The Abu Dhabi government has announced the launch of a US$1.6bn supply chain finance (SCF) facility that aims to provide liquidity to SMEs, initially in the healthcare sector.

According to an announcement from the emirate’s Department of Finance, the first phase of the initiative is being launched in partnership with First Abu Dhabi Bank (FAB) and national health insurance company Daman.

The department says it aims to speed up payment of SMEs’ receivables, reducing the cost of working capital. SMEs in Abu Dhabi accounted for 44% of Abu Dhabi’s non-oil economy in 2019, as well as nearly a third of GDP.

Ataba Al-Zaabi, chairman of the Department of Finance, says the initiative will “underpin continued liquidity for SMEs in Abu Dhabi” and support long-term sustainable growth.

FAB’s group chief executive, André Sayegh, adds that the facility will help maintain healthcare supply chains during – and beyond – the Covid-19 pandemic response.

The initiative is part of – and funded by – Ghadan 21, a US$13.6bn development plan approved by the Abu Dhabi government in 2018. The plan consists of more than 50 projects across business and investment, as well as innovation, society and lifestyle.

“Supporting such businesses is a critical element of Abu Dhabi’s diversification strategy to move towards a knowledge-based economy,” the Department of Finance adds.