Ministries of Economy & Finance launch indicator to gauge participation of local SMEs in government procurement bids

H.E. Al Saleh highlights Ministry of Economy’s vision to create a competitive business environment for SMEs in the country

H.E. Younis Haji Al Khoury underscored the Ministry of Finance commitment to grant Exclusive Privileges for entrepreneurs and SMEs as part of its efforts to develop and modernise the government procurement policy

 The Ministry of Economy and the Ministry of Finance announced the launch of ‘Government Procurements for Local SMEs Indicator’ to gauge the participation of SMEs in tenders launched by federal entities in the country. This indicator will play a vital role in supporting the achievement of the national objective to elevate the participation of these companies in government procurements to 10 per cent in line with the Federal Law no. 2 of 2014 concerning SMEs.

The announcement was made during an SMEs session organised by the Ministry of Economy in cooperation with the Ministry of Finance in the presence of their excellencies the undersecretaries of support services who are the key decision makers in the procurement departments of more than 40 federal entities in the country. A total of 120 participants representing the federal entities in the country and 10 partners of the Ministry of Economy in the field of procurement of SMEs attended the session.

 The event also announced awards recognising the entities who have made maximum contributions to supporting local SMEs in government procurement, explaining the most important award criteria.

 H.E. Abdulla Ahmed Al Saleh, Undersecretary of Ministry of Economy, underlined that the UAE, thanks to the vision of its wise leadership, remains keen to empower SMEs and promote their competitiveness, considering their importance as key drivers of economic growth over the next 50 years. H.E. Al Saleh explained that the Ministry of Economy has adopted a vision to create a competitive and encouraging business environment for SMEs in the country and encourage them to expand and grow. In addition, the Ministry launched a program for government procurements as part of the national program for SMEs to enhance their participation in government bids and tenders launched by federal entities. These efforts have enabled more UAE citizens to enter the market, compete and enter the field of purchasing. They equip SME-owners with experience, thus enabling them to avail maximum benefits from available offerings and incentives.   

The Undersecretary said: “The event is a new start to a series of sessions and panels that will be held to enhance government-private cooperation to help develop SMEs in the country. They will support small businesses led by young Emiratis and provide them with the means to commercially succeed, sustain and expand. Besides, it will help raise awareness on the importance of government procurements for SMEs to be able to play key roles in the UAE’s economic development.” 

 “The new indicator will come into effect in the beginning of 2024 in cooperation with the concerned federal entities. it will effectively gauge the performance of the government entity awarding tenders and follow up its implementation for the objective in particular and for all participating entities in general. The indicator is also a tool for comparing federal entities’ efforts in offering support to SMEs participating in bids.”

H.E. Al Saleh said: “The efforts to raise the participation of SMEs in government procurement to 10 per cent according to Federal Law No. 2 of 2014 on SMEs continue. This is especially relevant since there are more than 557,000 SMEs in the country, and the sector contributed 63.5 per cent to the country's non-oil GDP in 2022.”

 Empowering Entrepreneurs

H.E. Younis Haji Al Khoori, Undersecretary of Ministry of Finance, emphasised the importance of supporting and developing small and medium enterprises (SMEs), due to the sector’s fundamental role in achieving the UAE’s ambitions and its contributions to the national economy. Numerous mechanisms and programmes have been launched to support these businesses. His Excellency added: "The Ministry of Finance is committed to developing and implementing initiatives aimed at promoting and supporting SMEs. Among these initiatives, is allocating a percentage of purchases, contracts and government services for these enterprises, equivalent to no less than 10% of federal government entities’ budgets for SMEs."

H.E. Younis Haji Al Khoori said: “The Ministry of Finance has laid solid foundations to enable SMEs to participate more effectively in federal entities’ projects and tenders. The Ministry has developed a set of reports that allow federal authorities to monitor and control the spending allocated to SMEs. The Ministry also encourages all SMEs to register in the Digital Procurement Platform, to enable them to view and access government tenders, participate in them, and win contracts that support their growth journey. “

H.E. Younis Haji Al Khoori added: “The Ministry of Finance is committed to the advancement of the national economy and to supporting innovative entrepreneurs and SMEs. The Ministry provides them with a number of benefits, including granting them a 10% price preference for SME suppliers when evaluating government tenders, adding a product mark to SME products and services, and exempting them from submitting a Performance Bond, replacing it instead with a retention amount that will be withheld from their initial invoices. The Ministry also instructed federal procurement teams to ensure that a minimum of three SME providers are approached to bid for work pertaining to Limited Offerings .”

H.E. Younis Haji Al Khoori indicated that the Ministry of Finance's launch of the Digital Procurement Platform promotes SME participation through framework agreements with suppliers. The platform also offers exclusive features to entrepreneurs and SMEs by clearly classifying them across the platform to direct government entities to work with them and to facilitate access to their services and products.

H.E. added: “The launch of the award to support SMEs contributes to creating more opportunities for this sector, through promoting their unique capabilities, highlighting their achievements and ensuring further collaboration with federal entities. Applying for the awards gives these enterprises the opportunity to communicate with experts and to learn about optimal frameworks for managing, developing and growing their business.”

H.E. Younis Haji Al Khoori also said: “SMEs face three main challenges; the huge volume of tenders in comparison to the numbers of SMEs, the availability of financial solvency, and the energy and production capacity needed to meet the requirements of tenders. If managed optimally, these challenges constitute important opportunities for SME growth and development.”

The event featured a number of sessions. The first session saw the Ministry of Economy elaborate on the prominent role of SMEs in enhancing the competitiveness and strength of the national economy by increasing production, exports, and foreign trade. They also contribute to creating job opportunities and introducing innovative and creative ideas in various fields.

 In the second session, the Ministry highlighted the objectives of Federal Law No. 2 of 2014 concerning SMEs, most notably the development of SMEs to be key contributors to economic development in the country. Another important goal is to disseminate and encourage a culture of research, creativity, innovation and entrepreneurship and enhance the competitiveness of SMEs to enable them to create more job opportunities in the country. Article 10 of the law stipulates that 10 per cent of the procurements for federal entities must be allocated to members of the National Program for SMEs; 5 per cent to companies and entities owned by the federal government and 25 per cent or more of them. The session also underlined the advantages offered by the government procurement policy and the SMEs digital procurement platform.

The third session hosted a group of Emirati entrepreneurs who are national program members to share their practical experiences in submitting and winning tenders launched by the federal entities.

During the third session, the Ministry of Finance showcased its initiatives to support SMEs through the digital procurement policy and platform. The Ministry provided an overview of the platform's purpose and  emphasised the special benefits extended to entrepreneurs and SMEs. The session also presented statistics and facts related to SMEs in the digital procurement platform and highlighted the Ministry's initiatives aimed at attracting and increasing the number of registered suppliers in the Federal Supplier Register.