On Thursday, 7 October, FCI and IFC came together to bring a webinar supported by the UAE Ministry of Finance, focusing on the new secured transaction law of the UAE. More than 100 participants joined the online event. The webinar’s objective was to discuss the new secured transaction law and various aspects of factoring as an alternative financing tool.
Factoring continues to grow successfully both in mature markets and in emerging markets. Through their control methods and permanent monitoring of the receivables on their clients’ debtors, factoring companies or factoring divisions of banks can provide more financing than traditional lenders, and at the same time, limit their credit risks to a strict minimum. Factoring, therefore, plays an important role in financing economic activity during the financial crisis.
Global and regional industry experts explained the legal and regulatory framework for factoring in the UAE, presented the new Emirates Development Bank’s National Supply Chain Finance Program and highlighted challenges and latest developments in the global and UAE's factoring industries.
The morning started with His Excellency Mr Younis Al Khoori (Undersecretary of the UAE Ministry of Finance) and Mr Riadh Naouar (IFC) as they gave the welcome remarks. A short presentation followed this opening by Mr Peter Mulry (FCI) as he explained The World of Factoring & Receivables Finance.
In Mr Naouar’s welcome remarks, he mentioned: “Factoring, reverse Factoring, and other Supply chain finance (SCF) programs can be powerful instruments to unlock MSME finance potential. Automated SCF solutions address the low technological capacity of MSMEs and improve financial institutions’ supply through the appropriate risk management technique and visibility of the entire value chain. It can facilitate significant private sector investment in the MSME sector on a risk-mitigated basis. Factoring and other receivable-based finance structures allow financial institutions to offer financing with no or minimum collateral (a major impediment in MSME financing) and provide competitive interest rates, especially where the MSMEs avail financing against their commercial and documented transactions with large corporates. New legal and institutional framework for Factoring and receivables-based finance created in the UAE will lay the foundation for the development of this market and will serve as a model for other countries in a region to follow.”
After a short break, Dr Hussam Sameer Al Talhuni (Legal Advisor to H.E. Minister of Finance) presented the opening remarks and set the tone for the day. Following this session was a dual presentation around the Legal and Regulatory Framework for Factoring in the UAE by Mr Marek Dubovec (National Law Center) and Ms Lana Salameh (JC Law) and followed by a panel Q&A where attendees could pose questions for the presenters.
The second half of the morning moved to the panel discussion portion where we heard about Emirates Development Banks’s National Supply Chain Finance Program from EBD executives, Mr Shaker Fareed Abdulrahman Zainal and Mr Ahmed A. Abdullah, followed by a short panel Q&A where Ms Aksinya Sorokina (IFC) posed preselected questions. The subsequent panel discussion featured Mr Vikas Chandra Jha (Emirates NBD), Mr Zulqarnain Javaid (Etisalat) and Mr Richard Wulff (International Credit Insurance& Surety Association (ICISA)) as they discussed the Opportunities and Challenges facing the Receivables and Payables Finance industry as well as the advantages of Factoring and comparison to traditional trade finance.
The final session of the day was with panellists Mr Cagatay Baydar (TEB Factoring Turkey (BNPGroup)), Mr Mritunjay Singh (Abu Dhabi Commercial Bank) and Mr Reda Ezzat, Senior Vice President (Mashreq), the session opened with a brief explainer presentation on International Factoring mainly in Turkey by Mr Baydar.
His Excellency Mr Al Khoori gave feedback to FCI, stating: “… [I] hope it adds value to [the] economy by creating a bigger awareness.”