Abu Dhabi formalises 30-day payment rule for government suppliers

All state entities will now be required to clear payments through Sharaka platform within 30 days of receiving invoices

Ghadan 21, a series of initiatives and reforms with a Dh50bn budget, was announced for Abu Dhabi last year. Christopher Pike / The National

The government of Abu Dhabi has formalised a rule making it mandatory for all public sector and state owned entities to pay their suppliers and contractors within 30 days from the date of receiving their invoices.

The government directive on payment terms, part of the latest wave of Ghadan 21 package of economic initiatives announced on Tuesday, applies to all direct suppliers in the emirate.

The payment rule is the outcome of a 60-day outreach campaign by the Abu Dhabi Council for Economic Development (ADCED), which met with and listened to the concerns of private sector firms from across all sectors. The ADCED passed on its recommendations after consultations with more than 140 companies to the Abu Dhabi’s Department of Economic Development, which is finding solutions to overcome the challenges faced by the private sector enterprises.

The suppliers and contractors will be paid through government ADCED-managed platform Sharaka, launched in July last year as part of the Ghadan 21 programme.

“The Sharaka initiative aims to strengthen the partnership between the private and the public sectors [in Abu Dhabi],” Saif Al Hajeri, chairman of the economic department said on Tuesday at a private sector forum.

The government, he said, is identifying “the challenges facing the private sector and works together with the business community to create an ideal working environment and a sustainable economy” in the emirate.

The new payment rules, along with eight other initiatives launched under the Dh50 billion three-year economic stimulus package will help the government achieve that objective, he noted. The incentives laid out for the private sector on Tuesday range from instant licensing to government guaranteed funding for SMEs and a Dh4bn research and development fund for the corporate sector in Abu Dhabi.

The 30-day payment rule is largely aimed at supporting the smaller and medium-sized entities in Abu Dhabi, which usually rely on the uninterrupted cash flows for the continuity of their businesses. Firms in the construction sector and related segments of the economy, especially need prompt payments to maintain commercial viability of their enterprises.