The decline in oil price has influenced revenue, liquidity and working capital performance across the Middle East and North Africa (MENA) region, with multifaceted implications to the market. The implications, among others, include constricting liquidity across business sectors, thus deteriorating working capital performance. This deterioration is widespread not just in smaller business but is evident even in large corporate businesses with the trend set to continue.
Though the decline in working capital performance is prominent across MENA, the UAE has stepped up to show progress. According to a study conducted by PwC Middle East this year, working capital performance across the Middle East has weakened, falling by 7 percent in 2016 with businesses in the Kingdom of Saudi Arabia unable to improve their working capital performance, whilst Kuwait ranked lowest in working capital performance.
However, the UAE is the only country in the region with an overall working capital performance improvement since the oil price plummet in 2014. This data is testimony to the fact that all business in the UAE, regardless of size, have been able to improve their working capital management and are poised to adapt to the changing economic environment gradually.
Regardless of size or sector, businesses across the MENA can enhance working capital performance with better working capital management along with setting better performance indicators in important financial metrics.
Tawreeq Holdings offers adept working capital solutions through its bespoke Supply Chain Finance (SCF) solutions for Small and Medium-sized Enterprises (SMEs) and Corporates that are structured to optimize the management of working capital and liquidity tied up in the supply chain processes. Tawreeq’s SCF solutions are a set of comprehensive cash flow and liquidity-structured products that offer relief form the tense liquidity challenges businesses face in the region, while assisting in improving working capital performance.