In view of financial literacy’s critical role in the success of an economy and the sustainable development of a society, the UAE Banks Federation, UBF, has stepped up its efforts to increase the level of financial awareness in the country.

In response to the growing relevance of financial awareness and closely aligned with the increasing focus of the UAE government and banks in the country on financial education, the UBF released a handbook, titled ‘Financial Literacy for SMEs’. Highlighting different aspects of business finance, including governance, financial management, access to finance and borrowing, debt management, the handbook seeks to equip business owners with knowledge and skills that will enable them to make sound financial decisions and ultimately operate their businesses successfully.

Financial knowledge is the foundation of long-term growth as understanding business finance enables companies and business owners to use appropriate information to make effective decisions. Basing financial planning on proper knowledge and skills will prepare business owners to build a viable business that will scale and withstand market and economic downturns.

Representing more than 60 percent of the country’s GDP and employing 42 percent of its workforce, small and medium enterprises, SMEs, form the backbone of the UAE’s economy. SMEs, which make up 94 percent of all companies operating in the country, account for a good share of the customer base of local banks, another cornerstone of the country’s economy. Given the enormity of the SME sector as an economic force, financial literacy skill of entrepreneurs is of immense importance.

Commenting on the handbook, Abdul Aziz Al Ghurair, Chairman of the UBF, said, “In an increasingly complex financial environment, it is essential for entrepreneurs, especially owners of SMEs, to have a strong grounding in the principles of business finance to keep their business afloat. SMEs play a critical role in an efficient and competitive economy, and a thriving SME ecosystem will positively contribute to a society’s economic stability and development.

“Taking into account the importance of financial awareness of businesses, the UBF has launched ‘Financial Literacy for SMEs’ handbook, which seeks to address various aspects of business finance to empower entrepreneurs with essential knowledge and skills to make sound financial decisions towards operating their businesses effectively.”

The handbook stresses that SME owners must acquire skills to distinguish between personal and business finances and possess sufficient knowledge of key accounting standards and book-keeping as well as legal and regulatory frameworks, rights and resources in order to become financially literate.