The international export credit insurer Coface says it is chasing at least ?60 million (Dh299.7m) owed to overseas suppliers by companies based in the UAE, as orders and projects are cancelled because of the economic slowdown.
Coface, which insures exporters against non-payment and collects debts, has seen a rapid increase in claims because of the distressed property sector.
"There are easily half a dozen big incidences here where foreign suppliers are owed around ?10m each," said Jerome Cazes, the chief executive officer of Coface. "This compares with absolutely nothing at this time in 2008."
The cancellation of property projects and shrinking bank lending have led to an increase in late payment and bad debts throughout the construction industry supply chain.
"In most of the cases local developers are failing to pay international suppliers," Mr Cazes said. "We have unpaid debts on cancelled projects." Coface has been working in the region since Sept 2007 when it set up a regional office in Dubai. Most of the company's customers are foreign suppliers to GCC countries, but it also insures re-exporters or multinationals selling their products through UAE regional offices.
The economic crisis is boosting the credit insurance business in the region, Coface said. "People just don't trust the companies they are shipping to," said David Venediger, the managing director of Coface Emirates. Credit insurance is one of the main alternatives to letters of credit.
Credit insurers will initially urge their clients to renegotiate the outstanding claim, before moving to debt collection. If everything else fails, credit insurers will indemnify the claim after five months and pay the client about 90 per cent of the outstanding amount.
Coface mainly insures exporters against non-payment, but also offers other services such as providing company information to exporters. From next month, Coface will also offer credit rating services in the UAE, France, Germany, UK and China.
In the UAE, the company works through local partners such as the Export Credit Insurance Company of the Emirates (ECIE), which it re-insures.
uharnischfeger@thenational.ae
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Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
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Company name: baraka
Started: July 2020
Founders: Feras Jalbout and Kunal Taneja
Based: Dubai and Bahrain
Sector: FinTech
Initial investment: $150,000
Current staff: 12
Stage: Pre-seed capital raising of $1 million
Investors: Class 5 Global, FJ Labs, IMO Ventures, The Community Fund, VentureSouq, Fox Ventures, Dr Abdulla Elyas (private investment)
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The specs
Engine: four-litre V6 and 3.5-litre V6 twin-turbo
Transmission: six-speed and 10-speed
Power: 271 and 409 horsepower
Torque: 385 and 650Nm
Price: from Dh229,900 to Dh355,000
The biogs
Name: Zinah Madi
Occupation: Co-founder of Dots and links
Nationality: Syrian
Family: Married, Mother of Tala, 18, Sharif, 14, Kareem, 2
Favourite Quote: “There is only one way to succeed in anything, and that is to give it everything.”
Name: Razan Nabulsi
Occupation: Co-founder of Dots and Links
Nationality: Jordanian
Family: Married, Mother of Yahya, 3.5
Favourite Quote: A Chinese proverb that says: “Be not afraid of moving slowly, be afraid only of standing still.”
The National in Davos
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THE SPECS
Engine: 1.5-litre, four-cylinder turbo
Transmission: seven-speed dual clutch automatic
Power: 169bhp
Torque: 250Nm
Price: Dh54,500
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