Mashreq unveils ‘Supplier Finance’ program for SMEs in UAE

By Salma C, Intern Reporter
  • Follow author on
Mashreq partners with cashew
Rep. Image

Mashreq, a leading financial institution in the UAE, has unveiled the ‘Supplier Finance’ program to facilitate the availability of working capital to small and medium enterprises (SME) in the region. 

The new initiative will help in the reduction of the overall cost of financing the supply chain, by influencing the creditworthiness of large buyers to make more cost-effective advance payments to their smaller suppliers.

The program complements Mashreq’s existing market-leading receivable finance solutions which offers a one-stop for client end-to-end supply chain finance needs.

According to the World Bank, in the Arab world, SMEs make up about 97 percent of businesses, half of the workforce, about 150 million people, and 40 percent of GDP. Therefore, it is important that SME businesses that moderately maintain the financial services sector have unrestricted access to adequate capital if they are to thrive and have a positive impact on their environment.

According to a pre-pandemic report from the International Monetary Fund, increasing the inflows of SMEs into the Mena region, comparable to the average level of emerging and developing economies, will increase annual growth by 1 percent, and create eight million jobs in the Arab world by 2025.

Mr. Victor Penna, Co-Head of Global Transaction Banking at Mashreq Bank stated that “Increasing the financial and environmental sustainability of supply chains is becoming more and more important to corporate players in the Middle East. We are pleased to be delivering programs that support these goals whilst helping close financing gaps for SMEs.”

In addition to ensuring a sustainable source of working capital at a low cost, Mashreq’s distribution finance programs improve the collection process and reduce overhead costs. As a result, buyers can improve their working capital cycle, increase the efficiency of payment management, and most importantly strengthen the supply chain and drive business growth.

In line with Mashreq’s vision of maintaining environmental sustainability, the initiative motivates buyers to support distribution groups that contribute to sustainable enterprises. A state-of-the-art 24×7 digital delivery channel available to both buyers and distributors provides end-to-end transaction visibility and easy access to transactions without direct visiting Mashreq branches.

Socially responsible organizations such as Mashraq have recognized the power of ‘supplier finance’ programs as a powerful tool for resolving the underlying problem of financial gaps faced by SMEs. In recent years supply chain finance has surpassed traditional trade finance in terms of market earnings.

Related: UAE’s EDB & DIB unite to launch credit guarantee scheme for SMEs