Giving Due Credit

The Middle East IT channel firms continue to battle with credit challenges, while it is also the pillar on which business happens in the region. Reseller Middle East, as part of Tahawul Tech’s Your Voice series, gathered experts across distribution, reselling, systems integration and insurance firms to discuss how channel players can arrive at a solution to this problem and define the responsibilities of each stakeholder.

Credit, is unquestionably a crucial aspect of the channel business. Distributors provide credit to partners who don’t have enough financial means to roll out IT projects, and many resellers opt for disties who have the capabilities to deliver comprehensive credit and financing terms.

However, in the recent past, the regional market has been plagued by credit issues, which have adversely impacted various segments of the channel ecosystem. Faced with overwhelmingly heavy and bad debts, several channel firms have fled the market, over the last few years.

“Currently the IT channel market is experiencing a stable growth,” said Shukri Halima, head of Risk and Operations, Financial Risk, Howden Insurance Brokers. “There has been a significant difference in terms of players fleeing the market as compared to five or six years ago.”

Halima added that upcoming events like the Expo 2020, have opened up more opportunities for businesses in the region.

Although the market is growing, credit issues continue to exist. Because of the volatility of the market, banks have recently slashed the credit terms. “The biggest problem, in my opinion, is the lack of credit understanding and discipline of partners in the IT channel ecosystem,” said Dharmendra Sawlani, managing director, Smile Computers and president, Dubai Computer Group.

He further said that there are also no specific regulations governing channel credit transactions. “Ideally, we should have a Federal Credit Insurance Authority in the region, but at the moment it is something that we lack.”