Any smart economist will tell you that putting all of your eggs in one basket is risky and a bad idea for economic stability. Despite this advice and knowledge many people and countries continue to do this. However, more countries are beginning to realize the value of economic diversification and the importance of having multiple healthy sectors instead of hedging all bets on just one. One country which has been ahead of the pack for a long time is the United Arab Emirates (UAE). The UAE realized after the OPEC crisis in the 70’s that relying solely on oil to keep the economy going was dangerous. Since then they have slowly expanded the government’s investments into a wide array of manufacturing sectors.
The most recent display of this continued effort to improve economic health came this past Sunday when the UAE Cabinet endorsed the National Programme for Small and Medium Enterprises (SMEs). Many analysts are saying with the launch of this program the success rate of SMEs can be increased by 50%. The current success rate of SMEs in the UAE is around 25-30%. The new program will be controlled under the umbrella of the Ministry of the Economy. The aim of the program is to provide technical support, training and other expertise which can boost SMEs quality.
Other institutes such as the Khalifa Fund for Enterprise Development in Abu Dhabi, headed by Hussain al Nowais, have provided support similar to this program before, but only at the local level. The new program will work coordinate at both the federal and local levels. Hussain al Nowais is glad the program has been created and says “it will efficiently contribute and support the national economy.” These changes are setting the UAE up for a more stable and balanced growth which is important for its economy and future generations.
Current statistics show the UAE has roughly 300,000 SMEs and they provide 86% of all jobs in the UAE market. Right now these SMEs output is equal to 60% of the UAE’s GDP, but the National Agenda aims to push their contribution to the economy up to 70% by the end of 2021. Growing the country’s non-oil GDP protects it against issues like the recent oil glut the world is experiencing due to increased drilling in the U.S. Further in the future it will also protect against growing renewable energies which could also cause a decline in the demand of oil. Other Middle East countries should take a note from the UAE when working to improve their economies in the future.