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Emirates Development Bank loans to SMEs up 387%

EBD approved a total of AED 6.1 billion in loans in 2022
EBD approved a total of AED 6.1 billion in loans in 2022
  • EDB loaned $490m to SMEs in 2022
  • UAE aims to develop 8,000 SMEs by 2030
  • Unicorn startups worth $1bn or more are significant target

Emirates Development Bank (EDB) approved a total of AED1.8 billion ($490 million) in loans to small and medium-sized enterprises in 2022 – a year-on-year increase of 387 percent.

This consisted of AED1.2 billion of direct financing and AED611 million of indirect financing through EDB’s credit guarantee scheme with partner commercial banks.

SMEs make up around 95 percent of all companies operating in the UAE. They employ around 90 percent of the private sector and contribute more than 60 percent to the country’s GDP, according to data from the UAE government.

Lucy Chow, secretary general of the World Business Angels Investment Forum and general partner of the WBAF Angel Investment Fund, said entrepreneurs are the “bedrock” of every economy.

“Absolutely, providing visas, access to markets, education and talent are all required by SMEs,” Chow said.

“But nothing can move ahead without access to funding and the increased volume of loans approved is the step in the right direction.”

The UAE government last year launched the Entrepreneurial Nation 2.0 initiative to develop more than 8,000 SMEs and startups by 2030.

The first edition of the initiative was set up in November 2021, and included 10 programmes and an estimated AED20 million contributed by entities from the private sector. 

The over-arching goal of the programme is to see the creation of 20 unicorns, or startups valued at $1 billion and above, by 2031.

“The breadth of new government initiatives to support SMEs is vital, if we want to support the rise of ‘no less than 20 unicorns by 2031’,” said Chow.

“However, we need more private funding to come through too. Everything from angels to VCs and eventually private equity money if we want to get to 20 unicorns by 2031.”

EDB also supports entrepreneurs and startups with non-financial services through training and advisory programmes on building credit worthiness. 

Ryaan Sharif, general manager at Flat6Labs UAE, said a noteable trend among SMEs is the increasing adoption of generative AI, blockchain, cloud computing and automation.

“Many SMEs are investing in these technologies to improve their operations, increase efficiency and reach new customers,” he said.

“As we look to the future and with this commitment from EDB there is reason to believe that the UAE’s SME ecosystem will continue to thrive, driving innovation and growth in the years ahead.”

The bank approved a total of AED 6.1 billion in loans in 2022 across all company sizes and sectors, and its financing activities last year resulted in AED3.5 billion non-oil GDP impact and over 12,000 industrial jobs created, according to a statement.