Will a new conglomerate streamline Abu Dhabi’s defence policy?

The Dubai Air Show in November 2019 marked the inauguration of EDGE Group, a new defence conglomerate based in Abu Dhabi created to bring a range of companies under one name. Launched by Sheikh Mohamed bin Zayed Al Nahyan, crown prince of Abu Dhabi and deputy supreme commander of the UAE armed forces, the new entity will have a combined annual revenue of around $5bn, employ over 12,000 people and join up some 25 existing companies. This forms part of the UAE’s ongoing drive to boost the efficiency of government-owned companies and institutions. It is hoped that the creation of EDGE will reduce the overlap between existing entities in the defence sector, while also streamlining policy and helping transition to a single point of contact for foreign and domestic contractors.

New Entity

EDGE brings together a number of Abu Dhabi-based companies that were previously part of other groups, including Emirates Defence Industries Company and its subsidiaries, military vehicle manufacturer NIMR Automotive and ammunitions producer Caracal International. The conglomerate contains Emirates Advanced Investments Group, the parent company of Emirates Advanced Research and Technology Holding, an electronic warfare and research and development firm. It also includes Tawazun Holding, Abu Dhabi’s industrial investment company specialising in the defence sector, which operates as part of Tawazun Economic Council (TEC). Tawazun is responsible for the Tawazun Economic Programme, Abu Dhabi’s industrial participation strategy for contractors operating in sectors such as defence and aerospace, and Tawazun Strategic Development Fund, which supports small businesses, strategic technology investment and industrial capacity building. EDGE also incorporates Abu Dhabi Ship Building, which was responsible for building six Baynunah-class corvettes and a range of other vessels for the UAE Navy. The Advanced Military Maintenance Repair and Overhaul Centre also forms part of the group. The 25 entities now under EDGE Group are organised into five clusters: platforms and systems, missiles and weapons, cyber-defence, electronic warfare and intelligence, and mission support.

Defence Climate

The formation of EDGE comes at a time when the UAE’s defence spending is at an all-time high, with military expenditure rising at a compound annual growth rate of 6.5%. Although government spending is likely to be affected by the Covid-19 pandemic and falling oil prices in early 2020, this trend suggests that defence will remain a key part of the UAE’s budget over the longer term.

Growing demand for equipment has placed a strain on suppliers and manufacturers, but it is hoped that the reorganisation will ensure that the country’s needs are met in a sustainable way. Moreover, EDGE aims to help the UAE to transition away from its existing model of investing in overseas entities through funds such as Mubadala Investment Company, Abu Dhabi’s sovereign investment corporation for strategic development, and offset arrangements with TEC. Instead, EDGE hopes to encourage investment in local manufacturers and contractors, with the assistance of foreign partnerships.

Welcome Developments

The new conglomerate has already made several major announcements since its formation. At the Unmanned Systems Exhibition and Conference held in February 2020, EDGE Group unveiled the first drone to be produced in the UAE, which was designed by one of its subsidiaries, Abu Dhabi Autonomous Systems Investments. This will not only enhance the emirate’s defence capabilities, but also advance its plans to become a leader in artificial intelligence and unmanned systems.

Additionally, in March 2020 EDGE signed a memorandum of understanding with Tawazun to support the local defence industry through the Sustain and Enhance Emiratisation in Defence and Security programme. The initiative offers internships and job opportunities to Emirati nationals studying engineering and computer science to encourage them to enter the defence sector.