Dubai SME & FAB join hands to offer finance programme for Emirati-owned SMEs
The UAE has a strong focus on its SME sector, which forms 94 percent of its businesses, contributing 47% to the country’s GDP in 2018. In a new initiative to support this sector, the Mohammed bin Rashid Fund (MBRF) of Dubai SME, the agency of Dubai Economy mandated to develop the small and medium enterprise, has joined hands with First Abu Dhabi Bank (FAB) to launch a new receivable financing programme for Emirati- owned SMEs in Dubai.
The Memorandum of Understanding to facilitate this venture was signed by Abdul Basit Al Janahi, CEO of Dubai SME, and Hana Al Rostamani, Group Head of Personal Banking at FAB.
As per the agreement, Emirati-owned SMEs in Dubai will receive easy and tailored solutions from FAB to secure financing against sales invoices. They will also benefit from preferential rates and a wide 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. Dubai SME has supported the growth and expansion of 7,000 startups since 2002. We also enable our member SMEs to benefit from government contracts and the net value of contracts thus facilitated by Dubai SME now stands at AED 5.2 billion.Abdul Basit Al Janahi, CEO of Dubai SME
Vikas Thapar, Head of Business Banking Group at FAB said in a statement, "As a leading supporter of the SME sector in the UAE, FAB was selected to help businesses overcome their long receivables processes by providing them with access to competitive financing rates."
The agreement is also expected to make the process of receiving financing faster, which will not only make FAB a preferential banking partner but also support Emirati-owned SMEs in a timely fashion, which will enable them to grow and expand faster.
Earlier this year, FAB also signed an agreement with Abu Dhabi to offer state-backed loans to SMEs. AED 9 billion was set aside for SMEs under the AED 50 billion Ghandan 21 programme.
SMEs are the backbone of any economy. They’ve shown their importance in the UAE by contributing 47 percent to the GDP last year. The government aims to increase this contribution to 70% by 2021, for which it is important that these SMEs get the financial support needed to grow quicker.
This year alone, the UAE has introduced a number of reforms in the fees and payment segment that has seen many fees be reduced or scrapped altogether. Dubai government also mandated 5% of government contracts to go to SMEs, as well as reduced payment due dates to 30 days from the previous 90 day period. In addition, the UAE also introduced 100% foreign ownership of businesses in 122 economic activities.