UAE’s Federal Export Credit Company, Etihad Credit Insurance (ECI) has issued 3,605 revolving credit guarantees worth $620 million to assist local businesses in increasing their exports to various countries.
The agency’s overall credit guarantees have contributed $1.8 billion in non-oil exports to more than 85 nations since its launch in 2018, according to the ECI. To alleviate payment risks associated with exports, the ECI provides export guarantees and trade insurance to UAE companies. It already has ties with several local and international banks that provide loans to UAE companies to fund exports, as well as insurance.
“A detailed review of the performance has revealed that the 18 sectors that benefitted from our guarantees include cable, steel, petrochemicals, building materials, packaging, automotive, energy, utilities, health care, and food. The ECI’s continued support to UAE trade and export, despite the deep global recession caused by the COVID-19 pandemic last year, has not only continued to protect businesses’ cash flows” but also eased the access of small and medium enterprises (SME) to trade finance. This has helped economic recovery in the post-pandemic era.”
Dr. Al Zeyoudi further pointed out that “these measures provided access to new markets to the UAE’s exporters and re-exporters and helped to stabilize the UAE economy, as well as create new opportunities for investment and project financing, thereby adding value to the UAE’s non-oil gross domestic product, employment, and SME sector development.”
Handholding the economy
In the first 11 months of 2020, the ECI provided SMEs with $114.3 million in trade credit support to help companies safeguard their liquidity positions amid the coronavirus-induced global economic slowdown.
Last month, the UAE’s leadership unveiled Operation 300bn, a new initiative aimed at more than doubling the industrial sector’s contribution to the country’s economic production from $36.2 billion to $81.6 billion by 2031. To support the strategy, the Emirates Development Bank would offer $8.1 billion in financing over the next five years.
“Easing access to trade and project financing will highly contribute to advancing Operation 300bn and Make it in the Emirates initiatives to more than double the value of the output of the national manufacturing and industrial sector in the next 10 years,” Dr. Al Zeyoudi added.
Earlier this year, the ECI signed an agreement with Emirates NBD to boost exporters’ access to trade finance. Emirates NBD would provide loans to UAE businesses backed by the ECI as part of the agreement.
To enhance UAE exports, the agency has formed partnerships with several international financial institutions too including the African Trade Insurance Agency to increase cross-border trade with the continent. Further, it’s looking into forming a partnership with its Italian counterpart to extend trade credit for sustainable development projects.