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4. Financial Outlook
WHITE PAPER ON UAE's STATE OF MANUFACTURING
The United Arab Emirates
has proven crude oil
reserves, accounting
for a significant 10% of the
world’s total reserves. Not just
crude, it boasts substantial
reserves of natural gas as
well, approximately 3.2% of
the world’s gross reserves.
The bulk of the oil and gas
wealth is concentrated in
Abu Dhabi, which contributes
approximately 90% of the
total oil production of the
country and holds over 90%
gas reserves. In the light of
increasing diversification to
the non-oil sectors, UAE has
also become an important
financial center because
of an incentivized boost in
the manufacturing sector &
technology and large-scale
infrastructure investment in
transport & tourism.
Together, the emirates have
emerged as a few of the most
important economies in the
region with a stable economic
and political system. The gulf
countries have an ambition
to emerge as a financial and
service sector leader in the
Middle East. While most of
the increase in spending
is expected to come from
Abu Dhabi, other emirates
in the UAE will also benefit,
due to the proximity and the
involvement of its own banks
in Abu Dhabi’s Economic
Vision 2030 program, the
emirate’s roadmap for future
economic development.
The economic outlook
remains expansionary in
the foreseeable future to
support the diversification
program, which will continue
to have a positive impact on
the banking sector as the
backbone of the economy.
Among the Gulf Cooperation
Council (GCC) countries, the
United Arab Emirates has the
highest degree of banking
intermediation in terms of
assets, loans, and deposits.
The high level of banking
penetration in the UAE reflects
its relatively developed
banking infrastructure.
2017 has been the year of
‘convergence’ in financial
services. There has been
increased cooperation
between financial services
and startups, blurring
lines between traditional
products (retail, payments
& insurance in particular),
and the acceleration of the
convergence of technologies
including mobile, distributed
ledgers, IoT and cognitive
computing. The UAE
improves by one place to
16th (out of 138 countries) as
it continues to lead the Middle
East and North Africa region,
building on improvements
in competitiveness in recent
years. This year gains in
areas such as technological
adoption and business
sophistication.
The value of manufacturing
projects currently underway
serve as an indicator of the
increased investment in
the manufacturing sector
which will boost capacity
for future growth. A high
degree of concentration in a
few key sub-sectors highlights
the potential for the growth of,
and diversification at large and
within, the manufacturing sector.
The value of manufacturing
projects currently underway
serve as an indicator of the
increased investment in the
sector which will boost capacity
for future growth.
Lending to the manufacturing
sector expanded higher than
the 21.4% growth recorded in
2015, in the last 2 years. Loans
to this sector accounted for
5.1% of total bank loans. Bank
credit to the manufacturing
sector reached AED 62.3bn.
Within the manufacturing
sector, base metals and
products credit accounted for
23.7% of manufacturing loans
followed by chemicals (19.5%).
Not only would there appear
to be scope to further increase
the availability of credit to the
manufacturing sector as a whole
over the coming years, but there
also appears to be the potential
for bank credit to further support
the manufacturing sub-sectors
in order to diversify the base.
On the other hand, the
government has been taking
various initiatives for the
promotion of the insurance
sector. The aims are to ensure
a suitable environment for the
development of the insurance
sector; to enhance the role
of the insurance industry to
secure lives, properties, and
liabilities against risks in order
to protect the national economy;
to collect, develop, and
INNOVATIONANDTECH
January | 2018
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