Wednesday, Sep 28, 2016

Dubai

There is a lack of leasing companies in the UAE which can provide asset-based financing to small and medium enterprises (SME), a service which could complement loans offered by banks, industry officials said.

According to Dubai statistics, 95 per cent of the population are financially dependent on SMEs, which employ 42 per cent of workforce and contribute 42 per cent of the GDP. Delegates gathered at the annual Institute of Chartered Accountants of Pakistan (ICAP) conference spoke on challenges of finances to the small and medium enterprises in the UAE.

“There is a lack of asset based lenders in the UAE, and the choices are limited, The opportunities to borrow from asset based lenders, who really understand the SME market are limited,” Babar Ali Malik, head of marketing at Al Hail ORIX Finance told an industry gathering. Currently, only a few companies like Gulf Finance House, Finance House, and a few other companies provide asset based financing.

Asset based financing is a specialised method of providing working capital and term loans that are secured by accounts receivable, inventory, machinery, equipment and or real estate. This type of financing is used to refinance existing loans, finance growth, mergers and acquisitions among others. In terms of credit availability, out of 185 countries, the UAE and Saudi Arabia ranks at 79 and 97, while other GCC countries came in just below 100.

Unorganised

SME companies generally lack the kind of corporate structure that banks normally require to finance projects.

Banking officials say about Dh2 billion of new money is going into SME every month, according to Peter Tavener, chief finance officer at Beehive UAE. Beyond banks there is a limited scope of other avenues of finance particularly for SME’s. Banks are having heavy restrictions on the rates or with the security they acquire.

“There could be specialists in asset finance, trade finance, but beyond that, the earlier stage that they need is a help from equity and help from government. And those are the two areas where the UAE has changed massively in the past 5-8 years. If we look at the equity, you have crowd funding companies, Venture Capital companies, but beyond that there is a lack of other providers. The government is making moves in the right direction by helping the innovative SME’s.

Building sustainable UAE economy is top priority, Shaikh Nahyan says

Building a sustainable economy in the UAE is the government’s top priority, Shaikh Nahyan Bin Mubarak Al Nahyan, Minister of Culture and Knowledge Development said on Wednesday.

“Our second priority is a balanced and diversified development to ensure stability. Those priorities also includes social responsibility,” Shaikh Nahyan told industry executives gathered at the annual ICAP CFO conference.

“The governments action must at the same time preserve the environment and pay heed to pluralistic society. that understand and respects the incredible diversity of culture nationalities, beliefs, in our country. We must entrust confidence in society,” Shaikh Nahyan added.

By Siddesh Suresh Mayenkar Senior Reporter

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