Tech Innovation: The Path To New Revenue Channels For UAE SMEsWith a well-established infrastructure for digital payments, the current UAE landscape lends itself to the adoption of digital commerce.
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In November, H.E. Sultan Al Mansouri, the UAE Minister of Economy, said small and medium-sized enterprises (SMEs) are "key drivers of the UAE economy," pointing out thatsome 350,000 companies in the UAE fall under the SME category,and provide jobs for more than 86% of the private sector's workforce. More recently, the minister reiterated the UAE government's efforts to promote SMEs, and expand the sector to constitute 90% of the UAE's gross domestic product.
However, despite these strong contributions, life for SMEs isn't always easy sailing. With the recent decline in oil prices and slower economic activity, SMEs find it challenging to gain new business, manage cash flows, and to secure capital to invest in innovation and product development.
According to UAE Banks Federation chairman Abdul Aziz Al Ghurair, loan impairments from SMEs were expected to range between AED5 billion and AED7 billion in 2015. Further, almost three-quarters (74%) of respondents tothe Gulf Finance survey in Q4 2015said that they faced difficulties in their ability to raise money, compared to 48% in the third quarter.
相关的现金流the issue of late payments –payments made to them for their goods and services provided to their vendors and customers- which can adversely affect a small firm's ability to invest or expand its workforce.
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There have been initiatives to facilitate SME funding through peer-to-peer lending programs that rely on crowdfunding. For instance,Beehive, founded in 2014, is the first and only P2P financing platform in the UAE that lends money to unrelated individuals, or "peers," without going through a traditional financial intermediary, such as a bank or other financial institution.
In addition, Visa is helping governments and large corporates to improve their payments to suppliers via the Visa smart solutions virtual program. This comprehensive payment solution is helping transform the way the government pays their suppliers and will play a significant role in offering SMEs improved efficiency, access to liquidity and therefore overall improvement in cash flows.
The adoption of new forms of technological innovation could help create new revenue channels and reduce overheads, which would in turn positively impact company bottom lines. The advent of digital technologies has acceleratednew channels of commerce, including e-commerce and m-commerce, which have created new ways for consumers to make purchases in the physical and digital worlds such as tapping their mobile phone or connected watch onto a contactless payment terminal, scanning a QR code or simply clicking a button. Similarly, merchants and SMEs today also have access to more mobile and digital solutions that take less time and expense to implement and can adapt to different situations.
According to PayFort, the UAE's e-commerce market is expected to reach US$4.4 billion in 2020, up from $2.3 billion in 2014, suggesting e-commerce will be an ever increasingly important channel for the SME. Additionally, smartphones are already an integral part of the Middle East mobile market- approximately 41% of Arab smartphone users make purchases through their device.
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With a well-established infrastructure for digital payments, the current UAE landscape lends itself to the adoption of digital commerce.The increasing number of connected devicesacross the region demonstrates widespread readiness for "smart technology," or the Internet of Things (IoT), with Frost & Sullivan predicting four billion connected devices in the region by 2020. GCC countries are well equipped to handle the rise in connectivity, as most of them operate on 4G or LTE mobile network technology.
Clearly, this is the time for SMEs to plan their operations to make the most of these emerging technologies. The solution, we believe, lies in open commerce, which is why we recently launchedVisa Developer,我们的网络公司——大nd small- can access VisaNet directly, and leverage this readymade capability to develop new innovative services and solutions. As a global payments technology company, Visa has years of experience and investments to ensure consumers, businesses and governments in more than 200 countries can engage in commerce with ease and absolute peace of mind. These unique experiences enable partners to interact with Visa payment experts and explore new products and technologies that advance the payment experience in areas such as mobile, security and cloud-based payments, and contribute to the overall growth and development of SMEs.
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