Ep. 72: Marwan Al Suwaidi - Khalifa Fund Supporting Small- to Mid-Sized Enterprises

Contact Marwan:
https://www.linkedin.com/in/marwan-al-suwaidi-01189828/


Khalifa Fund for Enterprise Development:
https://www.khalifafund.ae/
Khalifa Fund Mission: "To raise Entrepreneurs
and SMEs efficiency by building capabilities, unlocking financing
and service options, integration with different stakeholders and
advocating the entrepreneurial culture."


FULL EPISODE TRANSCRIPT
Mitch: (00:05)
Welcome back for episode 72 of Count Me In, IMA’s podcast about
all things affecting the accounting and finance world. I am your
host, Mitch Roshong, and the episode I am introducing is for a
conversation between our co-host Rouba Zeidan and Marwan Al
Souwaidi, a seasoned finance specialist and the Director of
Finance & the Procurement Support Services Department at
Khalifa Fund. In this episode, Rouba and Marwan discuss the
future of small- to medium-sized enterprises in the Gulf
Cooperation Council and the role the Abu Dhabi-based Khalifa Fund
is playing in supporting this fundamental segment of the economy.
They also talk about how businesses can sustain and reinvent
their models following COVID-19, so keep listening for another
insightful and valuable episode of Count Me In. 


Rouba: (00:56)
So let's start with the Khalifa Fund, which is the company that
you represent. It was established in 2007 as an independent
not-for-profit SMEs socioeconomic development agency by the
government of Abu Dhabi. The fund was originally set up to
support the culture of investment amongst UAE nationals and
developing obviously the SME investments in the Emirates. What
was the vision behind such an initiative byt Abu Dhabi? 


Marwan: (01:24)
Prior to 2007, let’s say, actually no one was providing loans to
small and medium enterprises, so there was a vague gap in the
market. So, Khalifa Fund was established to take a position that
banks and financial institutions we shy to take. So, the main
idea or the main wisdom of creating the Khalifa Fund is to
nurture the SME ecosystem in Abu Dhabi fairs, then by 2011, we
moved to the entire UAE. So, that was the main wisdom or vision
behind creating the Khalifa Fund: to encourage UAE nationals to
go to the private sector, by establishing your own firms, take
some employment from the public sector to the private sector, and
provide like a financing vehicle, banks financial institutions
did not take that step at that time. 


Rouba: (02:43)
Okay. Initially you’d started for local purposes, national
purposes, but eventually in 2015, the Khalifa Fund diversified
its efforts internationally with a like a portfolio of some one
billion dollars across 22 countries in 3 different continents :
Africa, Asia and Europe. How were these regions selected? And
what are some of the promising industries that the Fund is
actually looking out for, and mostly interested in?


Marwan: (03:11)
Mainly, going international came from a direction from His
Highness Sheikh Mohammed Bin Zayed, crown-prince of Abu Dhabi.
So, the main idea is also to support the friend countries to
boost their economy through creating employment in their country.
That was the main wisdom behind going international. We have for
example the Chechen Republic, mainly for innovation, also Belarus
in the innovation sector, because we see that there is a big
market or an encouragement for the society there to move to that.
So, we analyze the country, before going there, we find potential
areas that can be developed in that country and that can support
the purpose of creating employment and enhancing the
ecosystem. 


Rouba: (04:18)
So, mostly, it revolves around innovation across various sectors.
You’re looking for new ideas, fresh new concepts.


Marwan: (04:26)
True.


Rouba: (04:26)
Excellent. So, according to the Credit Bureau, the total credit
for SMEs in the UAE totaled to 24 billion dollars by end of last
year. How is that figure expected to increase or decrease under
the current economic developments resulting from the COVID-19
pandemic?


Marwan: (04:44)
COVID-19 is the tipping point and I think the economy will be
different. So, the methodology of the regular loan provided prior
to the COVID-19 will be different post-COVID-19, entrepreneurs
will be different, people who are going to go to them, to the
market, need to be agile, flexible. The sector, private sector
and classers will be different. We cannot say it’s going to
increase or decrease because it will not be compared to what it
was prior to COVID-19. This is something else that we are going
to talk about.


Rouba: (05:31)
Would you imagine it to be stronger than it was pre-COVID?


Marwan: (05:36)
I think that COVID-19 is very challenging for the SME sector. So,
SMEs that are going to survive during COVID-19 will end up
learning a lot of things that they never learnt before. So, a
solid will be much so important, and they can easily build on
that. Entrepreneurs who did not survive during COVID-19 but saw
how the market changed are going to come back with a different
mindset and a different approach to the market. So, I think SMEs
will be performing much better than before COVID-19. 


Rouba: (06:27)
Amazing, a positive perspective, as it should be pf course. So,
when looking at the stats on SMEs globally and regionally, it’s a
fairly similar scenario across the board, in the sense that they
represent the biggest percentage of the private sector businesses
and employ the largest workforce. For example, if you zoom in on
the UAE, they represent more than 60 per cent of non-oil GDP and
94 per cent of the total number of companies operating in the
country. And when you look at the job spectrum, they provide more
than 86 per cent of the private sector's workforce – according to
the Ministry of Economy. What is the government doing to help
them get through this critical phase which stands to have, as you
mentioned earlier, a tremendous impact, in some cases it is going
to mean everything in regard to survival?


Marwan: (07:22)
The government introduced many government stimuli. One of them is
the targeted economic support scheme, the 50 billion dirham that
was given to the banks, so the banks will support our financial
support to the SMEs, out of their bank sheet, let’s say, which
came like a heavy relaxation to the banks. Yes, so the banks, by
the 50 billion dirham, which is the economic stimulus, will be
able to provide financial support to the affected SMEs by waving
a lot of fees, by waving or not taking the installment, during
the next 3 to 6 months, plus providing loans for the working
capital, because, again COVID-19 affected the working capital.
The clash operating cycle. So, the banks are more relaxed now
because they are going to provide the funds off their bank
sheets, this is one thing. On the local governments, each Emirate
has its own government stimulus to the SMEs. So, I think UAE is
one of the best countries who proacted into supporting the
economy beginning of March 2020. So, I think that the UAE
government acted very fast.


Rouba: (09:04)
Yes, I definitely second that motion. I’m based in the UAE, have
been for the past forty years, and to be honest, when you
contrast this globally, I feel really privileged to be in this
area at this critical time, they have been wonderful, in agility
as you mentioned, it’s a crucial kind of attribute at this point.
In a survey conducted by the Pearl Initiative, they found that
70% of SMEs surveyed in Saudi Arabia and the UAE stated that they
face a number of challenges such as economic conditions and
finding experienced personnel, they also noted a key one that
comes to mind which comes to mind, which is raising capital. If
this was a...