What challenges SMEs face
dubai — An absence of talented and experienced employees, funding difficulties and the prevailing negative economic outlook are the main challenges that affect micro, small and medium enterprises (MSMEs), according to a new report by the Pearl Initiative, a Gulf businessled non-profit organisation promoting a corporate culture of accountability and transparency as a key driver of competitiveness across the region.
The report was compiled from the findings of a survey that analysed the state of corporate governance in more than 1,000 MSMEs across the GCC region and the key obstacles they face.
Demonstrating ambitious plans for growth, 89 per cent of respondents reported their plan to raise capital in the next one to two years, even as they face slow economic growth. On average, 50 per cent of those surveyed confirmed the existence of corporate governance documents within their firms, although only 30 per cent acknowledged the implementation of these (i.e. delegation of authority, audit reports, risk reports and staff feedback), and even less admitted to proper auditing of documents.
The findings indicate clear challenges for MSMEs in the region, with business reputation, financial performance, ethics and social responsibility emerging as crucial factors in attracting investors and longterm funding.
Carla Koffel, executive director at the Pearl Initiative, said: “One of the Pearl Initiative’s long-term goals is to support the region’s economic development. One significant step we can take in achieving this goal is to support thriving MSMEs across various sectors across the Gulf region. Through our discussions with business leaders from MSMEs, we have sought to understand the challenges they face and to identify the best ways of addressing them.”
Koffel added: “While there is no one-size-fits-all solution, the findings from this report indicate that implementing an integrated system of corporate governance practices can help MSMEs achieve agility and resilience to overcome some of the key challenges they face. We also recommend that the MSME community develop and adopt baseline governance capabilities that can be scaled up to meet their evolving business needs.”