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Business Unusual: the evolving role of start-ups and SMEs in MENASA

Business Unusual: the evolving role of start-ups and SMEs in MENASA

What a difference a couple of years make. Start ups and SMEs will soon rule the business roost across the MENASA region, says Sentinel’s Prajit Arora

September 28, 2011 3:36 by



Go back to Dubai a couple of years ago and the term ‘business as usual’ unequivocally equals to big and ambitious business.

Fast forward to today and the economic rollercoaster we are experiencing has put that term on its head. These days, ‘business as usual’ has increasingly come to mean entrepreneurial business.

Entrepreneurial activity is erupting across the Middle East, North Africa and South Asia (MENASA), promising to revolutionise economies and reinvigorate communities. According to the MENA private equity association, venture capital deals tripled in the past 2 years; a strong indication of the growth of entrepreneurship in the region.

The rapid and exponential growth has ushered in a new era of business, something which analysts have attributed to the global financial crisis, alongside an improvement of infrastructure and services for start-ups and entrepreneurs.

MYRIAD MILESTONES

In November 2010, the Celebration of Entrepreneurship (CoE) event took place. And, for the first time a platform was created in the Middle East where more than 1,500 thought leaders, inspiring entrepreneurs and creative minds could come together. That landmark event was backed by Abraaj Capital and gathered a full ecosystem of entrepreneurs, innovators, business leaders, youth and artists to instigate a new phase of entrepreneurship in the region. CoE represented a milestone in Dubai’s entrepreneurial landscape, where more and more individuals were being encouraged to take that step

In a similar trend, TED, a non-profit “devoted to Ideas Worth Spreading” opened its doors in Dubai under TEDxDubai, an independent chapter, in 2009 to bring under one umbrella the biggest, brightest and most innovative ideas worth spreading in the UAE.

TEDxDubai put the spotlight on some of the country’s most innovative ideas. The Parham brothers, the brains behind Wild Peeta, a Dubai-based fusion shawarma start-up and Mohammad Harib, founder of Freej, a popular animated series are just a couple of speakers that shared their story in hopes of inspiring others to follow their passion and turn it into a business. Since its inaugural meeting, TEDxDubai has played an important role in nurturing and showcasing Dubai’s finest ideas worth spreading.

With entrepreneurship events, start-up weekends and even “tweet-ups” becoming the mainstay in the UAE, and particularly in Dubai, it has become a little less daunting to turn “dream ideas” into a reality. Services such as those offered by the Department of Economic Development for start-ups and SMEs and those provided by organisations such as Sentinel Business Centres have made taking that courageous step forward a reality for many. These include a gamut of services, from legal paperwork to fully serviced office space.

BUSINESSES TO HELP START YOUR BUSINESS

Long gone are the days of coming to Dubai to make a quick dirham and leaving. Today, more and more business owners are looking to make Dubai their home, and grow their business here. The process of the setting up a business, however, is still labyrinthine and daunting to anyone who is setting up a business in the UAE for the first time.

For many, the lure of the Free Zone option is very attractive. Touted as being the quicker and more affordable option, many companies have blindly opted to pursue this, with many unknowingly operating illegally. According to Mohammed Shael, CEO, Business Registration & Licensing Division, DED, in an interview on Dubai Eye 103.8, “Free Zone companies in Dubai must have a local Dubai branch or local distributor in order to sell goods or services in Dubai, otherwise this is considered illegal.”

“The problem is that a lot of expats do not do their research adequately, and rely too much on word of mouth to make important decisions such as selecting their trade licence option,” added Mr Shael.

For many, the lure of the Free Zone option is there. Touted as being the quicker and more affordable option, many companies have blindly opted to pursue this, with many unknowingly operating illegally.

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According to Mohammed Shael, CEO, Business Registration & Licensing Division, DED, in an interview on Dubai Eye 103.8, “Free Zone companies in Dubai must have a local Dubai branch or local distributor in order to sell goods or services in Dubai, otherwise this is considered illegal.”

“The problem is that a lot of expats do not do their research adequately, and rely too much on word of mouth to make important decisions such as selecting their trade licence option,” added Mr Shael.

And with this comes the increasing need for assistance in building the properly licensed and set up foundation for these mushrooming businesses.

Start-up hubs or incubator facilities exist to eliminate a lot of the perceived hassle of obtaining a legitimate and appropriate trade license, and do away with many of the worries faced by start-ups. Perhaps more importantly, in an almost organic way, companies like Sentinel are helping create bridges across the network of entrepreneurs.

Finally, expect this same pace of evolution in startups and SMEs in the Middle East to continue and for this business unusual to eventually become the norm.


Prajit Arora is the Managing Director of Sentinel Business Centres



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1 Comment

  1. MMMMMMMMMMMMM on November 30, 2011 5:54 pm

    The biggest write-offs of loans by all banks based in the UAE have been in the SME sector followed by credit card losses particularly in the years 2009 and 2010. Whereas no one talks about the gaping holes in the bank’s bottom lines by big loans extended by greedy banks on “name lending basis”. The reason being, these big loans have since been restructured and the quarterly interest is being debited to the respective borrower company’s or group’s current account with the bank which are already running into overdraft. Banks will of course not admit this fact. However, for reporting purposes and media they will (without blinking) state that their loan book is healthy as loans are being serviced regularly. Slowly foreign banks will write-off the bad debts and move elsewhere.

     

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