The Banking Executive Magazine - Issue 150, June 2021

EDB TO LAUNCH DIRECT INVESTMENT FUND TO SUPPORT SMES Ahmed Al Naqbi, CEO of Emirates Development Bank (EDB), has re- vealed the bank's plans to launch an AED 1 billion direct investment fund in 2022 to support SMEs and indus- trial companies that need financing and investment in priority sectors, such as manufacturing, healthcare, infrastructure, food security and technology. In a statement, 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 coun- try. It is a known fact that access to fi- nance for SMEs and startups has al- ways 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 – particu- larly SMEs and startups – need more than financing to thrive. They need access to information, innovation, knowhow, and technology to be- come 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 finan- cial 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 ex- panded offering to SMEs and corpo- rates is that it not only includes direct lending, asset based financing, indi- rect lending, and equity finance, but also encompasses a host of non-fi- nancial 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 com- prehensive research, surveys and workshops to come up with a realis- tic solution to what the SMEs, start- ups and corporates need in the current business environment. EDB has clearly identified initiatives such as financial support to these tradi- tionally underserved segments in- cluding direct lending for micro-SMEs.". EDB’s support to SMEs includes the expansion of access to financial so- lutions, such as loans to expatriate- owned and managed SMEs in priority sectors, in addition to those owned by the UAE nationals. Financ- ing services include direct and indi- rect lending, as well as financing the national supply chain finance plat- form. 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 chal- lenges for SMEs, including limited access to finance, especially with ap- proximately 33 percent of SMEs have financing needs. Such challenges also include limited financial prod- ucts 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 ex- ceed a tenor of 7 years, and finally the implications of COVID-19 pan- demic. "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 Devel- opment Bank for financial and non- financial solutions will be the first step to towards supporting these en- tities cushion the blow of the pan- demic and will help them accelerate their recovery plans," he said, in con- clusion. ISSUE 150 JUNE 2021 the BANKING EXECUTIVE 55 Ahmed Mohamed Al Naqbi, Chief Executive Officer of EDB