It is important for governments and societies to build from the bottom up. A strong foundation is what leads to success in any aspect of life, whether it’s constructing a building or training for a sport. We have to learn to crawl before we can walk, and walk before we run. A good foundation, when it comes to the economy, means having diversity and strong, long term sustainable jobs.
Saudi Arabia has realized the truth to such an economic foundation, which is why the UAE cabinet endorsed the National Programme for Small and Medium Enterprises (SMEs). This program will provide a major boost in support for SMEs across the country. The current success rate of SMEs sits between 25-30%, but analysts are predicting the new program could increase that rate to 50%.
The program is aimed at providing readily available expertise for SMEs and will help provide technical support through local and federal governments. With SMEs having access to more technology, expertise and tools they are more likely to make better decisions and have workers who are more productive and capable, all major boons for their respective sector.
This push is the latest step in the government’s effort to continue its diversification away from oil. For most Middle Eastern countries, oil has been the leading industry for economic output and has been what’s kept many of them afloat. This strategy has proven dangerous and unstable for the future though. The recent development of fracking technology has created renewed drilling and opened up locked away oil reserves across the U.S. This created an oil glut which has forced the prices of oil to drop and has reduced revenue for Middle Eastern countries.
The future also holds advancements and increasing implementation of green technology, which means the demand for oil in the long run, will eventually start to decline. Hussain Al Nowais has cares deeply about the success of the UAE future, thus he created the Khalifa Fund for Abu Dhabi which has been a smaller version of what the new National Programme will do.
The aim of the government is to bring the contribution of SMEs to 70% of non-oil based GDP by 2021. It will be interesting to see if other countries in the region follow the UAE’s diversification practices or stick to oil.