Small companies in the Emirates still face an uphill battle to obtain credit, a UAE-based executive for a major international bank has said.
Sadia Saeed, head of UAE small and medium enterprise (SME) banking at Standard Chartered, admitted banks were still turning away businesses.
"Yes, definitely we do accept that it is difficult for SMEs to access financing. Banks have been shy after the financial crisis and some have closed their doors," she said.
Standard Chartered maintains that its own doors have remained open to SMEs, but Saeed says authorities must speed up the delivery of a national credit bureau to increase transparency and the development of a new framework for bankruptcy in order to help alleviate lending risks.
"We want to see a bankruptcy law, something that is a very clear process," said Saeed. "The good thing now is that we hear about it and maybe the Ministry of the Economy is wanting to do something about it."
In October last year the UAE Ministry of Finance (MOF) released the findings of a joint report with the Union of Arab Banks calling for banks to loosen the reins on SME lending.
In Dubai alone, the SME sector accounts for 42 per cent of the workforce and 42 per cent of its gross domestic product (GDP).
However, the study found lending to this segment totals a mere two per cent of total bank lending in the Gulf. Overall loans to the private sector slumped by four per cent last year.
Banks remain wary of lending to the sector after the financial crisis forced many small firms to default on loans.
Standard Chartered yesterday said it hopes new products designed for such firms will double its number of SME customers from their current level of 17,000 within three years.
© 7Days 2011
