For bolstering the expansion of SMEs within the emirate territory as well as for staying competitive, the Etihad Credit Insurance aided as well as insured the overall exports of SMEs as well as their collective operations within the native market.
From within the January to November 2020, Small as well as Medium Enterprises (SMEs) within the UAE territory have overall received in Dhs420mn as a cumulative aid in form of trade credit. This aid came in from the pathway of Etihad Credit Insurance (ECI), UAEs Federal Export Firm. The overall trade credit initiative provided to the SMEs renders to an overall net worth of Dhs 1Bn Non-Oil Trade Insurer.
As per the report done by state news agency WAM: “The ECI has overall insured exports of SMEs as well as their overall operations within the native market that aids in for them in order to stay well ahead of their competitors within the trade field, specifically within the COVID-19 pandemic time frame.”
Within the previous year, during 2019, ECI had launched a ‘SME Protect’-A unique trade credit initiative for backing up SMEs expansion plans globally as well as in backing up them while entering robust and gigantic-growth enablers. The launchpad of this invention made the ECI as well as the initial government export credit firm within the Middle East as well as Africa for offering SMEs, online trade credit resolution for secured trade-export fields for in excess of Fifty Nations.
The ‘SMEs Protect’ launchpad is the subsequent outcome of the 2018’s survey conducted in tandem with Ras Al Khaimah Chamber of Commerce, Abu Dhabi Chamber of Commerce, as well as Dubai Chamber of Commerce, that have discovered that overall 97 percent of SMEs continued to favour letter of Credit as well as cash payments, wherein only three percent preferred selling on credit mode.
Within the tougher framework as well as the most challenging turbulent economic cycle, the guarantees from ECI have been supportive for securing the overall liquidity of the SMEs, providing sustenance for the businesses in curbing their overall bank funding cost thereby permitting them to appeal their favoured bank to rebate the invoices secured by the ECI at a privileged rate.
The CEO of the ECI, Massimo Falcioni, further stated that: “the ECI has a thorough knowledge regarding the integral role the SMEs play within creation of a robust national economy, and that is an integral part to which they have created an online full-fledged client-friendly solution within 2019, termed as ‘SME Protect’ to permit the SMEs in the UAE to trade safely and self-assuredly as well as provide the advance access to global markets, thereby locating the UAE as the universal hub of trade and export.”
Falcioni further elaborated and stated that: “The closest integrity with which the Abu Dhabi Department of Economic Development (ADDED), chambers of Commerce of the Abu Dhabi, Dubai, Sharjah as well as Ras Al Khaimah and Dubai Exports, permitted a devoted ECI group for progressing numerous webinars coaching, counselling as well as controlling the SMEs to better comprehend their export potential, and realize how to arrive at international markets and offer competitive payment with secured terms.”
Only 50 percent of overall start-up businesses make it to the fifth year of operation, fostering a slump down of over 33 percent within the 10th year, according to data released by US Bureau of Labour Statistics, stressing out the helplessness of the sector. Only one in three small businesses lasts post the 10 years mark.
The Federal export credit establishment bargains financial care to international export activities of the SMEs done via its ecosystem of strategic partners, counting the native and universal banks. The ECI provides banks assurances so these institutions can diminish the capital they distribute for their funding if they use collateral, thereby fortifying the supply chain.
Meanwhile, a World Bank data discloses that SMEs represent about 90 percent of trades and in excess of 50 percent of employment universally. In the UAE, the Federal Competitiveness and Statistics Authority showed that the involvement of the SME sector to the UAE’s GDP is estimated at 53 percent in 2019, up from about 49 percent in 2018.
Additionally, the SMEs also contribute to 95 percent of the overall firms in the nation and employ 86 percent of the whole workforce in the non-oil private sector. However, despite its contribution, SMEs are considered high-risk by financial institutions, due to which securing access to credit proves to be an obstacle.
