ABU DHABI- Ahmed Al Naqbi, CEO of Emirates Development Bank (EDB), has revealed the bank's plans to launch an AED 1 billion direct investment fund in 2022 to support SMEs and industrial companies that need financing and investment in priority sectors, such as manufacturing, healthcare, infrastructure, food security and technology.
In a statement to the Emirates News Agency (WAM), Al Naqbi said, "Small and Medium-sized Enterprises (SMEs) are the backbone of the UAE’s economy, and account for almost 94 percent of all businesses in the country.
It is a known fact that access to finance for SMEs and startups has always been a challenge, and more so against the backdrop of the COVID-19 pandemic. Increased financing options would not only help the small and medium-sized businesses navigate a challenging phase but also boost overall economic growth." "The fact is that business – particularly SMEs and startups – need more than financing to thrive. They need access to information, innovation, knowhow, and technology to become more productive, efficient, and resilient. Beyond financial products, these entities need a broader range of tools and services to flourish in the current business environment." "As part of Operation 300bn, the future growth roadmap of EDB as a financial driver of the Ministry of Industry and Advanced Technology strategy focuses on boosting the industrial sector in the UAE and supporting 13,500 SMEs by 2031.
EDB will extend AED 30 billion in funding to benefit SMEs, startups, and large corporates in specific growth sectors to achieve this goal," he added.
"What is special about EDB’s expanded offering to SMEs and corporates is that it not only includes direct lending, asset based financing, indirect lending, and equity finance, but also encompasses a host of non-financial support, such as coaching, mentoring, and advisory services to build a strong ecosystem and help these entities to drive the next phase of industrial growth in the UAE across the identified priority sectors." "The support is a result of our comprehensive research, surveys and workshops to come up with a realistic solution to what the SMEs, startups and corporates need in the current business environment. EDB has clearly identified initiatives such as financial support to these traditionally underserved segments including direct lending for micro-SMEs.".
EDB’s support to SMEs includes the expansion of access to financial solutions, such as loans to expatriate-owned and managed SMEs in priority sectors, in addition to those owned by the UAE nationals. Financing services include direct and indirect lending, as well as financing the national supply chain finance platform. The bank also provides equity financing for startups and SMEs.
"The pandemic has reinforced our stance that as a development bank, EDB needs to assist the SME sector beyond just lending and offer a host of non-financial support services. Banks must strive to understand the businesses they finance and develop products to suit their needs. Our strategy aims to achieve just this," added Al Naqbi.
He explained that EDB’s strategy is aimed at overcoming current challenges for SMEs, including limited access to finance, especially with approximately 33 percent of SMEs have financing needs. Such challenges also include limited financial products in market, scarcity of Venture Capital funding, with 90 percent of investments in Venture Capital not in priority sectors, lack of long-term lending, as the financing period in most commercial banks does not exceed a tenor of 7 years, and finally the implications of COVID-19 pandemic.
"With this financial and non-financial support, small businesses in the UAE are now equipped to ensure that they are not holding themselves back. Reaching out to the Emirates Development Bank for financial and non-financial solutions will be the first step to towards supporting these entities cushion the blow of the pandemic and will help them accelerate their recovery plans," he said, in conclusion.
© Copyright Emirates News Agency (WAM) 2021.