Sheikh Mohammed bin Rashid has launched a National Innovation Strategy that aims to make the UAE among the most innovative nations in the world within seven years. It will stimulate innovation in seven sectors including renewable energy, transport, education, health, technology, water and space.
“The UAE is already the most innovative Arab nation. Our target is to be among the most innovative nations in the world. The competitiveness race demands a constant flow of new ideas, as well as innovative leadership using different methods and tools to direct the change,” said Sheikh Mohammed.
So where does the UAE stand and what can it do to achieve these ambitions? The Global Innovation Index ranks countries according to their innovation capabilities. It is authored by Cornell University, INSEAD, and the World Intellectual Property Organization, an agency of the United Nations. In its 2014 report the UAE was ranked 36th out of 143 economies. The top 10 economies are Switzerland, the United Kingdom, Sweden, Finland, the Netherlands, USA, Singapore, Denmark, Luxembourg, and Hong Kong.
The UAE has the advantage of heavy investment in urban infrastructure and it benefits from a diverse multi-cultural workforce. So what steps can be taken to improve its innovation performance? Here are some broad suggestions.
1. Make it as easy as possible to start a new business. Most radical innovations come from start-ups and we need a lot more of them. It is already reasonably easy to start a new business in the UAE. However, we could further reduce administration and regulation burdens.
2. Increase the availability of loans for small and medium sized enterprises (SMEs). At the moment many smaller enterprises cannot raise the finance they need to expand. Banks are keen to rebuild their balance sheets and are unwilling to make loans especially to smaller companies and start-ups. We need to encourage venture capital funds, business angels and banks to invest in or lend to start-ups and smaller enterprises. This is risky so the government can help lay-off some of the risk.
3. Tilt higher education towards Science. The UAE invests heavily in education but we need to see a better return in terms of innovation. Many valuable high-tech start-ups come out of PhD studies or University research departments. We should encourage more bright students to take degrees and further degrees in Science based subjects. We should say that a degree in Physics is more valuable than a degree in History. One way to tilt the playing field would be to make it more attractive financially to take degree courses in science and engineering courses.
4. Curtail Bureaucracy. Too much procedure and bureaucracy in government bodies and large companies acts as a brake on entrepreneurial activity and innovation. Even the most successful companies in the UAE often display a complacent attitude at the top. Many have layers of administration full of bureaucrats who love long-winded procedures. The government can take the lead in cutting red tape and unnecessary regulation wherever possible.
5. Buy more from small companies. Public sector spending is huge but relatively little goes to very small companies because the procurement processes are so long and convoluted. If government allocated a proportion of its spending for SMEs and start-ups then that would channel some much needed business to this sector and help it to grow.
6. Promote to the top on merit. To compete with the best in the world we need the world’s best corporate leaders and this means promoting and recruiting the very best talent.
We need more innovation in all parts of the economy including large corporations and the public sector. However, we should start with the SME sector. Over a period these proposals would encourage more start-up businesses and more high-tech businesses. This will help fuel entrepreneurship and innovation.