Dubai and FAB partner up on new financing scheme to boost SME sector
Emirati entrepreneurs to receive financing from First Abu Dhabi Bank
Dubai SME's Mohammed Bin Rashid Fund and First Abu Dhabi Bank formed a partnership to roll out a new receivable financing programme aimed at supporting small and medium enterprises in the emirate.
Under the agreement, FAB will offer Emirati-owned suppliers the ability to secure financing against sales invoices, according to a statement by both entities. In addition to settling payments, the programme will also offer Emirati entrepreneurs preferential rates and a broader array of FAB’s suite of business banking products and services.
“The partnership with FAB is a significant opportunity for Dubai SME Emirati-owned suppliers to benefit from the diverse financing options increasingly available in the UAE,” said Abdul Basit Al Janahi, chief executive of Dubai SME in a statement. Dubai SME, an agency of the Dubai governnment's Department of Economic Development, has backed 7,000 startups since 2002.
The net value of contracts to member SMEs facilitated by Dubai SME now stands at Dh5.2 billion, Mr Al Janahi said.
Small and Medium Enterprises account for 95 per cent of the registered businesses in the UAE and employ a little more than half of the entire labour force in the country. These businesses contribute 47 per cent of the UAE's gross domestic product, the region’s second-biggest economy. The aim is to increase this contribution to 70 per cent by 2021.
FAB is one of the top lenders to SME sector in the UAE. It is aiming for double-digit growth in its SME business this year and plans to increase its share of the UAE’s SME market to more than 20 per cent by 2020, from 15 per cent currently.
“This partnership promotes economic development and expansion while also enabling the country to become an entrepreneurial hub,” said Hana Al Rostamani, group head of personal banking at FAB.
FAB also signed an agreement with the Abu Dhabi Investment Office in June to extend up to Dh9 billion of government-backed loans to SMEs in the capital via the Ghadan 21 programme. Under the scheme, 75 per cent of loan amounts extended to SMEs in the capital will be backed by government guarantees.
Updated: November 20, 2019 05:02 PM