Nearly two-thirds of surveyed entrepreneurs in the U.A.E. report that a lack of adequate banking services is their biggest challenge when setting up a business, according to a new study—with many saying that opening a bank account takes at least three months, sometimes longer.
The study was conducted by the Dubai Chamber of Commerce and Industry (Dubai Chamber) along with the U.A.E. Ministry of Economy and the global consultancy firm Roland Berger, among others. The study surveyed local startups and SMEs, although it is unclear how many companies took part.
After access to banking services, 61% of companies reported that securing finance was their biggest obstacle, a trend no doubt influenced by a tough lending environment for SMEs in the region. Next, a lack of affordable office space was third at 53%. Companies also reported complex procedures, transparency and insufficient guidance from bankers as being significant obstacles.
According to the Dubai Chamber, banking and finance issues faced by new entrepreneurs stem in part from “pressure on banks to comply with increasingly stringent regulatory standards to combat illegal activities and second, their sense that emerging companies are not as commercially attractive as other customer segments.” It also lumped a portion of the blame on entrepreneurs themselves, reporting that banking sector players encounter a lack of “awareness from the start-ups [sic] on the basic requirements as a major cause for delays.”
As one potential way to improve access to banking services, the study recommended that banks offer basic accounts designed for new companies, such as accounts that set a limit on transaction amounts or allow for local transfers only.
Re-dessiminated by The Asian Banker from Forbes Middle East