Abu Dhabi has launched an export credit agency that will provide guarantees and finance to overseas buyers of UAE goods and services, as the emirate looks to diversify its economy and develop non-oil revenue lines.
Abu Dhabi Fund for Development (ADFD), an autonomous national entity affiliated with the emirate’s government, will own and operate Abu Dhabi Exports Office (Adex), which was established through consultation with the Export–Import Bank of Korea, Mohammed Saif Al Suwaidi, director-general of ADFD said at a press conference on Monday.
Adex will support the emirate's economy and enhance the competitiveness of its exports by providing funding and guarantees to overseas buyers - either public or private sector bodies - looking to import goods and services from the UAE.
The export agency will also provide credit facilities to support UAE exporters and help them manage associated risks, he said.
ADEX anticipates that the finance will encourage UAE exporters to expand into overseas markets. However, it did not set a target for the increase in exports it expects to see, not did it allocate a specific amount it would lend.
“We are starting this programme from scratch,” Mr Al Suwaidi said. “Probably with the first year [of operations] we will have a very clear vision of the future and the [long term] strategy will be developed based on that first year.”
The UAE, he said, enjoys a strategic location and the country has some of the best logistics facilities, including sophisticated ports, which are a prerequisite for development of the exports sector.
“We have a very good banking system and we, [ADFD] as the government of Abu Dhabi are capable of securing very low cost of funding [for ADEX], This is going to make this programme different …. through these tolls and means we will be able to compete with the others [Export Credit Agencies run by other governments],” Mr Al Suwaidi added.
The UAE, which accounts for about 4.5 per cent of the global oil production, is transforming its economy by strengthening its non-oil exports to generate new revenue. The UAE is implementing its overarching economic agenda through its Vision 2021 initiative and Abu Dhabi has its own economic Vision 2030 at emirate level.
The country’s total non-oil trade last year reach Dh1.6 trillion, while its non-oil exports amounted to Dh212 billion in 2018, a year-on-year growth of 2 per cent. Total exports and re-exports in the UAE accounted for approximately 80 per cent of the country’s gross domestic product while non-oil exports made up close to 30 per cent of GDP, Mr Al Suwaidi had earlier told delegates at the ADEX launch event.
Asia-Pacific was the biggest partner of the UAE last year, making up for 39 per cent of the nation’s total non-oil trade.
"The significant increase in non-oil exports confirms the UAE is reaping the benefits of the economic policy,” he said. “This new policy will support our economy by financing national exports …. to open new markets for them around the world.
ADEX is offering direct and indirect lending facilities to foreign buyers of goods and services from the UAE, which could cover as much as 100 per cent of a deal, depending on the type of funding, associated risks and the nature of export operations, according to Mr Al Suwaidi.