Dubai supporting small and medium-sized enterprises with health benefits

Small and medium-sized enterprises (SMEs) run by Emirati entrepreneurs secured health service contracts worth Dh24m ($6.53m) between 2012 and 2015, according to Dubai Health Authority (DHA). DHA’s director of purchasing and supplies, Eman Khalfan Al Jallaf, told local media her department had made it a priority to deal with local SMEs offering a range of services from medical equipment and IT to security. As part of the Dubai government’s aim of encouraging smaller firms to play a larger role in driving the diversification of the emirate’s economy, Al Jallaf said a number of incentives had been offered to their suppliers. One technique was to allow SMEs run by Emiratis to provide only 10% of their performance guarantee in the first year of a three-year contract with DHA. “This allows companies to get more projects with various government entities as it reduces their expenses to a significant extent,” said Al Jallaf.

FUNDING OPPORTUNITIES: At the annual Dubai SME 100 ranking competition in 2015, the crown prince of Dubai, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, identified health care as a promising sector for Emirati entrepreneurs to target, and emphasised the role SMEs play in the economy. “SMEs today represent 95% of all firms registered in Dubai, 42% of the labour force and 40% of the emirate’s GDP,” Sheikh Hamdan said at the conference.

Emirati-owned SMEs are able to tap a number of government funds as well as take advantage of favourable contractual terms offered by DHA, and so have access to capital to cover start-up expenses or cash flow issues in their early years. In April 2015 Dubai SME, a resource centre for SMEs and part of the Department of Economic Development, launched the Dh600m ($163.3m) Mohammed bin Rashid Fund for SMEs, offering Emiratis aged 21-65 with innovative businesses or business ideas two sorts of loans. Start-ups can apply for seed funding of Dh50, 000-500,000 ($13,610-136,100), as well as a credit loan scheme, supplied by banks and guaranteed by the fund, that offers start-ups and existing firms funding of Dh500,000-5m ($136,100-1.36m). There is a two-year grace period for repayments on the seed funding, but the maximum loan repayment period is two years. For its part, Dubai SME provides assistance in the development of business plans and offers training workshops and financial advice. “The fund will focus on innovative project ideas that will contribute to the strategic goals of Dubai and the UAE and projects that adopt digital and smart technologies and are keen on robotising their operations,” Abdul Baset Al Janahi, CEO of Dubai SME, told local media.

In addition to the new fund, Emirati SMEs have been able to apply for help from Khalifa Fund for Enterprise Development since 2007. The Hamdan Innovator and Incubator also offers entrepreneurs a chance to use an idea lab and an incubator space, as well as take advantage of seed funds.

DUBAI SCIENCE PARK: A prime location for innovative start-up companies providing biomedical, pharmaceutical, renewables and life science solutions is Dubai Science Park (DSP), a TECOM Group free zone, which brings together two former entities known as DuBiotech and EnPark that served businesses specialising in science and sustainability. DSP has over 300 business partners, including major international names in health care, but it also offers space to small start-ups in the industry. “One of the most important areas where the organisation has been helpful is in bridging the gap between industries and academics in harnessing the potential of science and technology graduates,” Marwan Abdulaziz Janahi, executive director of DSP, told OBG.

There has been a 40-50% growth rate in tenants joining the free zone, and Janahi sees a lot of opportunities coming from companies operating in the IT side of the health care industry, as well as from biotechnology specialists and pharmacy companies. “For innovation to be at the core of the development of health, biotechnology must be the driving force. In fact, improving the quality of health care is heavily dependent on biotechnology,” Janahi told OBG.

Indeed, businesses recognise the support system that Dubai, and the UAE as a whole, has been creating. “The UAE has the will, desire and resolve to work with companies who have breakthrough and real medical innovation that addresses unmet medical needs, and hence provide fast-track processing for approvals to ensure these medicines are quickly accessible to the patients of the UAE at large,” Joe Henein, president and CEO of NewBridge Pharmaceuticals, told OBG.

ONLINE: Another start-up that is working with the Ministry of Health (MoH) is DoctorUna. The company runs a website that enables patients to select a doctor, a medical specialist or a clinic, and to book an appointment with them online. It was founded in 2012 by Reem Haj Ali, who was previously head of rehabilitation and physiotherapy at Saudi German Hospitals Group and had 15 years of experience as a senior health care worker in Dubai and Abu Dhabi. In a society where many patients prefer to go straight to the specialist, rather than waiting for referral to a hospital by a primary care centre, DoctorUna provides a valuable service that is free for patients and frees up time for doctors by streamlining their appointments process while enabling them to reach a wider pool of patients. The MoH has licensed the site, along with its apps for iOS and Android, and the service is advertised on DHA’s website. The success of the site has enabled Haj Ali to expand the site from the UAE to Kuwait, Jordan and Egypt, and in doing so she has found help from angel investors. Board members include Rabea Ataya and Akram Assaf, co-founders of Bayt.com, the Middle East’s leading jobs site.

SME INVESTORS: One investment firm eyeing the potential for SMEs in Dubai’s health care sector is Shuaa Capital, a subsidiary of Gulf Finance Corporation (GFC). After raising Dh500m ($136.1m) in January 2015, it began looking for opportunities to back businesses with a medical focus, with the aim of increasing the proportion of health care firms in its portfolio from 2% to as much as 10%. GFC told local media it was hoping to target SME financing options in Dubai, Abu Dhabi, Sharjah and Saudi Arabia, with a view to increasing its loan book from Dh750m ($204.15m) to Dh1bn ($272.2m) by the end of 2015. GFC says it expects medical equipment to be a fast-growing market in which SMEs can perform well. They believe health insurance reform and the rising incidence of non-communicable diseases such as diabetes will be strong drivers of growth. The company offers loans and finance leases of Dh250,000-5m ($680,500-1.36m) for six months to four years. To qualify for the smallest of its loans, a business must produce a three-year bank and business record.

DHCC SUPPORT: Although 94% of its space for phase one is already let, Dubai Healthcare City (DHCC) is expanding in both phase one and phase two, offering opportunities for SMEs and entrepreneurs. Its business centre leases workstations or small offices for two to three employees to companies wishing to set up in the world’s largest health care free zone. Whether leasing a desk or an office, companies that are accepted by DHCC will receive the same tax incentives and assistance with visa processes as larger companies located on the campus. DHCC does stipulate that the companies’ activities must be in health care support, consultancy or event management.

Another boost to business is the new resolution announced in April 2016 allowing companies offering services such as medical tourism services, travel agencies, tour services, salons, restaurants and cafes to open in DHCC. As per the previous regulation, a company under the Service Provider Category can open in DHCC if it is establishing a branch of a parent company registered in the UAE; second, the company is under the same ownership; and third, the company has been operating in a similar service category for a minimum of two years. The regulation is in response to the increasing interest from investors keen to bring value-added and innovative services in the free zone.

BUDGET BOOST: The sector looks set to benefit from a significant boost in spending in 2016, which bodes well for SMEs hoping to provide it with products and services. In the federal UAE budget, 55.7% of expenditure is set to be on health, education and social services, up from 49% in 2015 and totalling Dh26.7bn ($7.27bn). Health expenditure will account for 7.9% of the federal budget, although most health funding comes from the individual emirates. In Dubai’s 2016 budget, 37% of the Dh46.1bn ($12.5bn) earmarked for expenditure was targeted for health, education and community projects. With health receiving such a high priority in government spending and the UAE’s emphasis on promoting both innovation and entrepreneurial activities, SMEs in Dubai providing solutions with a medical application will find DHA open to business and prepared to offer them positive terms.