The need to support both local & expatriate entrepreneurs

Posted on Thu Oct 03 2013

The government needs to create a conducive environment for both local and expatriate entrepreneurs to boost the economy, said a keynote speaker at the 4th Middle East SME Forum.

“On one hand, train local entrepreneurs, support them, provide capital and make sure they succeed, but also bring in overseas entrepreneurs,” said Frank Khoie, chairman and CEO of Dubai-based Khoie Group. “It is in fact a blessing to the local entrepreneurs because they will create more businesses and more opportunities.”

The UAE has a great economy and infrastructure which attracts international entrepreneurs to set up and expand their businesses, he noted. “[Imagine an] SME or businessman who comes from another country and takes his 5 or 10 or 20 million and transfers his company here after hearing fantastic things about Dubai and Abu Dhabi…After three or six months, he is learning his way around, he is established and is beginning to understand the rules, labour laws, residence permits and then learns that I have to renew my residence in three years.” He also learns about the unsettling chances that the visa renewal could be disapproved when the time comes, which leaves him asking: “But I have invested, have so much business and assets, and have family and children here. How is that possible?”

Here comes the government’s responsibility to implement policies to not only bring overseas entrepreneurs, but also keep them. “If anyone comes and lives in the country and receives a residence permit, they should become defacto citizen,” Khoie noted. His opinion echoes that of a number of foreign SME owners and entrepreneurs who have invested time and funds through their ventures, and have contributed to the economy.

Likening entrepreneurs to migratory flamingoes, Khoie underlined the need to retain such contributors: “Migratory flamingoes are unbelievably beautiful and you get 2,000 and 5,000 of them once a year. I was once joking with a friend, ‘Can you imagine if we could come up with an idea where we keep them here and not have them migrate back to Sweden? What a fantastic tourist attraction it will be?’ Entrepreneurs are no different. They are the best asset any society could have, because they are the engine of the economy and they are what’s making the economy move.”

He also stressed that public and private sector partnerships are crucial in developing policies and regulations that encourage entrepreneurship and fuel the economy. “The government is responsible to create the environment, provide the infrastructure and facilities in order for the private sector to succeed and continue to create jobs, economic opportunities and businesses,” he said.

Creating such an ecosystem will help market growth and expansion, and can pave the way to what Khoie hopes to be the transformation of the Middle East to West Asia. He aspires to see the establishment of a West Asia Free Trade Area – to be aptly called WAFTA – based on the model of the Association of Southeast Asian Nations (ASEAN) Free Trade Area, a trading bloc of 13 countries. “[We can then] have the UAE – which has become the Switzerland of the region – be a role model for all these countries In the GCC and Middle East. We can change into West Asia to become a successful region, and once our own free trade area has successfully connected, then talk about free trade areas in Europe, the US and other blocs.”

Access to finance

Another role public and private sector partnership can play is in easing access to finance for SMEs – whether it is seed capital for a start-up or growth capital for established companies. There is progress being made in this area with both government and private initiatives flourishing across the region. Speaking to SMEinfo, Tamer Bazzari, CEO of Genero Capital, said: “Governments have created programmes around SME financing, so there are different funds in the region that finance SMEs. A lot of them also focus on the local population as opposed to the expatriate population. Some of them have more of a  donation structure where they give the money and don’t do much in terms of accountability; Others – which is the right way to go – are doing some monitoring and measuring the performance of the SMEs, the return on capital, and putting certain types of KPIs as part of their lending portfolios.”

Some governments are also partnering with the private sector, he added. “They are financing via partnerships with local banks, for example, whereby the government would take the bulk of any losses.  For instance, the government will take 80% of the losses and the local bank will take 20%.” Others are involved through equity funds for long-term investments.

However, the demand for financing is more than supply, he noted. Talking about the UAE, for instance, he said, “You do have organisations that are offering finance, such as Khalifa Fund for Enterprise Development and Dubai SME…but I believe that there is more opportunity for funding such companies and such initiatives. The UAE has an ecosystem where innovation can flourish – with the free zones and the fact that it’s a very multi-cultural society and has a young population. The ecosystem here is fantastic to create SMEs and find entrepreneurs who will create very successful businesses. The venture capital industry, angel investors, crowd funding and those type of funding sources are in need [even though some do exist]. There are good business opportunities for those types of establishments to be set up and developed.”


About the Author

SMEinfo
SMEinfo
SMEinfo is an all-in-one digital resource and business community for start-ups, entrepreneurs and SMEs in the UAE.

Comments ( 0)

Leave a Comment

Top Trending Posts

Archives

Archives

TWEETS