UAE: Tawreeq Holdings offering Shariah Compliant financing for SMEs

Dubai, UAE: Tawreeq Holdings, the region’s first Sharia-compliant supply chain finance group, has Tawreeq Holdings Logooriginated more than $55 million in Supply Chain Finance services for small and medium-sized enterprises (SMEs) and mid-size companies, meeting an important milestone for the company, which launched its operations at the beginning of this year. The rapid take-up of Tawreeq’s novel supply chain finance solutions highlights the significant demand in the region, especially for its unique Sharia-compliant structure, which has brought factoring and reverse factoring to the region’s ethical investors and businesses for the first time.  

Tawreeq - Haitham Al Refaie“This is an important achievement for us, highlighting the very real demand in the market for our unique product,” said Haitham Al Refaie CEO of Tawreeq. “We want to help SMEs boost their liquidity and be more competitive by strengthening their supply chains. The integrated structures offered by Tawreeq Holdings will fuel their growth especially in the ethical, Sharia-compliant market.”

SMEs make up as much as 90% of the businesses in the MENA region and employ the vast majority of workers. But they face massive challenges in managing their cash flow and securing the working capital they need on an on-going basis. Meanwhile, banks are reticent to lend to small businesses as they often require the same level of filing and expense, no matter the size of the loan. The time and cost associated with financing often makes such services prohibitive for most SMEs, resulting in a massive credit gap that has kept most small businesses from reaching their potential.

Tawreeq tackles those challenges through cash-flow tools known as factoring and reverse factoring. Factoring is a short-term cash-flow solution in which a business sells its accounts receivable for a nominal fee, while reverse-factoring entails the extension of payment terms of buying corporates to match them with their receivables.

Tawreeq goes further by offering businesses a Sharia-compliant method that allows a wide range of businesses, both in the region and internationally, easy access to a supply chain financing cycle for the first time through one integrated solution.

“We have brought this service to the heart of the SME economy in a matter of just a few months,” Al Refaie explained. “For the first time, a whole segment of the businesses which forms the bedrock of the economy has access to tools that are essential to its future growth and sustainability.”

Tawreeq continues to add supply chain finance programmes across different industries including construction, hospitality and retail and aims to build on existing programmes in pharmaceuticals and FMCG.

Tawreeq’s Board of Directors is comprised of leading figures in the region’s economy, many of whom have had extensive experience in the financial services sector and more specifically with Islamic finance. The board’s combined experience brings added depth and insights to the company and enables it to steer Tawreeq’s ambitious growth plan.

“SMEs are the bedrock of the UAE economy and play a crucial role in the global economy as a whole,” said Haitham Al Refaie, CEO of Tawreeq Holdings. “We are proud to play a growing part in helping this crucial sector overcome the massive constraints on financing and unlocking hidden value to thrive and grow. We aim to continue growing and innovating to help them further.”