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The state-run Emirates Development Bank (EDB) has signed a deal with UAE lender Dubai Islamic Bank (DIB) to set up a credit guarantee scheme and disburse 200 million UAE dirhams ($54.4 million) in financing for small and medium-sized enterprises (SMEs).
The deal is part of a strategy to support SMEs in the country, particularly Emirati-owned businesses, as well as start-ups that need funding assistance, according to a statement issued on Wednesday.
Under the agreement, EDB will provide a credit guarantee program to DIB’s SME customers. DIB will offer up to 10 million UAE dirhams in financing to businesses, with half of the facility amount being guaranteed by EDB. DIB is expected to disburse a total of 200 million UAE dirhams in financing.
Priority will be given to businesses in sectors such as manufacturing, healthcare, infrastructure, food security and technology. Among those likely to benefit are enterprises that are 51 percent to 100 percent owned by a UAE national, as well as expatriates with businesses in priority sectors.
“The new scheme provides a solid platform for emerging national companies and entrepreneurs to explore new opportunities through innovation, such as smart industries, and it will assist SMEs and start-ups in the UAE to overcome the financial challenges of accessing funding from banks,” the statement said.
Ahmed Mohamed Al Naqbi, chief executive officer of EDB, said the bank is committed to supporting the UAE’s economic diversification strategy.
“To achieve this, one of the pivotal steps is to bridge the funding gap for SMEs, particularly those operating in priority economic sectors.”
SMEs account for 94 percent of the total number of companies in the UAE, employing more than 86 percent of the workers in the private sector.
(Reporting by Cleofe Maceda; editing by Mily Chakrabarty)
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