Specifically, the two entities decided to collaborate to establish supply chain finance and working capital solutions for Small and Medium Enterprises (SMEs). This collaboration has been facilitated by Hub71, Abu Dhabi's global tech ecosystem, aimed at supporting startups by providing commercial opportunities through its network of corporate and government partners in the UAE.
EDB, in line with government priorities, is focused on a mission to cultivate a sustainable, self-reliant economy. The bank aims to provide AED 30 billion in financing support to around 13,500 companies within its five priority sectors, namely renewables, manufacturing, technology, healthcare, and food security, by the year 2026.
The MoU outlines the formation of a working group to explore innovative methods of delivering supply chain financing to UAE's SMEs. Supply chain finance aids in mitigating the risk of disruptions in the supply chain and enables efficient management of working capital for both buyers and suppliers.
In the official press release, representatives from the Emirates Development Bank highlighted their commitment to exploring new ways to assist SMEs, which account for over 60% of the UAE's non-oil GDP. Through this MoU, they intend to combine their expertise with TCP's platform to offer a wider range of financing solutions to various businesses.
Officials from TCP talked about SMEs and described them as the backbone of an economy with startups representing the future drivers. Aligned with other governmental initiatives to support these sectors, this partnership aims to provide substantial support to this ecosystem and ensure trade finance alternatives to emerging businesses. TCP officials also talked about the advantages of leveraging cutting-edge technology and processes, and how it could potentially alter the landscape of trade finance, empowering entrepreneurs, SMEs, and startups to realise their potential.
According to the United Arab Emirates government portal, as of mid-2022, the number of small and medium enterprises in the UAE was 557,000. SMEs contribute as much as 63.5% to the non-oil GDP, and it is forecasted that there will be 1 million SMEs in the UAE by the year 2030.
Under the theme of Competitive Knowledge Economy of Vision 2021, the UAE aims to increase the percentage of contribution of SMEs to the non-oil GDP from 53 in 2018 to 60 by the year 2021.
The UAE believes that entrepreneurship plays a key role in unlocking the potential of nationals and enables them to be a driving force of the UAE’s economic development through small and medium enterprises in the private sector. It strives to implement an entrepreneurial culture in schools and universities to foster generations endowed with leadership, creativity, responsibility and ambition.
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