Dialogue / Aisha Al-Suwaidi.
DUBAI, 28th September, 2020 (WAM) — Massimo Falcioni, CEO of the Union Export Credit Company, confirmed that the company seeks to contribute significantly to supporting the realization of the national agenda for the development of the UAE’s non-oil exports, which aims to enter 25 new markets by benefiting from its strategic partnerships with export credit agencies. in other countries and employ its database of over 320 million companies from all over the world.
In an exclusive interview with the Emirates News Agency, WAM, he said that the company is working to implement its strategy in an optimal way that is in line with the vision of the wise leadership to chart the future of the country’s economy during the next fifty years.. Pointing out that the Export Credit Union, within its plans and future projects to welcome the fiftieth year of the country, seeks To provide protection for exports worth 10 billion dirhams by the end of 2021 and 27 billion dirhams by 2024.
He added, “As the credit protection company of the federal government in the UAE, it will continue to protect the cash liquidity and commercial receivables of UAE companies, facilitate their access to financing, facilitate their entry into global markets, and create promising investment opportunities, which supports the growth of GDP, the employment sector and small and medium-sized companies.”
He considered that facilitating companies’ access to trade and project financing would greatly contribute to supporting the “300 billion project” and the “Make in the UAE” initiative, and would double the value of the national industrial sector’s output in the next ten years.
He explained that the company aims to enhance the UAE’s leading position in the world in the establishment of sustainable cities and contribute to the elimination of global warming.
One of the ways the company affirms its commitment to supporting sustainable development is its partnership with the Abu Dhabi Future Energy Company “Masdar” to cooperate in initiatives that support investment in renewable energy projects, which in turn contribute to reducing carbon emissions.
Falcioni pointed out that the company’s contribution to supporting the growth of the energy sector and sustainability is in line with the “Emirates Energy Strategy 2050”, which aims to allocate 600 billion dirhams to raise the contribution of clean energy in the total energy mix produced in the country to 50 percent until 2050. Through these initiatives, the Union seeks Export Credit to support the vision of the wise leadership to create sustainable cities for future generations.
Regarding the achievements that have been made in the export sector since the establishment of the Export Credit Union in 2018, he explained that since its establishment as a credit protection company of the federal government in the UAE, in line with the national agenda of the UAE Vision 2021, the Export Credit Union has been entrusted with the task of accelerating the country’s economic diversification and reducing dependence on oil By supporting the growth of UAE companies and facilitating their access to finance, in addition to consulting services on dealing with new suppliers.
He added that the company has supported Emirati companies and boosted their exports, whether by providing short-term credit protection or medium to long-term guarantees to reduce the cost of project financing. Since August 2021, the company has issued 5,235 revolving credit guarantees worth 3.1 billion dirhams to promote non-oil trade in the country, equivalent to 9.3 billion dirhams as guarantees for non-oil exports to more than 83 countries, including Saudi Arabia, Iraq, Oman, India, Kuwait, Jordan, Egypt and South Africa And the United Kingdom, China, France and other countries. These guarantees were provided to support companies operating in 18 sectors, including petrochemicals (22% of the total), iron and steel (12%), cables (20%), building materials (7%), packaging materials (6%), and cars (5%). / services / 5%/ and food / 6%/.
He said that the commercial credit protection solutions offered by the company contributed to putting companies on the path of recovery from the losses that resulted from the buyers’ default. Its financial solutions have also worked to support the growth of local companies in international markets through its wide base of partners banks and financial institutions, which provide financing at preferential rates for companies backed by guarantees by the Union for Export Credit. In order to facilitate companies’ access to financing and reduce its cost on them, the company provided guarantees to finance exports (before and after shipment) insurance beneficiary solutions, bill deductions and supply chain financing at a value of 1.1 billion dirhams, 87 percent of which (equivalent to 960 million dirhams) were for UAE exporting companies. The company has also played a vital role in financing overseas projects, providing guarantees of 140 million dirhams to companies using UAE products and services.
And about the company’s contribution to more growth in the business of small and medium-sized companies, and about the size of growth in numbers, he explained that small and medium-sized companies are one of the most important growth drivers in the industrial sectors in the country, and it is expected that this category of companies will continue to play a very big role in the growth of countries’ economies. According to the Ministry of Economy, 94 percent of the companies operating in the country are small and medium companies that contribute to 86 percent of the workforce in the private sector and about 60 percent of the country’s GDP.
He said that small and medium-sized companies have a high capacity to contribute to economic diversification and sustainable development in the country, so the ECI has always supported the growth of this category of companies and will continue to do so.
He added that small and medium-sized companies are usually considered high-risk by financial institutions and banks, and this leads to difficulty in obtaining financing. According to data issued by the US Bureau of Labor Statistics, only 50 percent of start-up companies operate until their fifth year, and this percentage drops to 33 percent in the tenth year. Its solutions to enable them to carry out trade business safely and confidently at the local, regional and global levels, thus consolidating the position of the UAE as a leading global center for trade and export.
The CEO of ECI considered that one of the most difficult challenges that small and medium-sized companies are currently facing is the economic slowdown caused by the Covid-19 epidemic, which may make it difficult for companies to maintain strong cash flow. Therefore, policies and stimulus packages offered by governments and central banks help put small and medium-sized businesses on the path to recovery. In this regard, the Export Credit Union provided credit protection to small and medium Emirati companies amounting to 420 million dirhams in 2020, which is equivalent to insurance for non-oil trade worth one billion dirhams.
He pointed out that these guarantees helped in enhancing the cash flow of these companies and facilitating their access to financing from the Union’s export credit partners from banks at preferential interest rates to facilitate the payment of financing payments. In 2019, the company launched the “Small and Medium Enterprises Protection” service, which is a Export Trade Credit Protection is specifically designed for UAE-based SMEs to support their growth plans globally and help them enter emerging markets. It is an electronic insurance policy that allows small and medium-sized companies to start doing business in international markets within three easy and quick steps. The service also aims to facilitate the business of UAE companies and expand their understanding of trade credit solutions in order to accelerate the growth of their exports safely. By providing guarantees for their trade receivables, SMEs can now provide credit to customers without incurring financial losses.
He stated that the launch of the commercial credit solutions provided by this service came as a result of the survey that was prepared in cooperation with the Abu Dhabi, Dubai and Ras Al Khaimah Chambers of Commerce and Industry in 2018. The survey showed that 97 percent of small and medium-sized companies prefer letter of credit and cash payments, while only 3 percent prefer Selling by credit Therefore, the Export Credit Union has been keen to bridge this gap by facilitating doing business, accelerating the growth of small and medium-sized companies and sustaining non-oil trade.. Pointing out that the company’s innovative insurance solutions and services benefit small and medium-sized companies and large companies alike, allowing them to Trade safely and with confidence.
On how the Export Credit Union contributed to enhancing the entry of small and medium-sized companies into the export market, he pointed out that managing cash flows and non-payment is one of the major problems faced by small and medium-sized companies all over the world. The situation is no different in the UAE where SMEs constitute 95 per cent of the total number of businesses and debt collection remains a challenge as well. While timely protection of trade receivables from customers is critical for businesses of all sizes, non-payment or late payments can present a particular challenge to small and medium businesses that may lack cash flow or financing facilities that large businesses can rely on to manage problems. Short-term.. Considering that launching the Small and Medium Enterprises Protection Service can permanently end this problem, as it helps enhance the confidence of small and medium companies to enter competitive markets and increase their global presence by protecting their commercial entitlements and reducing the risks they may face when working in foreign markets.