Mohammed Al Fahim, the head of one of Abu Dhabi’s leading business groups, says the country’s older, established businesses should make a special effort to support struggling indigenous start-ups.
“In our time, the government helped us by announcing that all their purchases have to be done from local business houses – if a local trader or supplier is 10 per cent more expensive, it will still be acceptable to the government,” said Mr Al Fahim, the chairman of Al Fahim Family Council, which oversees a business group that is best known as one of the largest distributors of automobile brands in the UAE, including Mercedes-Benz, Fiat and Jeep.
“The government gave us a chance. It gave us the push, and we should now in return play the same part for young businesses,” said Mr Al Fahim.
The environment has become much tougher for Emirati entrepreneurs looking to go it alone, even more so in the past year or so since the oil price crash has strained government budgets.
A Gulf Finance survey last month found that SMEs were facing lower orders, slow payments and difficulties raising finance.
While not all SME sectors are suffering equally, it has become particularly tough for untested new businesses to get financed.
“What I heard from a lot of young start-ups is that to get finance, whether from banks or institutions, is not that simple; they have been struggling to get financed,” said Mr Al Fahim.
The government’s Khalifa Fund for Enterprise Development – set up eight years ago with Dh2 billion of capital – is often the first port of call for entrepreneurs looking for funding, although it can be a lengthy bureaucratic process.
“The Khalifa Fund does financing, but it takes a long time to approve it and this is the shortcoming of any governmental financing. SMEs require a quick decision, a faster response so they can catch the trend in the market at the right moment and before they lose interest,” Mr Al Fahim said.
More needs to be done on the finance side and private sector banks need to have better programmes for funding indigenous start-ups, Mr Al Fahim said.
While it is not the role of the established Emirati business groups to fund new businesses, they can and should offer specific assistance in a number of other ways, he added.
“We cannot force people to help the young start-ups, but morally they should be given a chance,” he said. “We can help them if they are in the same line of business as we’re in. Also, let’s say a shopping mall – they should provide a corner where they can charge [start-ups] a small rent and help them to grow. They have to sacrifice a bit of space with a minimum rent and help.”
Al Fahim group has a number of initiatives such as the family endowment, which has given hundreds of millions of dirhams to a wide variety of causes over the years.
In an informal talk to attendees at the SME forum in Al Ain last week, Mr Al Fahim reminisced about the rapid change in the UAE in his lifetime after the discovery of oil, which he has written about in his book, From Rags to Riches.
“During our time, in our generation, we were the pioneers and there were plenty of opportunities because companies wanted to distribute in the area and they needed someone to take their agencies and distributorships,” he said.
“The competition was less in the past than today” and emerging Emirati entrepreneurs need the same kind of help, he added. “The younger generation have bigger competition from outsiders and within the Emirates – so they are struggling and trying to prove themselves. We need to help.”
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