EDB aims to offer at least $1.6bn in financing this year, CEO says

Exclusive: State-owned lender will focus on supporting renewable energy projects in 2023 as the UAE prepares to host Cop28 later this year

Ahmed Al Naqbi, chief executive of EDB, said the lender will focus on supporting small and medium businesses in the UAE. Photo: Emirates Development Bank

Emirates Development Bank, the state-owned lender which provides financing for the UAE's priority sectors, aims to offer at least Dh6 billion ($1.6 billion) in funding this year, its chief executive has said.

The bank, which provided Dh6.1 billion in financing in 2022, will not “do any less than last year” in 2023, Ahmed Al Naqbi told The National in an interview on Wednesday.

“I can definitely say that we will be able to do … no less than Dh6 billion of further support, but hopefully, it will be more than that. And also, the reality of the capacity of the market has to be taken into consideration,” Mr Al Naqbi said.

EDB currently provides direct and indirect financing to UAE-domiciled businesses or projects across its five priority sectors — manufacturing, infrastructure, advanced technology, food security and health care.

It has set aside Dh30 billion for direct and indirect lending to more than 13,500 companies in those sectors by 2025.

“EDB is definitely a leader in the five sectors … But there's a finite universe, a finite market. I wish we could put Dh100 billion out there, but there might not be that [many] number of projects out there. But we do believe that what we did last year is fair to replicate,” Mr Al Naqbi said.

The financing given last year marked an increase of nearly eight times on an annual basis, the bank said.

EDB provided loans to about 180 companies last year, Mr Al Naqbi added, with the bulk of them being small enterprises, including 50 to 70 under the “micro” businesses category.

While Dh1.8 billion in loans was approved for small and medium enterprises last year, the funding approved for large corporates surged to Dh4.3 billion as part of efforts to support the UAE’s “national priority sectors with large projects in key areas”, including data centres, desalination plants, transport, hospitals, manufacturers and specialised logistics, EDB said.

“So there's actually a very large number of small entities, start-ups, that are doing projects in the country, that we are giving loans to. And then above that, we have our mid-caps and large-caps, and they will typically do more large-scale economic projects to support the country. But it [the customer base] is very well diversified,” Mr Al Naqbi said.

“If there is a concentration, it's the concentration in manufacturing, so [we are] looking at as many projects as possible that are greenfield manufacturing projects here in the country.”

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  Sheikh Khaled bin Mohamed, member of the Abu Dhabi Executive Council and Chairman of the Abu Dhabi Executive Office, has launched the Abu Dhabi Industrial Strategy to strengthen the emirate’s position as the region’s most competitive industrial centre. All photos: Abu Dhabi Government Media Office

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  Abu Dhabi government will invest Dh10 billion to more than double the size of the emirate’s manufacturing sector to Dh172bn by 2031.

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  Non-oil exports will grow by 148 per cent to Dh178.8bn and 13,600 jobs will be created under the strategy.

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  Sheikh Khaled was joined at the launch by officials and dignitaries such as Dr Sultan Al Jaber, Minister of Industry and Advanced Technology.

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  The strategy will increase access to financing, improve the ease of doing business and attract foreign direct investment.

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  Under the initiative, the home-grown supply chain programme will build industrial sector resilience by increasing self-sufficiency and promoting domestic products.

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  Alongside the launch of the strategy, several new industry partnerships were signed.

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  Six programmes will drive growth and innovation, boost skills and advance the transition to a circular economy.

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  Sheikh Khaled at the launch event. The Industry 4.0 programme will accelerate business growth through the widespread adoption of new technology and processes.

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  Initiatives included in the strategy will continue Abu Dhabi’s transition towards a smart, circular economy.

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  The plan will include job placement programmes that offer rewarding career pathways in high-demand areas.

The UAE unveiled its industrial strategy, Operation 300bn, in 2021 to increase the industrial sector’s contribution to gross domestic product to Dh300 billion by 2031, from Dh133 billion in 2021.

It has also launched the Make It in the Emirates initiative, which encourages local and international investors to manufacture and export products from the UAE.

Within manufacturing, EDB is seeing a lot of traction in foodstuff, pharmaceuticals and petrochemical sub-sectors, Mr Al Naqbi said.

Meanwhile, loans disbursed through EDB's microlending platform, which is powered by Beehive, stood at more than Dh100 million last year.

The platform allows SMEs to apply for loans of up to Dh5 million — directly through its business banking app — and receive approval or feedback within five days.

The support provided by the platform will increase this year, Mr Al Naqbi said.

“We're only going to push that even further. Because from our mandate … we really have a focus on the smaller-size companies. And we want them to be the ones that are receiving the support from EDB in the ways that we can support them,” he said.

“They are obviously not necessarily always suitable for financing, because they might be too early stage start-up companies that don't have any income, and a loan might actually be a burden on them and a burden on their growth.

“But we can support them through transactional banking … And we're looking at adding things such as bill payments and wage-protection system to allow them to do the payroll. And all of this is basically free of charge on the application. So it's to support them — we're not looking to make money off of them.”

This year, EDB plans to finance a “much larger number” of renewables projects, in line with the UAE's Year of Sustainability.

“We are hosting Cop28 here in the UAE, our chairman Dr Sultan Al Jaber, is the president-designate of Cop28, so definitely, you will see EDB very much moving into that sector.”

The bank is allocating up to Dh1 billion to support renewable projects this year, Mr Al Naqbi said during a panel discussion at the investment conference Investopia in Abu Dhabi on Thursday.

“The UAE, I don’t see it as a hydrocarbon leader,” Mr Al Naqbi said.

“I see the UAE as a leader in energy space ... we are very much a leader in solar, we are very much a leader in hydrogen, we are very much a leader in many facets of the energy sector and we will continue to be so and continue to invest in that area.”

For this year, EDB will also focus on building more tailor-made financing solutions for AgriTech, Mr Al Naqbi said.

“AgriTech and farming require a very specialised kind of financing because of the longer breakeven points of those projects. So we are looking to launch this year a specialised product that is for that sector,” he said.

Wheat farm in Sharjah — in pictures

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  The wheat farm project in Mleiha, which was opened in November by Sheikh Dr Sultan bin Muhammad Al Qasimi, Ruler of Sharjah, is getting ready to produce its first harvest. Chris Whiteoak / The National

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  Drone images show the vast green patches. The farm covers 400 hectares, about the size of 500 football pitches. Photo: Supplied

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  The irrigation system at the farm. Chris Whiteoak / The National

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  Dr Khalifa Musabeh Ahmed Alteneiji, Chairman of the Department of Agriculture and Livestock, says the harvest should begin within weeks. Chris Whiteoak / The National

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  The crop has been grown without the use of pesticides, chemicals or genetically modified seeds. Chris Whiteoak / The National

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  The plan is to reach a total area of 1,900 hectares. Chris Whiteoak / The National

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  An on-site weather station can predict temperature, wind speed and humidity up to 48 hours ahead. If rain is forecast, the farm cuts down on irrigation. Chris Whiteoak / The National

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  The fields are irrigated using a reservoir with a capacity of 16,000 cubic metres. Chris Whiteoak / The National

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  The irrigation system in action. Chris Whiteoak / The National

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  In four months, the desert land has been transformed into a green oasis, ready to yield up to 1,700 tonnes of wheat. Chris Whiteoak / The National