UAE Launches AED1 Billion Fund Boosting mSMEs

The newly announced AED 1 billion fund created by Emirates Development Bank and RAKBANK aims to boost micro, small and medium enterprises across the United Arab Emirates.

How the partnership is structured

Emirates Development Bank and RAKBANK each contributed AED 500 million to the co‑financing initiative, which will be administered through the bank’s lending platform. The fund targets mSMEs in the Northern Emirates—Ras Al Khaimah, Umm Al Quwain and Fujairah—as well as early‑stage greenfield projects that need seed capital.

According to the partnership announcement, RAKBANK will handle risk management and the day‑to‑day lending portfolio, while the development bank will monitor performance and provide strategic guidance. Deployment is slated for the next 12 months.

Focus on national priority sectors

The UAE’s economic plan emphasizes advanced technology, manufacturing, food security, renewables and healthcare. Small and medium enterprises are seen as the primary source of innovation in these areas, yet they have historically struggled to obtain financing that matches their growth plans.

By directing capital to businesses that meet local ownership criteria and prioritize manufacturing, the fund seeks to align private investment with the country’s broader industrial objectives. It also promises competitive rates and a co‑lending structure that includes clear benchmarks for regional distribution.

Statements from the partners

H.E. Ahmed Mohamed Al Naqbi, CEO of Emirates Development Bank, said the initiative “is exactly what Make it in the Emirates was meant to deliver.” He noted that the bank has already invested more than AED 18.8 billion in transformative projects since 2021, but this new program is distinguished by its focus on scale and specificity.

Raheel Ahmed, Group CEO of RAKBANK, emphasized that “mSMEs are the backbone of the UAE economy.” He added that the partnership builds on the bank’s long‑standing commitment to supporting entrepreneurs, offering not just more funding but financing that better suits small‑scale innovators.

Many firms often lack the connections to handle complex financing channels. The emphasis on outreach and awareness suggests that both institutions recognize this hurdle and plan to address it.

Potential impact on the entrepreneurial ecosystem

If the fund reaches its target audience, it could accelerate the development of new factories, labs and digital platforms that underpin the UAE’s diversification goals. Entrepreneurs in sectors such as clean manufacturing or food‑tech may find the timing especially favorable, given the government’s push for self‑sufficiency in food and energy.

Success will hinge on the ability of RAKBANK to manage credit risk while maintaining the promised competitive terms. Past experience with similar schemes indicates that careful monitoring is essential to avoid defaults that could undermine confidence in future public‑private collaborations.

Overall, the fund represents a concrete step toward aligning financial resources with the country’s strategic vision, offering a clearer pathway for mSMEs to scale and contribute to the national economy.