UAE to direct additional $6bn to local manufacturers

Alamy via Reuters

• Diversifying from hydrocarbons
• Adnoc expanding local procurement
• AED300bn GDP target

The UAE is to direct an additional AED23 billion ($6.3 billion) to local manufacturers as it strives to develop its homegrown sectors and diversify its economy away from a reliance on hydrocarbons.

Abu Dhabi state oil company Adnoc will expand its local manufacturing procurement programme for critical industrial products by AED20 billion to AED90 billion by 2030, Sultan Al Jaber, the UAE’s minister of infrastructure and advanced technology and CEO of Adnoc, told a conference in Abu Dhabi on Monday. 

Adnoc’s new target is part of its in-country value programme which aims to drive an additional AED178 billion ($49 billion) into the UAE economy by 2028. 

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Abu Dhabi-listed healthcare operator Pure Health, meanwhile, will spend an additional AED3 billion in offtake agreements, raising the total value of UAE’s procurement programme to AED143 billion for more than 2000 products.

Emirates Development Bank (EDB), the UAE’s state-owned lender for the industrial sector, has also committed to AED5 billion in financing in 2024, aimed at accelerating the growth of the manufacturing industry across the seven emirates.

The bank will dedicate AED370 million to finance emerging companies and startups as part of its artificial intelligence powered innovation programme.

EDB has been mandated to approve AED30 billion to 13,500 UAE companies by 2026. Its investments across the UAE total more than AED10.5 billion over the three years to the end of Q1 2024, including AED4.7 billion for manufacturing.

The bank focuses on five priority sectors including renewables, manufacturing, advanced technology, healthcare and food security.

Supporting small and medium enterprises will include AED1 billion of co-lending with commercial banks through credit guarantee schemes and multilateral deals. 

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“This financing demonstrates our confidence in the UAE’s industrial sector and its potential to drive substantial economic growth,” said Ahmed Al Naqbi, EDB’s chief executive.

Among other incentives, Al Jaber announced that companies located in the Northern Emirates – Ajman, Fujairah, Ras Al Khaimah and Umm Al Quwain – and working in the industrial and technology sectors will benefit from competitive electricity tariffs as part of a partnership between the Ministry of Energy and Infrastructure, the Ministry of Industry and Advanced Technology, and Ethiad Water and Electricity.

“We are motivating companies, leaders and individuals to take the initiative and adopt best practices and advanced technological applications to upgrade and boost their competitive capabilities,” Al Jaber told the Make it Emirates conference.

The UAE aims to increase the industrial sector’s contribution to GDP to AED300 billion by 2031 from AED133 billion in 2021.

Industry contributed AED197 billion to the UAE’s GDP in 2023.

Al Jaber said the country increased its non-oil exports from almost AED3 trillion in 2020 to AED3.5 trillion in 2023. Industrial exports accounted for AED187 billion.

He added that global economic challenges, geopolitical conflicts and climate change affect the supply chain, and “the private sector is playing an essential role in transforming them” into opportunities.