On March 5th, Cedar Rose, along with BIIA and Wealth Today, hosted an insightful roundtable in Dubai’s prestigious Kempinski Hotel. This event focused on enhancing MSME financing in the UAE. 

The event, titled “Enhancing MSME Financing in the UAE,” brought together experts and stakeholders from across the government and financial spectrum to tackle some of the most pressing challenges faced by Micro, Small, and Medium Enterprises (MSMEs) in accessing finance. 

Identifying the challenges 

One of the primary challenges for the constant evolution of new companies in the UAE is the lack of financial support and higher financial risk, largely attributed to their insufficient credit history. This gap in financial data availability drastically limits their access to finance, a critical component for corporate growth and sustainability. Financing partners encounter difficulties in assessing MSME’s trade credit risks, often due to a lack of sufficient data and the perceived increased risks associated with their operations.
The roundtable discussions, shed light on several other issues: stakeholders providing loans and trade credits face obstacles due to the lack of business, operational and financial data and the absence of alternative data initiatives. Furthermore, the complexities introduced by numerous jurisdictions and regulations, especially in free zones, complicate the data availability and coverage.

The landscape for MSME financing in the UAE is further complicated by the trust required for sharing data, along with the unique challenges faced by the predominantly expatriate population. When expatriates establish local companies, they often lack local credit history, which is a significant hurdle for a majority. This situation underscores the ideal scenario where accessing cross-border credit history data could play a crucial role. Such access would not only mitigate the issue of insufficient local credit history but also enhance the trust in data sharing, thereby smoothing the path for MSME financing in a region characterized by its diverse international community. 

Proposed solutions and requests to the Government 

A consensus emerged on the need for government intervention to facilitate MSME sustainability. The creation of a comprehensive framework for data collection and sharing, housed in a secure environment, was highlighted as a critical step. This framework should not only foster innovation but also build trust among original data owners, encouraging them to share their data confidently. 

Stakeholders called for a unified approach to propose and act within this framework, emphasizing the importance of sharing and accurately reporting on projects. Moreover, enhancing MSME finance education and promoting data protection and sharing culture were seen as key for building trust within the proposed framework. 

Key takeaways from the roundtable 

The roundtable concluded with several key findings, emphasizing the urgent need for accessible additional data to support MSME financing. The government is viewed as a vital source of this additional data.  

Education and support for MSMEs on managing cash flow, particularly in the early years, are crucial. The government’s role in facilitating access to more information through a data-sharing framework between the public and private sectors was underscored, a practice observed in other regions. 

The call for continued dialogue, including representatives from relevant government departments and organizations representing MSMEs, highlighted the collective resolve to address these challenges head-on. 

Moving forward 

The roundtable hosted by Cedar Rose, in association with BIIA and Wealth Today, marks a significant step towards enhancing MSME financing in the UAE. The insights and solutions discussed could pave the way for a collaborative effort to address the challenges faced by MSMEs in accessing finance. The proposed framework and calls for education and trust-building offer a promising path towards a more inclusive and supportive financial ecosystem for MSMEs in the UAE. 

Sources: Cedar Rose ; UAE MSME Financing Roundtable in Linkedin published by Cedar Rose:  

Editorial Comment:  BIIA was extremely pleased to be invited by our member, Cedar Rose, to chair this very important initiative in the UAE to highlight the importance of access to finance for MSMEs in the UAE and the role that information plays in enable access.

This initiative is one of several that BIIA have undertaken to support its members in their engagement with regulators and customers in the countries they operate.  Such ‘in country’ consultancy support is a recent initiative from BIIA as part of its strategic work to extend their services offering.