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Digital capabilities are key to resilience of MSMEs in Dubai during Covid: DET-Visa study

Digital capabilities are key to resilience of MSMEs in Dubai during Covid: DET-Visa study
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Growing acceptance of digital payments and expanding use of social networks, messaging apps, online marketplaces, and cross-border reach were key factors in boosting the recovery and resilience of micro, small and medium enterprises (MSMEs), according to a joint study conducted by the Department of Economy and Tourism (DET) in Dubai and the Visa Economic Empowerment Institute (VEEI) to assess the resilience of small businesses in Dubai during the COVID-19 pandemic.  

A whitepaper that resulted from the study titled ‘Dubai MSMEs: Digital and resilient’ looks at the digital journey of MSMEs in Dubai and draws on Visa data to provide insights into UAE commerce trends.

The report noted that the pandemic led to a surge in e-commerce as business owners moved quickly to fulfill their customers’ demands. The study surveyed businesses that are actively accepting card-not-present (CNP) payments as an indication of e-commerce activity. For all businesses in Dubai, this percentage increased from 8 percent in July 2019 to 13 percent in August 2021, a growth of 60 percent. For small businesses, the percentage increased from 7 to 12 percent over the same period, a growth of 70 percent. Dubai saw a record 83 percent YoY increase in the number of eCommerce licenses issued in the first half of 2020.

Abdul Baset Al Janahi, CEO of Dubai SME, an agency of the Department of Economy and Tourism in Dubai, said

“Small and medium enterprises that operate in Dubai enjoy distinctive advantages. The emirate’s constantly evolving enabling ecosystem provides the ideal conditions for SMEs in the emirate to adapt to challenges. This has been a key factor driving their resilience and stability during the pandemic,”

Enhancing the digital capabilities of SMEs has always remained a priority for Dubai SME, and our efforts in this direction took a new turn with Dubai announcing its strategic vision to be a leading innovative digital economy. The findings of the DET-VEEI study confirm that digital is the way forward for small and medium enterprises and the best pathway to sustain their growth.”

Dr. Saeeda Jaffar, Visa’s SVP and Group Country Manager for GCC region, said

“The global pandemic and resulting economic crisis have severely impacted all businesses, with the smallest of firms struggling the most. It is therefore encouraging to see merchants in Dubai — especially those that have embraced digital commerce — feel optimistic about business recovery and growth,”  

“Supporting MSMEs has always been a top priority for Visa and is also the key to economic recovery. The Dubai government has spared no effort in developing a digital infrastructure that supports remote operations and digital business models for MSMEs in the ‘new normal’. Given our aligned goals, we are pleased to be able to share the results of this study in partnership with DET.”

Key findings from the VEEI survey on MSMEs include:

• A majority of MSMEs in Dubai experienced growth in 2020. Forty-three percent of the surveyed firms had positive revenue growth in 2020. Not surprisingly, firms that experienced the fastest revenue growth in 2020 were optimistic about growth in 2021.

• The biggest COVID-19 effects were on sales and employment. For most firms, domestic and international sales and purchases, customer bases, and employment were among the largest segments affected by COVID-19.

• MSMEs adopted new payment capabilities during the pandemic—and transitioned away from some familiar ones. Accelerating new trends, Dubai has seen a continued shift away from payments by cash and cheques and towards digital methods. The majority of firms in all size categories still accept cash, but mobile payments, QR codes, established non-card e-commerce payment providers, and newer entrants in the payment space kept gaining users, especially in comparison with pre-pandemic levels. In a striking development, more medium firms reported accepting mobile payments than cash in domestic transactions.

• MSMEs expanded their use of social networks, messaging apps, and online marketplaces. MSMEs increased their digital activity across size categories. The use of these online marketplaces doubled in many cases from their pre-pandemic levels.

• The main priorities MSMEs identified in continuing their recovery is getting customers back, followed by diversifying their products and services, exporting to new markets, and digitising their sales channels. Firms that sell online placed loans and grants in the bottom half of their strong needs. Not surprisingly digital sellers included cybersecurity among their top needs.

• Looking ahead, firms plan to prioritise improving their digital capabilities. Firms in every size category indicated they will prioritize expanding their digital marketing capabilities, growing their online sales, and amplifying their use of digital payments. About a quarter to a third of firms, depending on the firm size category, have set out to telework before or during COVID-19, and almost another third of firms reported that they are looking to pursue teleworking soon.

Based on the results of the VEEI survey of MSMEs in Dubai, and with a view to increasing collaboration between the public and private sectors, DET and Visa offer the following recommendations to further empower small businesses in Dubai.

• Emphasise digital enablement assistance for MSMEs.

• Keep consumers in mind when driving digital ubiquity in Dubai and elsewhere.

• Prioritise cybersecurity capabilities for small businesses.

• Help small businesses connect to marketplaces and use eCommerce capabilities to export.

News Source: Dubai Media Office

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