As part of a concerted effort to devise programs to lessen its dependence on oil revenues, the UAE is attempting to stimulate small and medium sized businesses in the region. The program aims to provide better financing opportunities and to lower the costs of setting up small businesses. A new law, now in the final stages of approval, includes the creation of a government agency to coordinate policies for small businesses. The small business sector makes up 95 percent of the UAE’s economy, yet financing options are few and far between. On the part of companies, there is often little of the transparency that investors look for in extending financing. On the part of investors, many are reluctant to undertake investment risks in small companies. At present, small and medium business accounts for only 2 percent of lending in the Gulf Region.
In addition to diversifying beyond oil, there are other political and economic reasons for increasing business opportunities. Youth unemployment in the MENA tops 25 percent, a world-wide high, and millions of jobs must be created just to keep pace with population growth. The Arab Spring was spurred at least in part by under employed and under engaged young adults in countries across the Middle East. Creating employment and business opportunities provide the means to prevent possible future political upheaval.