Abu Dhabi-based Emirates Development Bank (EDB) contributed Dh1.91 billion ($520 million) to the UAE’s gross domestic product over the past twelve months, as it continued to play a key role in supporting the Gulf country’s industrial strategy.
The announcement came at the EDB board's first meeting of 2022.
The lender also provided direct and indirect financing to 1,350 small and medium-sized enterprises (SMEs) across priority sectors and rolled out a new credit guarantee platform, which was able to mobilise more than Dh332m of capital to SMEs, it announced in a statement on Sunday.
The bank’s new strategy and economic contribution, which was launched in March 2021, underlines "its importance not just to the UAE’s industrial sector, but also to the nation’s economic diversification, global competitiveness and long-term, sustainable economic growth”, said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and EDB board chairman.
“Over the years, the UAE has achieved significant growth and progress across various sectors that are now actively contributing to the nation’s GDP growth," Dr Al Jaber said.
"Through the EDB and its new strategy, we aim to ensure that the industrial sector keeps pace with that growth and achieves the aspirations of the UAE leadership.”
EDB, founded in 2011 through the merger of Emirates Industrial Bank and Real Estate bank, is playing a key role in supporting the UAE's industrial sector through financing programmes.
The bank’s new strategy was launched in March 2021 to support the UAE’s industrial development, accelerate the adoption of advanced technologies and empower the growth of SMEs in the country.
It focuses on the growth and development of large corporations and SMEs in five key sectors including manufacturing, advanced technology, infrastructure, health care and food security.
The lender has allocated Dh30bn to facilitate direct and indirect lending to more than 13,500 companies in these priority sectors by 2025.
“A few highlights include the financing of Dh1.52bn to projects in priority sectors and establishing partnerships with nine commercial banks, resulting in credit guarantees worth Dh332m,” said Ahmad Al Falasi, Minister of State for Entrepreneurship and SMEs and EDB deputy chairman.
Over the years, the UAE has achieved significant growth and progress across various sectors. Through the EDB and its new strategy, we aim to ensure that the industrial sector keeps pace with that growth
Dr Sultan Al Jaber,
UAE Minister of Industry and Advanced Technology and EDB board chairman
EDB also launched a large corporate banking division in less than a year and a digital banking application focused on SMEs and start-ups. In its first six months, over 1000 digital banking accounts have been registered, the statement said.
The lender has also signed memorandums of understanding with 26 partners, including banks, public and private sector entities, chambers of commerce and free zones, over the past 12 months to attract foreign direct investment (FDI) to the UAE. It also conducted more than 16 roadshows and industry events.
EDB has been active in forging local partnerships. Last October, it signed an agreement with the Abu Dhabi Investment Office to further boost FDI and attract more businesses to the capital. A month earlier, it teamed up with Ajman Free Zone to support the development of Emirati-led SMEs.
“We will continue to drive forward our efforts to support priority sectors and increase our value-added financing support for projects in technology, health care, food security, manufacturing and infrastructure as we look to the year ahead,” EDB’s chief executive Ahmed Al Naqbi said.
Mr Al Naqbi led the launch of two EDB initiatives with a total value of Dh10bn as part of the UAE’s Projects of the 50 campaign. The initiative allocated Dh5bn to support Emirati entrepreneurship and innovation, and another Dh5bn to accelerate industrial development and the adoption of advanced technology in the UAE.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
