EDB signs pact to launch supply-chain financing for UAE SMEs

Agreement will also provide smaller businesses with working capital solutions

Ahmed Al Naqbi, chief executive of EDB, right, and Bill Crawley, founder and chief operating officer of TCP, signed the agreement. Photo: EDB

Emirates Development Bank, the state-owned lender focused on financing the UAE's priority sectors, has signed a preliminary agreement to launch supply-chain financing and working capital solutions for small and medium-size enterprises in the country.

The initiative is being carried out in collaboration with Abu Dhabi-based Trade Capital Partners (TCP), a technology platform that delivers working capital finance solutions to SMEs, and is part of EDB’s efforts to support start-ups through its network of government and corporate partners, the lender said on Thursday.

Under the pact enabled by Hub71, Abu Dhabi’s tech ecosystem, the two partners will create a working group to explore ways of delivering supply-chain financing, which reduces the risk of disruption and enables both buyers and suppliers to optimise working capital.

“We are constantly looking at new and innovative ways to support SMEs, which contribute more than 60 per cent of the UAE's non-oil GDP [gross domestic product],” said Shaker Zainal, chief business officer at EDB.

“We will leverage our expertise combined with TCP's platform to jointly bring more financing solutions to a wider range of businesses. This [pact] reflects our value of excelling through partnerships and will further support the growth of SMEs and promote innovation in the UAE.”

EDB offers a “patient debt approach” with an emphasis on accelerating the pace of development in the country. The bank’s direct and indirect financing is offered with long tenors, higher loan-to-value ratios, lower rates and interest payment grace periods.

The lender is at the heart of the UAE’s efforts to the boost growth of SMEs and start-ups in the Arab world’s second-largest economy.

EDB contributed more than Dh3.5 billion ($953 million) to the country’s GDP last year and supported the creation of more than 12,000 industrial jobs.

It aims to provide Dh30 billion in support to 13,500 companies, which, in turn, will contribute Dh10 billion to the country's economic output, EDB said in its 2022 annual report last month.

Last year, EDB approved Dh6.1 billion ($1.6 billion) in loans, of which Dh1.8 billion was approved for SMEs. The funding approved for large corporates rose to Dh4.3 billion.

The bank is targeting the approval of loans worth Dh6 billion or more this year, to match the size of funding last year, chief executive Ahmed Al Naqbi told The National in March.

EDB, which started in 2015, finances companies or projects in five priority sectors – manufacturing, infrastructure, advanced technology, food security and health care.

It is a key plank in the success of the UAE’s industrial strategy, which aims to boost the sector’s contribution to GDP to Dh300 billion by 2031.

Last month, the bank introduced an agriculture technology loans programme, with plans to allocate Dh100 million in finance for the country's food security sector.

In August last year, EDB launched a lending feature that allows businesses to apply for loans of up to Dh5 million and receive approval feedback within five days.

“SMEs are the driving force of an economy and start-ups are the future drivers,” said Bill Crawley, founder and chief operating officer of TCP.

“In line with other government initiatives to grow and drive these sectors, this partnership will provide significant support to this ecosystem and provide trade finance alternatives to growing businesses.”