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.”
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.