Credit risk exposure for MENA manufacturers

As economic and geopolitical uncertainty continues to shape business outcomes in the Middle East and North Africa (MENA), local manufacturers are facing increasing exposure to credit risk. From food and agriculture to textiles and chemicals, companies across the region are contending with delayed payments, fraud, inflationary pressure, and unreliable partners. In this article, we explore the most pressing risks and trends facing manufacturers in the UAE, Saudi Arabia, Egypt, and Turkey—and how they can respond with smarter, data-driven strategies.

Payment delays & defaults

Cash flow is the lifeblood of any manufacturer, but in MENA, it's increasingly being choked by payment delays. In 2023, MENA firms reported some of the world’s slowest collection cycles. UAE-based companies, for example, had 48% of B2B invoices overdue, with the average time to collect payment reaching 67 days. In high-risk sectors like agri-food and chemicals, receivables often extended beyond 90 days.

These payment delays are not merely operational inconveniences—they are structural risks. Thin margins, rising input costs, and limited access to short-term financing mean that prolonged receivables cycles can tip otherwise healthy businesses into financial distress. In fact, bad debts accounted for 11% of B2B sales in the UAE in 2023, a striking figure that illustrates the cumulative impact of write-offs and defaults.

For manufacturers dealing with large-volume orders and perishable goods, the cost of late payments extends beyond liquidity: it undermines production planning, vendor relationships, and even workforce stability.

Source: Atradius – Payment Practices Barometer UAE, 2023

Fraud & unvetted customers

While late payments are a known threat, fraud is a fast-growing and more insidious risk for MENA manufacturers. Fraudulent buyers, armed with falsified references, fake business registrations, or even completely fabricated company profiles, continue to exploit gaps in regional financial transparency.

According to Coface, fraud-related claims in B2B transactions surged 16% globally between 2022 and 2023, with the highest vulnerability found in emerging markets. Gulf countries are particularly exposed: a 2023 Cedar Rose report revealed that over 40% of companies in the region had encountered at least one attempted fraud case in the previous 12 months.

The problem is worsened by the prevalence of non-listed firms and weak corporate disclosure laws. In many cases, audited financials are not publicly available, and corporate registries are outdated or inaccessible. This makes identity fraud and hidden ownership structures harder to detect without specialist tools.

To mitigate these risks, enhanced due diligence is no longer optional. Manufacturers must move beyond basic onboarding and credit checks, implementing ongoing customer monitoring, beneficial ownership verification, and real-time fraud alerts.

Sources: Coface – Global Fraud Trends 2023; Cedar Rose – Fraud Insights Report 2023

Economic volatility in Egypt and Turkey

Macroeconomic instability in Egypt and Turkey has placed additional strain on credit reliability in the region. Both countries are grappling with persistent inflation, currency devaluation, and high interest rates, all of which undermine local manufacturers’ ability to meet their obligations.

In Egypt, inflation surpassed 30% in 2023 and remained elevated into 2024 due to subsidy reforms and global commodity price surges. The Egyptian pound lost over 50% of its value between 2022 and 2024, significantly increasing the cost of imported materials and raising the default risk for local SMEs reliant on foreign-denominated inputs.

Meanwhile in Turkey, inflation hovered around 60% in early 2024, prompting the Central Bank to hike policy rates to 50%. While these moves were meant to stabilise the currency and curb inflation, they had the unintended consequence of making financing prohibitively expensive for businesses, especially in manufacturing sectors like textiles and agri-food, which are already under cost and demand pressure.

The combined effect in both markets is clear: manufacturers are being squeezed from all sides. Rising production costs, shrinking purchasing power, and restricted access to affordable working capital have made defaults and payment delays more likely, particularly among SMEs and new market entrants.

Sources: Reuters – Egypt Inflation; World Bank – Egypt Economic Update (April 2024); Bloomberg – Turkey Rate Hike; Coface – Turkey Country Risk Assessment

Saudi Arabia: A market with strong fundamentals, but not without risk

Saudi Arabia offers a relatively stronger payment culture and credit infrastructure compared to other MENA markets. Institutions like SIMAH (Saudi Credit Bureau) have enhanced transparency and credit discipline, helping many B2B companies access more reliable data. This foundation has supported the Kingdom’s ambitions under Vision 2030, including significant expansion in local manufacturing, particularly in agri-tech, textiles, and food processing.

That said, challenges remain. According to Coface, 35% of Saudi-based firms reported payment delays of over 60 days in 2023, with SMEs disproportionately affected. Payment bottlenecks are most common in industries that serve public procurement chains or large distributors, where approvals, batch invoicing, and procurement complexity often stretch receivables cycles well beyond 60 days.

As Vision 2030 accelerates, manufacturers are engaging with a growing number of new ventures, many of which are startups or joint ventures with limited financial history and unclear ownership structures. These projects bring exciting opportunities, but they also introduce new credit exposures that require enhanced due diligence and sector-specific risk intelligence.

Source: Coface – Saudi Arabia Country Risk Assessment

Emerging credit trends (2023–2025)

Recent years have seen a clear trend toward longer payment cycles and greater credit uncertainty across MENA. According to Allianz Trade, global Days Sales Outstanding (DSO) reached 59 days in 2023, but in the UAE, DSO in chemicals, agri-food, and textiles exceeded 100 days.

A 75% increase in businesses reporting delays over 90 days was recorded across the region, according to Atradius. For small and mid-sized manufacturers, these conditions are especially difficult. Many lack access to trade credit insurance or short-term financing, and with rising interest rates, even healthy firms face liquidity squeezes if payments are delayed.

In response, larger and more sophisticated firms are taking action. A growing number are adopting receivables factoring, digital credit scoring tools, and automated credit control systems to strengthen their cash conversion cycles and reduce bad debt exposure.

In the UAE, for example, the PwC Middle East Working Capital Study shows companies tightening controls, segmenting portfolios by risk, and embedding AR monitoring tools within ERPs to track exposure in real time. These tactics are becoming essential as the credit environment grows more volatile.

Sources: Allianz Trade – Late Payment Insights; Atradius – Payment Practices Barometer; PwC Middle East – Working Capital Study 2023

Cedar Rose: Regional Risk Expertise Built for Manufacturers

With over 25 years of experience in MENA markets, Cedar Rose provides unparalleled access to credit and due diligence intelligence—especially in jurisdictions where reliable data is hard to find. Our CRiS Intelligence Platform offers credit scores, payment history, ownership verification, and continuous monitoring across millions of companies.

Manufacturers can seamlessly integrate our solutions via API, gaining access to real-time alerts and portfolio-level risk insights. For more sensitive or high-risk relationships, our enhanced due diligence services, including litigation checks and director verification—ensure you’re extending credit with confidence.

Final Thought: Informed credit is safer credit

For MENA-based manufacturers, the credit risk landscape is evolving rapidly. Whether you are exporting to new markets, onboarding domestic clients, or expanding capacity, a proactive and data-led approach is now critical.

By embracing trusted credit intelligence and modern due diligence tools, finance professionals can not only safeguard their operations, but also seize new growth opportunities with greater confidence and control.