SEED MONEY

Abu Dhabi 2016 | ECONOMY | INTERVIEW

TBY talks to HE Abdullah Saeed Al Darmaki, CEO of the Khalifa Fund, on initiatives that encourage entrepreneurship, its projects in the pipeline, and getting SMEs to ride out the challenges.

 HE Abdullah Saeed Al Darmaki
BIOGRAPHY
HE Abdullah Saeed Al Darmaki is the CEO of the Khalifa Fund for Enterprise Development (Khalifa Fund), a government-owned vehicle that drives the development of SMEs in the UAE. Al Darmaki has over 20 years experience, starting out in the hydrocarbon spectrum back in 1994, before moving into capital investments as well as the manufacturing industry. He was most recently in the civil service sector. Al Darmaki holds a Bachelor of Arts degree in international affairs and political science with a minor in history from Lewis & Clarke College in Portland, Oregon.

How does the Khalifa Fund capture and develop entrepreneurial spirit in the UAE?

One of my first initiatives as CEO was the Startup Weekend, a global initiative by the Kauffman Foundation, with about 2,500 Startup Weekends worldwide. We hosted one in the first year, two in the second, and three in the third year. My target is at least five a year in different cities. At Startup Weekend, people from all over come and share their ideas, and they know there is a reward if their idea impresses the judges. Out of 50 ideas, you end up with five, and those five are usually the result of a collaborative effort. The winner wins a financial reward and mentorship from the judging panel. In the last few years, we have developed some capacity-building programs to empower young Emiratis to come up with ideas through Startup Weekend—we have what we call an Idea Sourcing Program for Emiratis. We go to universities and ask the faculties to inform students about the competition, telling them we will help them develop support, shape, and mold their ideas.

Are there any products that the Khalifa Fund is working on directly?

We are about to roll out a smart product through our website so entrepreneurs and the approximately 1,200 businesses we funded can have constant connectivity between the fund and businesses through out website interface and our app. You can click on any business that we have funded and can see all the details about it. We are also setting up a software app for entrepreneurs through which we can track their business lifestyle. We have all the reports, the site visits, the outstanding balances, and all activities captured in the system. It is a transparent system and this is crucial. Many entrepreneurs may be busy with full-time jobs and have a team running their business for them, so they need to be able see everything that is going on with their business. This system provides transparency and accountability all around. The app is static and not too interactive, but by the end of 2016 we want to have a more dynamic application for the entrepreneur, and we also want to link it with the banks such that if there are any updates with their accounts, they will be able to see that.

How can banks further SME financing?

We need an insolvency law with provisions to protect SMEs. We do not have that yet, although there have been talks. Banks are more focused on personal and corporate banking, developing financial products for megaprojects. Some banks have an SME arm but they generally do not deal with businesses that are worth less than AED150 million. We feel that does not suit the financing requirements of an SME enterprise.

Do you feel SMEs are the engine of an economy's growth now that globally the economy has slowed?

We are facing a challenging year and a volatile energy price market. This will have an effect on all economic indicators, both locally and regionally. SMEs need to avoid putting all their eggs in one basket at this point in time, that basket being government projects. The government will redefine its priorities when there is more clarity on what is happening in world oil production, and also in terms of regional security. To keep their revenue stream healthy, we want SMEs to focus on smaller projects that may take more time and energy to process, but will pay back much quicker than bigger government projects. An audit we did with the financials of about 120 companies that we have funded and have been operational three years revealed that those SMEs generated AED50 million of revenue in a single year by selling their services and products outside the UAE. If you take that example to and apply it to all SMEs, you can appreciate the opportunities that are out there for SMEs looking to go beyond the UAE's borders.