechanical Engineering. He is also a Lead Assessor of the European Foundation for Quality Management and a certified trainer in sales, marketing, and customer care as well as people management.