In the UAE, payment delays and protracted defaults have increased since Q4 of 2015, as have run-away cases due to cash problems in this industry.
- The ICT value chain in the UAE encompasses vendors, distributors, power retailers, resellers and other small retailers, while manufacturing is not present. Most of the vendors and distributors are present in Dubai’s free trade zones, and redistribute to the wider Middle East.
- The UAE’s ICT market is currently characterised by high competition, single-digit margins, low entry barriers and stagnating growth in subsegments like PCs and desktops. Low oil prices have put downward pressures on the economy and discretionary spending, including the ICT segment.
- The imposition of a customs duty on certain consumer durables and IT products in India has negatively impacted the overall demand of ICT products.
- Payment delays and protracted defaults have increased since Q4 of 2015, as have run-away cases due to cash problems in this industry. One of the main reasons for the increased default rate is the lack of support from banks in the form of reduced or cautious lending.
- Our underwriting stance continues to be very selective and we are especially cautious when it comes to distributors and resellers exporting to high political risk countries in the Middle East and Africa.