Dubai banking major Mashreq has launched a new program to facilitate easy access to working capital for SMEs in the region.
The Supplier Finance initiative leverages the credit worthiness of larger buyers to provide a more cost-effective early payment to their smaller suppliers thereby reducing the overall cost of financing the supply chain.
Mashreq said it complements its existing receivable finance solutions which offers a one stop for client end-to-end supply chain finance needs.
Globally, SMEs play a pivotal role in shaping economies.
According to figures cited by the World Bank, in the Arab world alone, SMEs make up around 97 percent of businesses, employing half of the workforce – about 150 million people – and accounting for about 40 per cent of gross domestic product.
Mashreq said it is therefore critical that SME businesses – otherwise sparingly catered for by the financial services sector – have ready and uninterrupted access to adequate capital if they are to thrive and make a positive impact on their ecosystem.
A pre-pandemic report from the International Monetary Fund noted that increasing SMEs’ access to finance in the MENA region to one comparable with the average level of emerging and developing economies would raise annual growth by 1 percent potentially creating up to eight million jobs in the Arab world by 2025.
Victor Penna, co-head of global transaction banking at Mashreq Bank, said: “Increasing the financial and environment 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.”
Mashreq said its supplier finance programs are intended to benefit suppliers in several ways; other than ensuring a steady source of cost-effective working capital it improves the collection process and reduces overhead costs.
In turn the buyers can improve their working capital cycle, increase the efficiency of payment management and most importantly strengthen the supply chain network, driving business growth.
Mashreq has an expanding footprint across the Middle East, with international offices in Europe, Asia, Africa and the US.
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