The UAE's export credit insurer says it issued 420 million UAE dirham (AED420 million - US$114 million) of trade credit support to small- and medium-sized enterprises (SMEs) in the 11 months to November 2020.

Etihad Credit Insurance (ECI) says the support is part of its efforts to move the emirates' SMEs beyond letters of credit (L/Cs) as the main financing tool for their exporting activities.

Receivables guaranteed

Under its SME Protect programme, ECI is guaranteeing receivables so that participant businesses can now provide credit to clients without financial loss.

With a mandate to accelerate the UAE's non-oil economy, ECI reckons its trade credit support in the 11 months to November 2020 helped facilitate AED1 billion non-oil trade insured turnover.

L/Cs overwhelmingly preferred

The credit insurer's SME Protect is a result of a survey conducted by ECI in 2018 in cooperation with Abu Dhabi Chamber of Commerce, Dubai Chamber of Commerce, and Ras Al Khaimah Chamber of Commerce.

The survey showed that 97 per cent of SMEs still preferred L/C and cash payments, whereas only 3 per cent preferred selling on trade credit terms.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.