EDB and Ajman Bank Join Forces to Empower SME Financing and Innovation in the UAE

Small and medium-sized enterprises (SMEs) are the cornerstone of the UAE’s economy. Accounting for over 94% of businesses and generating more than 86% of private-sector jobs, SMEs are vital contributors to the nation’s economic diversification goals. However, accessing financing remains a significant hurdle for many of these businesses. Recognizing this, Emirates Development Bank (EDB) and Ajman Bank have renewed their strategic partnership to address the challenges in SME financing and empower entrepreneurs across the UAE.

This partnership not only strengthens the financial ecosystem for SMEs but also aligns with the UAE’s broader vision of fostering innovation, sustainability, and economic resilience. By leveraging innovative credit guarantees and co-lending solutions, EDB and Ajman Bank are paving the way for SMEs to flourish in a competitive market.

Why SME Financing Matters

SMEs are a driving force behind economic activity, particularly in emerging markets like the UAE. Here’s why their growth is crucial:

• Economic Contribution: SMEs contribute approximately 52% of the UAE’s non-oil GDP, with targets set to increase this to 60% by 2030.
• Employment Generation: These businesses provide jobs to over 86% of private-sector workers, offering diverse opportunities across industries.
• Innovation: SMEs play a pivotal role in fostering innovation, driving technological advancements, and reducing reliance on oil revenues.

Despite their importance, SMEs often struggle to secure funding due to limited credit histories, insufficient collateral, or a lack of tailored financial products. This gap in financing is precisely what the EDB-Ajman Bank partnership seeks to address.

The EDB and Ajman Bank Collaboration

The partnership between EDB and Ajman Bank was recently renewed through a signing ceremony attended by Ahmed Mohamed Al Naqbi, CEO of Emirates Development Bank, and Mustafa Al Khalfawi, CEO of Ajman Bank. Both leaders highlighted the transformative potential of this collaboration in reshaping the SME financing landscape.

“At EDB, empowering SMEs is at the heart of our mission. Our renewed partnership with Ajman Bank is a testament to our commitment to leveraging public-private collaboration to create an enabling environment for small businesses. Together, we aim to address financing challenges and unlock the full potential of SMEs, fostering economic growth across the UAE.”

“This partnership reflects Ajman Bank’s unwavering commitment to supporting entrepreneurs and small businesses. By combining our expertise with EDB’s resources, we’re equipping SMEs with the financial tools they need to innovate, expand, and contribute to the UAE’s economic prosperity.”

The EDB-Ajman Bank collaboration introduces several initiatives designed to enhance SME financing and promote financial inclusion.

1. Credit Guarantee Scheme

Through this scheme, EDB guarantees up to 50% of the loans extended by Ajman Bank to SMEs. This de-risking approach incentivizes banks to lend to businesses that might otherwise struggle to secure funding, especially startups and first-time entrepreneurs.

2. Focus on Priority Sectors

The partnership targets SMEs operating in five strategic sectors:

• Manufacturing: Driving industrial growth and technological advancement.
• Food Security: Supporting businesses that contribute to the UAE’s self-sufficiency in food production.
• Healthcare: Enhancing medical infrastructure and access to quality healthcare.
• Advanced Technology: Encouraging innovation in digital and tech-driven industries.
• Renewables: Promoting sustainable energy solutions in alignment with the UAE’s net-zero goals.

3. Financial Products

Ajman Bank and EDB are collaborating to develop customized financial products that address the unique needs of SMEs, offering flexible repayment terms and competitive interest rates.

4. Capacity Building

The partnership emphasizes providing SMEs with access to educational resources, financial literacy programs, and mentorship opportunities to enhance their business acumen.

5. Digital Banking

Both banks are investing in digital platforms to streamline the loan application process, ensuring quicker approvals and easier access to funds for SMEs.

Emirates Development Bank

Established under Federal Law by Decree No. 07 of 2011, the Emirates Development Bank has become a critical financial institution driving the UAE’s economic advancement. Since becoming operational in 2015, EDB has focused on empowering businesses in key sectors to promote innovation, sustainability, and economic competitiveness.

• SME Support: EDB has provided funding to over 1,350 SMEs, contributing significantly to their growth and success.
• Investments in Priority Sectors: The bank has allocated more than AED 2 billion to manufacturing, food security, healthcare, renewables, and advanced technology.
• Digital Innovation: EDB’s digital banking platform has enabled seamless access to financial services for SMEs, with over 500 businesses onboarded since its launch.

By aligning its strategy with the UAE’s Vision 2030, EDB continues to play a pivotal role in shaping a sustainable and diversified economy.

Ajman Bank, a premier Sharia-compliant financial institution, is renowned for its commitment to transparency, innovation, and community support. Backed by the Government of Ajman, the bank has established itself as a cornerstone of the emirate’s economic development strategy.

1. Sharia Compliance: Offering ethical financial solutions that adhere to Islamic principles.
2. Technological Advancement: Leveraging cutting-edge banking technologies to enhance customer experiences.
3. Support for SMEs: Providing tailored financing options to meet the unique needs of small businesses.

Ajman Bank’s collaboration with EDB is a natural extension of its mission to foster a thriving entrepreneurial ecosystem in the UAE.

SME Financing

• Limited Access to Credit: Many SMEs lack the credit history or collateral required by traditional banks.
• High Financing Costs: Small businesses often face higher interest rates, making borrowing expensive.
• Inadequate Financial Literacy: Many entrepreneurs struggle to navigate complex banking processes.
• Market Volatility: Economic fluctuations can disproportionately impact small businesses.

The EDB-Ajman Bank collaboration provides solutions that directly address these pain points:

1. Credit Guarantees: Mitigating risk for banks, enabling easier loan approvals.
2. Flexible Financing: Offering competitive rates and repayment options tailored to SME needs.
3. Capacity Building: Providing educational resources to enhance financial literacy among entrepreneurs.
4. Digital Transformation: Simplifying banking processes through user-friendly digital platforms.

The Impact on the UAE Economy

The UAE’s reliance on oil revenues has decreased significantly in recent years, thanks to concerted efforts to diversify its economy. SMEs are central to this strategy, contributing to sectors like technology, healthcare, and renewable energy.

• Non-oil sectors now account for over 70% of the UAE’s GDP.
• The nation aims to become a global hub for innovation, ranking among the top 20 countries in the Global Innovation Index.

By empowering SMEs, the EDB-Ajman Bank partnership is also addressing unemployment. The UAE’s SME sector has created thousands of jobs, particularly for young professionals and women entrepreneurs.

Women-led SMEs are a growing force in the UAE economy. By offering targeted support and incentives, EDB and Ajman Bank are fostering gender inclusivity in the entrepreneurial landscape.

The partnership underscores the growing influence of Islamic finance in driving economic development. Sharia-compliant financial solutions are particularly attractive to SMEs, offering ethical, interest-free alternatives to conventional loans.

1. The Islamic finance market is expected to grow to $3.8 trillion by 2024, with the UAE playing a leading role.
2. Islamic finance principles, such as profit-sharing and risk mitigation, make it an ideal fit for SMEs.

Ajman Bank’s Sharia-compliant offerings, combined with EDB’s strategic initiatives, provide SMEs with the tools they need to succeed.

Insights for SME Owners

If you’re an SME owner in the UAE, here’s how you can benefit from the EDB-Ajman Bank partnership:

1. Financing Options

   • Apply for loans under the Credit Guarantee Scheme for easier approvals.
   • Leverage sector-specific financing for businesses in manufacturing, healthcare, or renewables.

2. Digital Platforms

   • Access banking services through EDB’s and Ajman Bank’s user-friendly digital tools.

3. Financial Literacy

   • Participate in workshops and training programs offered by EDB to improve your business acumen.

4. Industry Leaders

   • Take advantage of networking opportunities to build connections and gain insights from experts.

The EDB and Ajman Bank partnership is a blueprint for how public-private collaborations can drive economic transformation. As the UAE continues to position itself as a global hub for entrepreneurship, this partnership will play a key role in shaping a resilient, inclusive, and innovative SME ecosystem.

Goals for the Future:

• SME Contributions: Achieve the target of 60% GDP contribution by SMEs by 2030.
• Sustainability: Promote investments in green technologies and renewable energy.
• Global Competitiveness: Foster an environment where SMEs can thrive on the global stage.

The collaboration between Emirates Development Bank and Ajman Bank is more than just a financial agreement; it’s a commitment to the UAE’s economic future. By addressing the challenges of SME financing and fostering an ecosystem of innovation and inclusivity, this partnership is empowering businesses to drive growth and prosperity.

Whether you’re a budding entrepreneur or a seasoned business owner, the opportunities created by this partnership are yours to seize. Explore the possibilities today and be part of the UAE’s transformative journey toward economic excellence.