Dubai’s MSME Sector takes a Leap of Faith, Gains from E-Commerce

If we are to look at the sectors that converted challenges into opportunities during the pandemic period which kicked in widespread supply chain disruptions, e-commerce is bound to top the list. We are not talking about the United States, China or even for that matter South Korea which have warmed up to the e-commerce trend with sizable markets. The focus, instead, is on Dubai where the Micro Small and Medium Enterprise (MSMEs) survived the pandemic scare by leaning on digital payments and deploying cross-platform techniques.

“We have an ecosystem that constantly evolves. Enhanced digital capabilities of SMEs, which tops our priorities, is part of this evolutionary process. This is helping us in a big way in adapting to new challenges. In fact, it is this key factor that drove the resilience of SMEs while dealing with the challenges posed by the pandemic situation,” says Abdul Baset Al Janahi, CEO of Dubai SME – an arm of the Department of Economy and Tourism in Dubai which is a resource that provides support, information and outreach for the growing SMEs in the emirate.
A joint study recently conducted by the Department of Economy and Tourism Visa Economic Empowerment Institute (VEEI) confirms that the pandemic led to a surge in e-commerce as business owners made a quick migration to the tech platforms to fulfill customer demands. The study, interestingly, surveyed businesses that actively accept card-not-present (CNP) payments which is a definite indicator of e-commerce activity. “There was a 60% increase in e-commerce activities across sectors between 2019 and August 2021,” reveals Al Janahi.
This, in other words means, a phenomenal growth from merely 8% three years back to 13% for all businesses while in the case of small business for the same period the growth was much more robust at 70% from 7% to 12%. This is beside an 83% year-on-year increase in the number of e-commerce licenses the emirate issued in the first half of 2020. “These figures prove that digital is the way forward for SMEs and the best pathway to sustain growth and we are sparing no efforts to develop digital infrastructure to support their new-age business models,” asserts Al Janahi.
If one is to go back in time by 5-6 years, the e-commerce value of Dubai was not much. E-commerce sales, however, saw a 19% increase in 2019, totaling $ 1.5 billion, from 2017, according to Dubai Chamber of Commerce and Industry (DCCI) which estimates that the United Arab Emirate’s (UAE) e-commerce market value at $27.2 billion today. DCCI had earlier predicted the unbridled growth of the e-commerce sector taking advantage of the 100% ownership rule, flexible long-term visa options, high internet penetration and matchless infrastructure complimented by a nourishing ecosystem.

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The smallest of the firms were the ones that struggled most during the pandemic, informs Dr. Saeeda Jaffar, Visa’s SVP and Group Development Manager for GCC region. “Supporting MSME’s is our priority and it is also the key to economic recovery. It is encouraging to see that merchants in Dubai are benefitting better from e-commerce,” adds Jaffar. The new trend, according to Jaffar, confirms Dubai’s tectonic shift from cash and check payments to digital methods.
There is no denying that the majority of firms in all size categories still accept cash. Still, digital methods have gained more ground compared to pre-pandemic levels. What is striking more is medium-sized firms accepting mobile payments instead of cash in domestic transactions, Jaffar points out. Encouraged by the trend, many firms in every size category now see improving their digital capabilities a priority to grow online sales. Meanwhile, what should not be missed in the ongoing narrative are issues related to cybersecurity which too are getting tackled with greater vigor.
For further information, please visit https://sme.ae/Default/en

Disclaimer: Content Produced by Business in Dubai

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