Risk and Finance

Expo 2020 – SMEs are central to the Sustainability message

A central mission of Expo 2020 is to stimulate the style of innovation and entrepreneurship that is capable of driving economic diversification and sustainable development. So, it’s entirely logical that the encouragement of small and medium-sized enterprises (SME) has emerged as an organic part of the Expo’s vision.

Logical because SMEs account for 94% of all firms in the UAE, contribute to more than 53% of GDP, and to 52% of all employment. Dubai aims to use the Expo to market the UAE’s business-friendly qualities to a global audience, supported by recent reforms to visa and ownership legislation aimed at further improving the business environment.

How? Well, this is partly being achieved through the diversion of spending to the SMEs that are official Expo 2020 licensees and through financial benefits provided to SMEs registered with the event’s online marketplace (OMP) – a custom-built, end-to-end procurement system.

These benefits include a guaranteed 50% payment upfront when procuring goods, or 25% when contracting services; the acceptance of bank cheques instead of deposits; and a commitment to clear payments in 30 days instead of the industry standard of 90 days. Expo 2020’s banking partner Emirates NBD is also offering OMP-registered SME accounts with preferential loan and transaction rates, working capital support and low minimum requirements.

Scaling up

The OMP also includes a growing database of almost 40,000 suppliers that is available free of charge to help SMEs scale up more quickly – in place of commercial e-procurement tools that can cost thousands of dollars. So far, about 85% of the firms that have signed up to the OMP are SMEs.

By the end of July, Expo 2020 had awarded 55.4% of all direct and indirect contracts, equal to AED2.4bn ($650m), and was on track to deliver 20% of its total spend to SMEs.

One example is DGrade, which has been selected as an official licensee. This will help divert millions of plastic bottles from landfill or the ocean, with the company set to open a recycling plant in Dubai South in the fourth quarter of this year. The plant will shred plastic bottles and spin them into yarn for producing expo-branded clothing. Similarly, another licensee, The Camel Soap Factory, will showcase its locally produced, hand-crafted soap, which is made in a zero-waste facility in Silicon Oasis – which, remarkably, uses only as much electricity as an average residential villa in Dubai.

Scalable solutions of this type exemplify the economic benefits that the Expo aims to celebrate – and a key thread throughout is its supreme relevance to SMEs.

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