Cash flow key challenge in recovery of UAE-based small and medium businesses – survey

Financial concerns appear to be a sticking point for recovery for all businesses in the wake of the Covid-19 pandemic, with cash flow still a problem for small and medium-sized businesses (SMBs) in the UAE, a new report has found.

As many as 47 per cent of UAE-based SMBs touted cash flow as an ongoing challenge in June, down just 1 per cent from May, while 42 per cent of SMBs on Facebook in June reported lack of assistance, as compared to the 29 per cent in May, the Wave II update of the Global State of Small Business Report published by Facebook, in partnership with the World Bank and the Organisation for Economic Co-operation and Development (OECD), revealed.

The update is based on the second wave of new data on the state of SMBs collected from June 24 – 30, 2020, recording feedback of 25,000 businesses in 50 countries including the UAE.

As several governments around the world started to loosen Covid-19 lockdown restrictions, SMBs in these economies have begun to resume their in-person operations, albeit in a controlled manner. In the UAE, 79 per cent of small and medium-sized businesses on Facebook are now open for business, up from 65 per cent in May earlier this year, the report added.

Globally, those sectors most impacted by lockdowns are also the ones reopening the fastest – in the hospitality sector, the number of hotels, cafes and restaurants closed fell 13 per cent, from 32 per cent down to 19 per cent. Within the services sector, consumer-facing sub-sectors across the world also saw significant drops in closure rates: travel and tourism agencies (23 per cent point drop), hospitality and event services (14 per cent point drop), and education and child care services (13 per cent point drop).

Facebook has also announced a grant of $544,609 for eligible SMBs in Dubai to facilitate their economic recovery. The grant, made up of cash grants and Facebook ad credits, is part of the networking site’s pledge in March earlier this year where it announced a $100m grant programme to help 30,000 small businesses in over 30 countries where its employees live and work.

“Despite showing an incredible amount of resilience and creativity during the pandemic, small businesses still face major challenges. For many, cash flow is among their biggest difficulties. Direct financial support can make a difference in helping many of them pay their employees and keep their doors open for business. This is a part of our broader effort to support businesses, especially small businesses, in this time of need due to the impact of Covid-19,” said Ramez Shehadi, managing director of Facebook MENA.