Monday, July 22, 2024
ReportDubai to roll out Islamic digital trade finance platform

Dubai to roll out Islamic digital trade finance platform

A Dubai free-trade zone is creating a digital Shariah compliant trade finance platform to open new funding avenues for the SMEs it hosts, which currently number over 11,000, in a bid to close the funding gap for SMEs.

The DMCC has partnered with Dubai SME, a government agency tasked with spearheading the development of the SME sector, to engineer a web-based trade finance platform, allowing SMEs to pledge their assets for financing purposes. The Shariah compliant platform will operate within the regulatory framework of the DMCC Authority.

Accounting for 40% of Dubai’s economy (according to latest data from Dubai SME), small and medium businesses have been identified as the bedrock of the economy and is a key priority of the Dubai government; however, financing has generally been a challenge for SMEs particularly when banks in the region are restricting lending to the sector driven by a slow economy and weak oil prices.

This financing rift nonetheless has opened the door for Shariah finance — the DMCC-Dubai SME partnership is an example of how Islamic funding tools can be used to narrow the chasm for SMEs while boosting the use of Shariah finance instruments, another area of focus for the Dubai government which has a national ambition of becoming a center for Islamic economy. Dubai SME, through its financial arm (the Mohammed Bin Rashid Fund), is also supporting peer-to-peer financier Beehive to offer Shariah compliant financing to SMEs.

“The MoU is among a series of such partnerships we continue to create after identifying a gap that existed in our SME landscape in terms of mobilizing resources to overcome challenges and sustain growth,” said Abdul Baset Al Janahi, CEO of Dubai SME.


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