Small and medium enterprises (SMEs) in the UAE are holding firm in the face of rising operational costs and economic headwinds, according to the latest SME Confidence Index released by RAKBank in partnership with RFI Global.
Based on a survey of over 1,200 SMEs conducted between October and December 2024, the index recorded a score of 57, down slightly from 61 the previous year. While the dip reflects challenges such as high borrowing costs and the introduction of corporate tax, sentiment remains positive with a score above the neutral base of 50.
The findings indicate a stable and optimistic business outlook. Nearly 68% of surveyed SMEs view the business environment as favourable, and over 60% have reported revenue growth in the past two years. Consumer and retail services emerged as the most confident sector, scoring 60, boosted by strong consumer demand and digital channel adoption. Other sectors such as construction, manufacturing, and trading maintained steady scores around 57-58, while professional and public services showed weaker confidence due to rising costs and debt-servicing concerns.
“Small and medium enterprises are the backbone of every thriving economy,” said Raheel Ahmed, Group CEO of RAKBank. “In the UAE, they are key drivers of diversification and sustainable development. We remain committed to empowering SMEs with tools and support for continued growth.”
The report also highlighted the evolving priorities of SMEs. Product innovation, market expansion, and digital adoption are now key strategies for growth. Twenty-two percent of SMEs have moved their sales online, and 45% use digital banking platforms monthly. Sustainability is gaining traction too, with 55% of businesses already on or planning to begin a green transition, and one in three identifying it as a short-term goal.
Yet challenges remain. Over two-thirds of SMEs reported higher operational costs, and only 39% expressed confidence in meeting debt obligations — a decline from last year. Larger SMEs, particularly those earning between Dh30-100 million annually, showed lower confidence levels (score of 55) compared to their smaller counterparts.
Vikas Suri, Head of Wholesale Banking at RAKBank, noted a shift in sentiment. “Confidence remains strong but has moderated slightly due to cost pressures, tighter borrowing conditions, and uncertainties around the corporate tax regime. Professional and public services, in particular, are taking a cautious approach.”
RAKBank is expanding its SME support through digital onboarding — now used in 92% of new accounts — as well as tailored solutions for startups and women-led enterprises. The bank’s Dh10 billion SME exposure is set to grow further, supported by a Dh1 billion co-financing deal with Emirates Development Bank.
Government-backed credit guarantees and digital innovation programs are also helping SMEs adapt, ensuring that the sector continues to play a central role in the UAE’s economic growth.
