Mashreq, DIB, and EDB pledge AED 18 bn in financing for manufacturers

Local banks have committed AED 18 bn to the country’s industrial push at Make it in the Emirates this year, according to a statement. This adds to AED 40 bn in commitments made last year, which had aimed to localize supply chains. The main goal this year? To help manufacturers scale operations and expand into new markets.

Who’s in? Our friends at Mashreq made the biggest pledge of AED 10 bn, which it will target toward green loans, green bonds, sustainability-linked loans and bonds, supply chain financing programs, and trade finance services and financial advisory support. Emirates Development Bank is committing AED 6 bn, while Dubai Islamic Bank pledged AED 2 bn.

This isn’t the banks’ first investments in the sector. Mashreq pledged AED 2 bn in industrial financing last year at the event, while Emirates Development Bank has also regularly pledged funds for food security, manufacturing, and tech.

It’s a big jump from AED 2 bn to AED 10 bn for Mashreq, but according to the bank, “demand from manufacturers for capex, working capital, and trade finance has scaled materially” as the UAE’s industrial agenda matures, Mashreq’s head of Services and Manufacturing Shakil Haider tells EnterpriseAM.

Case in point: The lender has already delivered above its AED 2 bn target from last year, Haider tells us. It has offered sustainable financing facilities to the likes of Arabian Gulf Steel Industries, Gargash Group, and Galadari Brothers over the past year.

Who will get the lion’s share of the AED 10 bn this time around? “The AED 10 bn is deliberately structured to span the full industrial value chain,” Haider says. “Large anchor manufacturers, particularly those tied to In-Country Value (ICV) mandates and strategic sectors, will absorb a meaningful share.”

A bulk of the funds will likely flow toward strategic autonomy sectors like food security, large-scale industrials, pharma, and advanced manufacturing, which are all areas seeing strong momentum in the UAE, Haider says, while noting that the bank is sector-agnostic and would still pursue any “bankable [windows].”

The bank is also standing by its existing clients in terms of supply chain resilience support during disruptions, he tells us.

Why sustainability-linked financing and green loans? Appetite for this type of financing is actually very healthy, possibly now even more than before, he says. For one, sustainable financing is directly correlated with the cost of financing for UAE manufacturers selling into Europe, which will face the Carbon Border Adjustment Mechanism, and for the UK, with its carbon border tax set to take effect next year, he explains.

Plus: “Manufacturers reassessing supply chains [amid] disruptions are simultaneously rethinking energy inputs, sourcing, and resilience,” according to Haider, adding that sustainability is a natural, core part of that conversation.

The bigger picture: The UAE is working on a major localization push that’s been given even more of an impetus now that supply chain disruptions have hit with the Strait of Hormuz blockade. The country has been aiming to lift the industrial sector's GDP contribution to AED 300 bn by 2031, and every year, localization and manufacturing agreements are coupled with a financing push to support the sector.