The recent signing of a reinsurance agreement between the UAE and the UK is set to lead to an influx of British companies exporting into the region, according to experts.
The new agreement – signed by Etihad Credit Insurance (ECI) and the UK Export Finance (UKEF) earlier this month – aims to enhance the competitiveness, scale and scope of both countries’ exports through strategic partnership and cooperation.
“For UK exporters, particularly SMEs and first-time exporters, the finance, guarantees, and insurance offerings that are likely stem from the agreement will push them to learn more about export opportunities in the UAE while derisking potential business deals,” said Wes Schwalje, COO of Tahseen Consulting.
Export credit agencies are playing an increasingly important role in national trade promotion, development, and diversification strategies, he said.
“For UAE exporters, the agreement underscores a growing government focus on building out an ecosystem that enables SMEs to increase exports,” said Schwalje.
Wes Schwalje, COO of Tahseen Consulting
“The agreement is very likely to expand the bilateral trade relationship and encourage risk-averse SME exporters and new-to-export businesses in both countries think globally,” he added.
The UAE is the UK’s fourth largest export market outside the EU and is the UK’s key trading partner in the region, making up 40 percent of GCC-UK trade.
Data from the UAE Ministry of Economy shows that the non-oil foreign trade between the UAE and UK in 2019 was valued at AED36.6 billion, of which, 27 percent were non-oil exports and re-exports standing at AED2.1 billion and AED7.7 billion, respectively.
According to Joe Hepworth, CEO of Dubai-based trade and investment advisors British Centres for Business, the new trade credit agreement acknowledges how significant UK-UAE trade is.
“[This] has been a very successful corridor for UKEF support over the last few years… the agreement cements that and adds further capacity to its operations which, in turn, should mean that further credit facilities are available for exporters to avail of,” he said.
Joe Hepworth, CEO of Dubai-based trade and investment advisors British Centres for Business
“The really interesting thing is that the UKEF–ECI arrangement seems to specifically address trade with third countries so UK companies based in the UAE can avail of support for their exports from the UAE to the MENA region,” Hepworth added.
“This is very positive for the UAE’s regional hub status and, given the number of British firms that use it as a MENA base, would meet a very significant and growing need.”
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