Tawreeq Holdings, an alternative financial services group based in Dubai and Luxembourg, has launched an innovative supply chain finance platform that offers liquidity and cash flow solutions to small and medium enterprises (SMEs) and their corporate clients across the Middle East and North Africa (MENA) region.

The platform represents the world's first Shariah-compliant trade receivables financing programme, which hopes to address the funding gap for SMEs in MENA estimated at US$260 billion. Tawreeq says the SMEs make up as much as 90% of the businesses in the region and employs the vast majority of workers. But they face significant challenges in managing their cash flow and getting the working capital they need.

"Banks are reticent to lend to small businesses as they often require the same level of filing and expenses no matter the size of the loan," says Haitham Al Refaie, co-founder and group CEO of Tawreeq. "The time and cost associated with financing often makes such services prohibitive for most SMEs, resulting in a credit gap that has kept most small businesses from reaching their potential."

The group is addressing the credit gap through Shariah-compliant factoring, reverse factoring and ethical management of the entire cycle of supply chain finance. Factoring is a short-term cash flow solution in which a business sells its account receivables for a nominal fee, while reverse factoring entails the extension of payment terms of buying corporates to match it with their receivables.

It took a year-and-a-half long development process to devise a Shariah-compliant workflow for supply chain finance. The novel offering has at its core a Shariah-compliant component proprietary powered by an international IT platform that seamlessly connects all elements under a single, cloud-based ecosystem that allows global reach and global service.

Tawreeq has worked closely with Amanie Advisors, the global Islamic finance advisor, and their respected international Shariah supervisory board to ensure Shariah compliance and certification of its products and processes.