Small and medium enterprises (SMEs) in the Middle East and North Africa (MENA) have transitioned from survival to prosperity in the post-COVID era. Encouragingly, they hold a positive outlook for their revenue projections in 2023. These notable findings stem from the comprehensive analysis presented in the second edition of the Mastercard Eastern Europe, Middle East, and Africa (EEMEA) SME Confidence Index.
Building upon the insights of the 2021 inaugural SME Confidence Index, which explored the pandemic’s effects on SMEs spanning various sectors, products, and services, the second edition of the survey focuses on their embrace of a digital future. The findings highlight that SMEs throughout the EEMEA region remain confident in their potential for business growth, with digitization emerging as the most significant opportunity they are keen to seize.
As companies recover from the pandemic and return to the growth phase, the research shows that 72 percent of SMEs in MENA project similar or increased revenue in the next 12 months. This trend is the strongest in Qatar with 88 percent of SMEs expecting revenues to either grow or hold steady, followed by 85 percent in Saudi Arabia and 80 percent in the UAE.
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Strong outlook
In the MENA region, more than 7 out of 10 SMEs express confidence in their business growth for the upcoming 12 months compared to 2022. Notably, Saudi Arabia takes the lead with an impressive 93 percent of SMEs expressing optimism about 2023. Following closely behind is Qatar at 82 percent, and the UAE at 74 percent.
The survey highlights the top three areas for support required by SMEs in MENA—training and upskilling staff (93 percent), access to a wider range of financial services (92 percent), and better telco infrastructure (91 percent).
The MENA region is witnessing an increasing adoption of digital payment solutions, as evidenced by 85 percent of consumers utilizing at least one emerging payment method in the past year. Mastercard, serving as a reliable partner to governments, plays a vital role in facilitating the digital transformation of small businesses worldwide. With a commitment to connect 50 million SMEs to the digital economy by 2025, Mastercard strives to foster economic equality and inclusive prosperity.
SMEs also expressed the need for support in additional areas, such as gaining access to improved data and insights, receiving mentorship from industry experts, and expanding their access to a broader array of financial services.
Access to omnichannel payment services
Additionally, SMEs in MENA have identified accepting omnichannel digital payments (92 percent), digitizing business operations (91 percent), and training and upskilling staff (90 percent) as the main drivers of growth.
Furthermore, easy access to funding remains a key factor for growth across MENA – 92 percent of SMEs in Egypt find access to capital and resources crucial to sustaining the upward trajectory in 2023. The International Finance Corporation (IFC) estimates the value of the total financing gap for SMEs in MENA at $210 to $240 billion.
Challenges faced
Amidst the ever-evolving economic landscape, SMEs encounter a range of challenges. These encompass limited access to credit (24 percent), difficulties in staff retention (46 percent), rising costs of goods and services (57 percent), and the enduring repercussions of the pandemic in certain countries (64 percent). Concerningly, more than 53 percent of surveyed SMEs in MENA express apprehension about these factors, anticipating an escalation in the cost of conducting business over the next 12 months.
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