Business News
Boom for digital economy to continue but don’t write off traditional business sectors
The pandemic has accelerated the rise of the digital economy and will continue to do so, say start-up ecosystem leaders from across the UAE, yet there remains opportunity for regional entrepreneurs in traditional economic sectors as the world works to build out the new normal.
Despite the wide-scale disruption resulting from Covid-19 and a drop in venture deals, start-ups in MENA raised a record sum of just over $1 billion (Dh3.6 billion) in 2020, with the money largely going to technology companies in e-commerce, finance and healthcare, according to the 2021 Emerging Venture Markets Report from regional data platform MAGNiTT.
Start-up ecosystem leaders in the UAE expect to see continued interest from global founders eager to capitalise on the region’s digital economy.
“Going by the current trends we are witnessing in the market, we expect the digital and e-commerce sector to thrive in the coming years,” says Dr Khalid Omar Al Midfa, Chairman, Sharjah Media City – Shams.
“An increase of service providers within the ecosystem offering digital services and contributing to the growth of the digital footprint of companies is expected. As Shams offers a conducive environment for such companies to begin their entrepreneurial journey in the UAE, we are observing this spike first-hand.”
While lockdowns and retail closures impacted the economy in several ways, these accelerated demand for solutions focused on online retail and digital transformation in the workplace, says Levi Joshua, Business Set-Up Manager at Ezone, a company that helps businesses establish operations in the UAE, with survey data showing that 40 per cent of UAE respondents are shopping more online, with over 45 per cent of the UAE population planning to continue their new phone shopping behaviour.
World Economic Forum estimates place the UAE’s 2020 e-commerce market at $27.2billion. “Furthermore, there has been a dramatic acceleration on digital transformation of workforce operations. The increased requirement for technological solutions to increase and monitor employee productivity also led to a hastened growth in the constantly evolving technology sector. Other fast-growing sectors are in service and logistics, among other industries that are evolving to satisfy the business demands of the new normal,” Joshua says.
Medical supplies industries, including parapharmaceuticals, and food and beverages catering to nearby markets have noticed a surge in demand, says Johnson M. George, General Manager, Umm Al Quwain Free Trade Zone. “There has also been a rise in companies looking to relocate their facilities, which helped us rent out a large percentage of our warehouses and industrial plots.”
Despite the attention on digital solutions, there continues to be space for companies in traditional business sectors to do well, particularly as vaccine programmes help countries open their economies.
“Most sectors of the economy are needed for the overall economic environment to function and sustain. Be it trading, services, tourism or hospitality, there is a demand for each sector [in the UAE],” says Meet Joshi, CEO of the business set-up consultants, Flyingcolour Group.
“There is a large, ever-growing scope for e-commerce, technology, and fintech sectors. As the world progresses, it is very hard to overlook these sectors. However, as mentioned, these sectors are an addition to the economy, and are not replacing the existing sectors.” ■
With such high stakes on the line, entrepreneurs find themselves dealing with the inability to make a decision due to overthinking. “Break down what needs to be done into smaller steps, and then prioritise issues based on their level of importance. You will feel more in control and confident in your ability,” says Shabana Shaikh, Head Sales & Marketing at Capital International Group.
Cultivate a positive mindset
Entrepreneurs are no exception to the wide range of emotional responses engendered by the pandemic but are under additional strain as they strive to provide the best possible service to their employees and customers. “Set aside time in your schedule for self-care to be intentional. The more you’re able to find inner calm during this crisis, the better able you are to make decisions and lead your business,” says Shaikh.
Select the right focus
For business owners dealing with conflicting demands, it can be difficult to know where to prioritise time and resources. “Consider what is truly important to your business when making your decision. For the majority of us, it is our people — employees, clients, vendors, and partners.”