Dubai Chamber and Emcredit sign MoU to strengthen credit information infrastructure for business community

Under the terms of the agreement, Dubai Chamber and Emcredit will cooperate to raise awareness on the role of credit information and its significance in helping businesses gain greater access to credit and facilitating trade credit between businesses.

This will allow businesses to enhance their credit risk management processes and sustain business growth in a prosperous trading environment. Furthermore, Emcredit and Dubai Chamber will organise a series of conferences and roundtable discussions to promote credit information sharing amongst businesses. As a specialised credit information company, Emcredit provides the commercial sector with a platform to share credit experiences and payment performance information on their customers, through a secured environment. This will allow businesses to enhance their credit risk management processes and sustain business.

"Globally, SMEs account for 99% of the business sector and contribute to 50% of the world's GDP. In the UAE, SMEs account for 80% of the country's GDP. This dominance of the SME sector both in terms of the number of firms as well as contribution to GDP highlights the importance of this sector to the success of the UAE economy."

said Hamad Buamin, Director General of Dubai Chamber.

Buamim added: "As part of its commitment to enhance the business environment in Dubai and encourage investments by mitigating commercial risks to companies, Dubai Chamber first launched its Credit Rating Services in 2005. Since then, our Credit Rating Services have become an essential tool for businesses to strengthen their competitiveness the marketplace. Our partnership with Emcredit is yet another part of our efforts to support and protect the interests of the business community in Dubai by creating a favourable business environment and helping them to manage risks more effectively by promoting transparency amongst businesses."

According to a recent report from Dun and Bradstreet, more than 50% of SMEs in the UAE face difficulty accessing finance. The report also highlights that interest rates for unsecured lending are much higher in the UAE (by about 15%) than in more developed nations. Meanwhile, secured lending, which is the dominant form of SME finance in the UAE today, requires collateral. This is often challenging in the case of SMEs, as they lack significant assets for use as collateral.

Ali Ibrahim, Managing Director of Emcredit, said: "Banks are generally apprehensive about lending to SMEs due to a perception of high risk. This is compounded by the lack of information on the repayment capabilities of SMEs. There are significant credit transactions that take place between businesses; this information has proven to be very valuable in accurate credit assessment. Together with Dubai Chamber, Emcredit can enable the business community to build reputational collateral based on how they meet their financial obligations, whether in repaying loans or paying suppliers. Such information is crucial when making lending and business decisions."