RAKBANK Index 2025 highlights that small and medium enterprises (SMEs) across the UAE are maintaining a confident outlook despite facing rising costs, inflationary pressures, and regulatory changes. According to the latest edition of the RAKBANK SME Confidence Index, released in collaboration with RFI Global, the overall sentiment among SMEs remains resilient, with a confidence score of 57.
The Index, based on responses from more than 1,200 SMEs surveyed between October and December 2024, provides a comprehensive view of how UAE businesses perceive their current performance and future potential.
Confidence Dips Slightly But Remains Above Baseline
While the RAKBANK Index score saw a marginal dip from 61 in 2023 to 57 in 2024, it still remains comfortably above the neutral threshold of 50. This indicates a net-positive sentiment prevailing in the SME sector.
More than 68% of SMEs expressed a favorable view of the future business environment. Over 60% of businesses surveyed reported revenue growth during the past two years, even as economic headwinds challenged operational efficiency.
SME Sector Remains the Backbone of the UAE Economy
“Small and medium enterprises are the backbone of every thriving economy, and in the UAE, they play a central role in driving diversification and sustainable development,” said Raheel Ahmed, Group CEO of RAKBANK.
Ahmed added that RAKBANK launched the Confidence Index in 2024 to regularly capture business sentiment, challenges, and forward-looking expectations in the SME space. He emphasized that the bank aims to offer more than financing—its role also includes offering insights, tools, and advisory support.
Strategic Dhs1 Billion Boost to the SME Ecosystem
A major announcement followed the report’s release: RAKBANK and Emirates Development Bank (EDB) have joined forces in a Dhs1 billion co-financing partnership. This collaboration, revealed during the ‘Make it in the Emirates’ forum under the Ministry of Industry and Advanced Technology, aims to support UAE’s dynamic SME ecosystem through accessible credit and scalable financing.
Sector-Wise Confidence Insights
High Confidence in Consumer and Retail Services
The Consumer and Retail Services sector emerged as the highest performer in the Index, achieving a score of 60. This sector benefited from increased consumer spending and the adoption of new business models such as e-commerce.
Stable Sentiment in Core Industries
- Construction and Manufacturing: 57
- Transport: 57
- Trading: 58
These sectors displayed stable levels of confidence, buoyed by infrastructure activity and demand in logistics.
Lower Confidence in Professional and Public Services
The Public Services and Professional Services sectors reported lower scores at 56, mainly due to increased operating costs and concerns about loan repayments.
Rising Costs and Debt Concerns
Although more than three in five SMEs recorded revenue increases over the past two years, a significant number are also facing rising operational costs.
- Over two-thirds experienced increased expenses.
- Only 39% expressed confidence in meeting debt obligations—down from previous levels.
This mismatch between revenue growth and rising costs presents a key challenge for SMEs as they navigate a complex economic environment.
Size Matters: Smaller SMEs More Confident
Interestingly, smaller SMEs (with annual revenue up to Dhs30 million) reported a higher confidence score of 58, while larger SMEs (with revenues between Dhs30–100 million) had a lower score of 55.
This suggests that smaller enterprises may be more agile in adapting to change, while larger SMEs face greater complexity and cost pressures.
UAE SMEs Betting Big on Digital Transformation
The RAKBANK Index 2025 highlights increasing digital adoption among UAE-based SMEs:
- 22% now sell products or services online
- 45% actively use digital banking monthly
From mobile banking to cloud solutions, SMEs are embracing technology to streamline operations, improve customer experience, and reduce overheads.
Sustainability Becomes a Key Business Priority
Sustainability is also climbing up the agenda. The report notes:
- 55% of SMEs are either on or planning to begin their sustainability journey
- 1 in 3 SMEs identified sustainability as a short-term business goal
This shift reflects the global trend toward sustainable business models and the UAE’s national focus on environmental and economic sustainability.
SMEs Face Regulatory and Credit Challenges
Among the biggest hurdles cited in the RAKBANK Index are:
- The corporate tax regime introduced in 2024
- Limited access to credit
- Inflationary and operational pressures
Despite these, SMEs are choosing to invest in areas that promise long-term gains: technology upgrades, talent acquisition, and market expansion.
A Forward-Looking Mindset Prevails
“The sector’s forward-looking mindset is especially encouraging,” said Ahmed. “We’re seeing increased focus on entering new markets, investing in talent, and modernising payment infrastructure. We see our role as a partner in that journey.”
As SMEs continue to play a central role in the UAE’s economic landscape, the RAKBANK Index provides a vital barometer of confidence—and points to a sector that, while cautious, remains hopeful and adaptive.
Conclusion
The 2025 RAKBANK Index offers both reassurance and insight. It underscores the enduring strength and strategic direction of SMEs in the UAE. While economic pressures persist, innovation, digital transformation, and a strong entrepreneurial spirit are fueling optimism and ensuring that UAE SMEs are not just surviving—but evolving.
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