The launch of Mashreq‘s ‘Supplier Finance’ programme is to facilitate easy access to working capital for small and medium-sized enterprises (SMEs) in the UAE region.
The new initiative leverages the creditworthiness 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. The programme incorporates Mashreq’s existing receivable finance solutions to satisfy clients’ 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 MENA world alone, SMEs make up around 97 per cent of businesses, employing half of the workforce – about 150 million people – and accounting for about 40 per cent of gross domestic product.
It is therefore paramount that SME businesses, otherwise sparingly catered for by the financial services sector, have uninterrupted access to adequate capital if they are to thrive and make a positive impact on their ecosystem.
Prior to the global pandemic, a 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 one per cent; potentially creating up to eight million jobs in the Arab world by 2025.
In addition, socially responsible organisations have continued to recognise the strength of ‘Supplier Finance’ programmes as a potent tool towards solving the inherent problem of the financing gap facing SMEs. In this way, it’s not surprising that supply chain finance has surpassed traditional trade finance in terms of market revenue in recent years.
“Increasing the financial and environmental sustainability of supply chains is becoming more and more important to corporate players in the Middle East,” comments Victor Penna, Co-Head of Global Transaction Banking at Mashreq Bank. “We are pleased to be delivering programmes that support these goals whilst helping close financing gaps for SMEs.”
Mashreq’s supplier finance programmes 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, buyers can improve their working capital cycle, increase the efficiency of payment management and most importantly strengthen the supply chain network, driving business growth.
Aligned with Mashreq’s vision of maintaining environmental sustainability, the initiative encourages buyers to support supplier groups who are contributing to sustainability initiatives.
A digital delivery channel available to both buyers and suppliers provides end-to-end transaction visibility and remote, easy access to transactions without the need to physically visit branches.
