Tawazun's defence fund partners with local banks on Dh700m programme
Venture Debt Programme will back local SMEs in the security sector
Tawazun Economic Council’s defence and security fund is launching a Dh700 million programme in partnership with local banks to finance UAE-based small and medium-sized defence companies as the country strives to build the industry.
The Dh2.5 billion Tawazun Strategic Development Fund is partnering with First Abu Dhabi Bank (FAB), Commercial Bank of Dubai (CBD) and National Bank of Fujairah (NBF) on the Venture Debt Programme to provide local security and defence SMEs with loans at attractive rates and low collateral, it said in a statement on Wednesday. The loans are to help SMEs expand operations and develop capabilities.
"Through the newly established Venture Debt Programme and these partnerships, we will have the opportunity to further support SMEs in the private sector to build industrial capabilities and innovative solutions, as well as contribute to enhancing self-reliance of the sector’s ecosystem in meeting the current and future challenges of the UAE’s strategic requirements," Abdullah Nasser Al Jaabari, chief officer and head of Tawazun Strategic Development Fund, said.
Tawazun Economic Council, the body tasked with developing a homegrown defence industry, is ramping up efforts to advance the sector as part of Abu Dhabi’s plans to boost the contribution of the non-oil economy to its gross domestic product.
The Dh700m programme will provide capital expenditure funding for companies setting up in the UAE and SMEs will also get supply chain finance for confirmed projects in the country, Mr Al Jaabari said.
SMEs will get funding in the range of Dh10m to Dh60m, depending on the nature of the project, Mohamed Musabah Al Mazrouei, associate director for ventures and SMEs at Tawazun Strategic Development Fund, said.
"This also gives banks an opportunity to be involved in feasible projects, further contributing to the fund’s ever-growing roster of projects," Mr Al Mazrouei said.
The Venture Debt Programme will provide defence and security SMEs with benefits such as flexible payment terms and competitive interest rates.
Companies that are at least 51 per cent Emirati-owned, with an annual turnover between Dh10m to Dh250m, will be eligible.
Companies must be engaged in value-added activities that support local manufacturing, enhance local supply chains, and allow for capability development by hiring qualified UAE nationals.
The Venture Debt Programme recently completed two pilot projects, one of which was a supply chain funding transaction between Al Saher International and CBD, with funding of about Dh30m.
The programme will provide capex funding for tangible assets including machines, equipment, and premises to companies setting up in the UAE. It will offer supply chain financing for confirmed projects within the UAE for supplier payments, bank guarantees, performance bonds, letters of credit, and trust receipts.
Published: November 13, 2019 07:26 PM