Exploring the Top SME Industries in 2023: Key Sectors for Business Growth.
A whole new world of opportunities awaits SMEs that aim to disrupt business. The pandemic disrupted businesses around the world in many different ways. However, small and medium-sized enterprises (SMEs) felt the impact the most, with several of them closing their doors temporarily or for good, while some saw exceptional growth. Today, many new business sectors are coming up and are being designed to meet evolving needs, giving SMEs more market opportunities to explore. In this article, we will discuss the top SME industries in the MENA region.
Related article: 6 Biggest Retail Trends in 2022
SMEs are the core of any economy
SMEs are the backbone of any economy, and their importance in the MENA region is no exception. They account for a significant proportion of total employment, economic growth, and innovation.
According to a GoDaddy survey of small businesses in the MENA region. Businesses are optimistic about their growth prospects for 2023. This optimism is fueled by an increased focus on digital transformation, investment in online marketing, and the development of an online presence. Additionally, SMEs in these countries are recognizing the importance of addressing local and global challenges such as environmental sustainability, cybersecurity, and the need for skilled labor.
Government policies and support play a crucial role in fostering a conducive environment for SME growth. A majority of businesses in the UAE, KSA, and Egypt feel that their governments are addressing the challenges they face through various policies and regulations. Furthermore, businesses expect continued government assistance in areas such as technical support, digital skills training, web-based marketing, and web design skills.
The resilience of SMEs during the pandemic has demonstrated their ability to adapt and innovate in the face of adversity. As economies in the MENA region continue to recover, it’s crucial to prioritize the growth and development of SMEs. By doing so, countries in this region will not only enhance their economic performance but also build a more diverse, innovative, and sustainable business landscape that can withstand future challenges.
SMEs mix innovations
As seen during the pandemic, SMEs are disproportionately affected by market failures and barriers in the business environment. Their contributions also depend on their access to knowledge networks, finance, training, and infrastructure.
According to a report published by the Organisation for Economic Co-operation and Development, SMEs contribute to value creation by adopting innovation generated elsewhere, adapting it to different contexts through incremental changes, and supplying new or niche products that respond to diverse customer needs. They also contribute by serving locations that do not have a large enough scale to attract more prominent firms. Related article: How the UAE Powers the SME Recovery
Related article: How the UAE powers the SME recovery
SMEs foster local communities and build globally
The rise of globalization has amplified the significance of international cooperation in innovation, encompassing the acquisition of ideas, funding, expertise, and technology, as well as the delivery of goods and services across various markets.
Here’s where SMEs are seeing the most growth
According to a report by the International Monetary Fund (IMF), small and medium-sized enterprises (SMEs) are a cornerstone of Arab economies, accounting for over 90 percent of all businesses and providing a major source of new job creation. The report suggests that increasing SMEs’ access to finance in the MENA region to the average level of emerging and developing economies would raise annual growth by up to 1 percent. In addition, giving SMEs access to formal finance could create up to 8 million jobs in the Arab World by 2025.
(1) Top SME industries: Sustainable products and clean-tech markets
SMEs are vital to the efforts to achieve environmental sustainability. Their participation in the transition to more sustainable production and consumption patterns is essential for green economic development. The green transition also offers business opportunities for SMEs as critical suppliers of green goods and services, eco-friendly supply chains, and in developing clean-tech markets.
For example, the renewable energy market is gaining traction today. The U.S. Centre for Climate and Energy Solutions highlighted that:
Related article: 5 Ways E-commerce can be More Sustainable
(2) Top SME industries: E-commerce and online food delivery
E-commerce and online food delivery have seen significant growth in recent years, particularly in the MENA region. The entrepreneurship survey by GoDaddy has confirmed this trend, with businesses in the UAE, KSA, and Egypt prioritizing investment in online marketing and developing their online presence.
In the UAE, for example, 49% of businesses use social media platforms as primary sales channels, with Facebook and Instagram being the top choices for promotion. Additionally, 64% of businesses acquire up to 30% of their customers through online channels, while 11% report that more than 70% of their customers come from online channels. This demonstrates the increasing importance of online platforms in driving business growth in the e-commerce and online food delivery sectors.
Similarly, businesses in KSA and Egypt are also adopting digital tools to boost their sales and reach a wider customer base. In KSA, 69% of businesses acquire up to 30% of their customers online, while 4% report that more than 70% of their customers come from online channels. In Egypt, 67% of businesses acquire up to 30% of their customers online, with 9% reporting that more than 70% of their customers come from online channels. These figures highlight the growing reliance on online platforms for customer acquisition and sales in the e-commerce and online food delivery sectors.
With the online food delivery industry projected to grow by nearly 20% to reach $200 billion in annual sales by 2025, SMEs in the MENA region are well-positioned to capitalize on this trend. By focusing on expanding their digital footprint, investing in online marketing, and leveraging social media platforms for promotion, these businesses can tap into the immense potential of the e-commerce and online food delivery sectors and drive growth in the coming years.
(3) Top SME industries: Cybersecurity
Several SMEs are also exploring the cybersecurity services industry as its demand has skyrocketed over the last two years, with virtually everyone spending their time online. Data breaches can cost organizations a lot of money and result in identity theft. Therefore, from IT consulting solutions to providing help after a security breach, SMEs are looking to capture their slice of this burgeoning market.
Given the low cost of entry compared to traditional channels, online platforms have never been easier to set up and are thriving. From social media influencers to data collection, going digital has presented countless opportunities for businesses to find new ways to make a profit.
(4) Top SME industries: Gaming and virtual reality
Another fast-growing business is gaming and virtual reality, which can be used for retail, education, medicine, and employment training applications.
Gaming and virtual reality are rapidly growing industries that offer immense potential for SMEs, start-ups, and entrepreneurs in the MENA region. The pandemic has accelerated the adoption of gaming and virtual reality technologies, as people sought new forms of entertainment and businesses explored innovative solutions for remote work, healthcare, and education.
The versatility of virtual reality technology extends to numerous sectors, including healthcare, real estate, and employee training. For instance, virtual reality can be employed for medical training simulations, property tours, and immersive learning experiences, opening up new opportunities for small and medium enterprises to develop innovative products and services.
Entrepreneurs in the UAE and other MENA countries are increasingly exploring the gaming and virtual reality sectors, contributing to economic development and diversification. As the demand for digital entertainment and innovative solutions continues to grow, the gaming and virtual reality industries are set to play a vital role in boosting GDP and fostering a more entrepreneurial ecosystem in the region.
(5) Top SME industries: Shipping
Meanwhile, the shipping industry has seen phenomenal growth over the last two years. The industry has seen success across the board, from long-distance freight truckers to local moving companies transporting raw materials, manufactured products, and distributing goods.
SMEs are not just shifting to digital – they are racing towards it with urgency. These businesses are signaling in a new global economic landscape that is here to stay.
Frequently asked questions:
I’m here to answer two burning questions: “Which industry has the most SMEs?” and “What are the 5 types of SMEs?” So, let’s dive in!
Which industry has the most SMEs?
The industry with the most SMEs is the services sector. This broad category includes businesses that provide various services to consumers and other businesses, such as professional services, IT, food service, and more. The versatility and low barriers to entry in this sector make it an attractive option for SMEs and entrepreneurs.
What are the 5 types of SMEs?
The services sector has the most SMEs. Business owners from all walks of life are launching innovative business models, with top consulting firms like Deloitte supporting this trend.
Now, let’s break down the top 5 SME industries in 2023:
- E-commerce: Online shops are booming! GoDaddy’s online store and website builder make it a breeze for entrepreneurs to join the digital marketplace and start selling online.
- Food service: From restaurants to catering companies, these businesses satisfy our cravings. GoDaddy’s domain names help food service providers stand out online.
- Professional services: Legal, accounting, and marketing firms (like Dubai SME) thrive as medium-sized businesses, supporting the private sector and SME growth.
- IT and software development: Tech-savvy startups develop cutting-edge solutions for various industries. GoDaddy’s website builder and support services empower these innovators.
- Health and wellness: With a focus on well-being, SMEs in this sector provide essential services. GoDaddy helps these businesses establish their online presence with ease.