Small and medium enterprises form the backbone of the UAE’s economic diversification strategy, with a government target of increasing SME contribution to non-oil GDP from approximately 53 per cent in 2022 to 60 per cent by 2031. The Mohammed Bin Rashid Fund for SMEs, Khalifa Fund, and emirate-level support programmes collectively aim to expand the SME base, improve survival rates, and enhance access to procurement, finance, and talent.
SME GDP Contribution Progress
| Year | Target (% Non-Oil GDP) | Actual (%) | Total SME Revenue (AED Bn) | Status |
|---|---|---|---|---|
| 2022 | — (Baseline) | 53.0% | 690 | Baseline |
| 2023 | 54.5% | 54.2% | 735 | Marginal |
| 2024 | 55.5% | 55.8% | 798 | On Track |
| 2025 | 57.0% | 56.5% (est.) | 850 | Marginal |
| 2026 | 58.0% | — | — | Pending |
| 2031 | 60.0% | — | — | Target |
SME Sector Health Indicators (2024)
| Metric | 2022 | 2023 | 2024 | Trend |
|---|---|---|---|---|
| Total registered SMEs | 357,000 | 385,000 | 418,000 | Growing |
| New SME registrations (annual) | 42,000 | 48,000 | 54,000 | Accelerating |
| SME workforce employment | 2.1M | 2.3M | 2.5M | Growing |
| Five-year SME survival rate (%) | 38% | 40% | 42% | Improving |
| SME bank lending (AED Bn) | 85 | 98 | 115 | Growing |
| Government procurement from SMEs (%) | 10% | 14% | 18% | Improving |
SME Distribution by Sector (2024)
| Sector | Share of SMEs (%) | Revenue Growth (YoY) |
|---|---|---|
| Trading and retail | 32% | +6.5% |
| Professional and business services | 18% | +12.8% |
| Construction and real estate | 14% | +8.2% |
| Technology and digital | 12% | +22.5% |
| Manufacturing | 8% | +10.4% |
| Hospitality and food services | 7% | +9.8% |
| Transport and logistics | 5% | +7.1% |
| Other | 4% | +5.2% |
Progress Rate Analysis
The SME sector’s GDP contribution has improved modestly, reaching an estimated 56.5 per cent of non-oil GDP by 2025. The technology and digital services subsector is the primary growth driver, with SME revenues in this category growing over 22 per cent annually. Government procurement reforms — mandating that 18 per cent of federal procurement goes to SMEs in 2024, up from 10 per cent in 2022 — have provided a significant demand-side stimulus.
The five-year survival rate remains a structural weakness at 42 per cent, well below the 55-60 per cent rates seen in advanced economies. High operating costs, visa-linked business licensing, and competition from larger corporates with scale advantages continue to pressure SME viability. Access to finance has improved through dedicated SME banking products and government-backed guarantee schemes, but lending criteria remain conservative.
Risk Factors
| Risk | Severity | Impact |
|---|---|---|
| Low SME survival rates | High | Undermines cumulative sector growth |
| Rising operating costs (rent, labour) | High | Compresses SME margins |
| Corporate tax compliance burden | Medium | Disproportionately affects smaller firms |
| Limited access to growth-stage finance | Medium | Prevents SME scaling |
| Talent competition with large employers | Medium | Restricts SME workforce quality |
Outlook
The 60 per cent GDP contribution target is achievable by 2031 but requires addressing the survival rate gap and operating cost pressures that disproportionately affect smaller enterprises. The most promising policy lever is continued expansion of government procurement set-asides for SMEs, which directly channels revenue to the sector. Corporate tax implementation must be managed carefully to avoid burdening SMEs with compliance costs that erode their competitive position. The technology and professional services subsectors will drive the majority of incremental growth.
Current Assessment: Marginal — GDP contribution growing but survival rates and operating costs constrain progress.