Emirates Development Bank, the state-owned lender that provides financing for the UAE's priority sectors, has signed a preliminary agreement with Emirates Islamic to collaborate on a joint credit guarantee programme to support small and medium enterprises operating in the country.
As part of the agreement, EDB will guarantee 50 per cent of the finance extended to eligible SMEs by Emirates Islamic, part of the Emirates NBD Group.
Emirates Islamic is the 11th bank to join EDB’s credit guarantee initiative, EDB said on Wednesday.
EDB has signed similar agreements with lenders such as Abu Dhabi Commercial Bank, RAKBank and the Commercial Bank of Dubai.
“We are pleased to welcome Emirates Islamic to our expanding group of commercial bank partners with the shared goal of facilitating access to financing for SMEs contributing to the UAE’s non-oil GDP [gross domestic product],” EDB chief executive Ahmed Al Naqbi said.
“EDB remains committed to enhancing our nation’s SME ecosystem and supporting the sustainable economic development of the nation, specifically the five key priority sectors.”
EDB is heavily involved in the government’s efforts to develop its non-oil economic and industrial base.
The lender provides direct and indirect financing to start-ups, SMEs and large corporates in five priority sectors — manufacturing, infrastructure, advanced technology, food security and health care.
It has set aside Dh30 billion ($8.16 billion) for direct and indirect lending to more than 13,500 companies in priority sectors by 2025.
The bank approved Dh6.1 billion in financing in 2022, a nearly eightfold jump compared with the previous year, and aims to offer at least Dh6 billion in funding this year, Mr Al Naqbi told The National in an interview last month.
The agreement “reflects our shared commitment to supporting the growth of the segment in the UAE, as we strive to enhance the overall SME business ecosystem and make financing more accessible”, Emirates Islamic chief executive Salah Amin said.
SMEs are the backbone of the UAE economy, comprising 98 per cent of the companies operating in the country, according to official data.
The development of the sector and measures to hasten the growth of the start-up ecosystem are among the main priorities of government as it chalks out a development strategy for the next 50 years.