The International Islamic Trade Finance Corporation (ITFC), the trade fund of the Islamic Development Bank (IsDB) Group, continues to consolidate its financing activities in Africa and with the private sector in member countries.
In early January 2021, ITFC signed a US$1.1 billion agreement with Egypt whereby it will supply it with a programme of integrated trade finance solutions.
The programme agreement was signed by Sonbol, Ashraf Abd Allah, the deputy chief executive of the Egyptian General Petroleum Company (EGPC) and Ahmed Youssif, vice chairman of the General Authority for Supply Commodities. The facilities will support the petroleum industry, food provision and national development, including trade and capacity building. It also compliments ITFC’s Arab Africa Trade Bridges (AATB) programme which lasts till end September 2021.
“This latest financing,” explained Sonbol, “holds special significance considering the calamities caused by COVID-19 on local trade ecosystem. Many businesses, including SMEs and exporters, have been badly affected. By securing the import of critical commodities, we can also focus on reviving trade. As part of this agreement, ITFC will support the Egyptian government to identify and grow key trade development areas including boosting its cotton sector value chain, driving female entrepreneurship, and boosting SME growth in general.”
In December 2020, ITFC launched its new standalone LC Confirmation instrument as part of its strategy to expand its private sector interventions, which is now open to SMEs in the 57 IsDB member countries, of which 28 are from continental Africa.
The aim is to boost exports in line with the IsDB Group’s ambition of boosting intra-Islamic trade which current stands around 25% to total trade. “Enhancing international trade is crucial for economic development and this role becomes even more critical as countries embark on the recovery phase from the COVID-19 pandemic. The LC Confirmation product is aimed at managing the increasing risk associated with the pandemic while facilitating trade flow and ensuring the steady supply of essential goods,” said the Corporation in a statement.
Commenting on the launch of the new product, Eng. Hani Salem Sonbol, ITFC CEO, stressed that the “Corporation is committed to supporting SMEs and private sector development in developing countries to drive global trade. With this LC Confirmation instrument, the ITFC is demonstrating the important role that Islamic trade finance products and solutions have in levelling the playing field for developing markets that seek to participate in the global economy. This provides much-needed support for exporters, the issuing banks and, as a consequence, serves to provide strategic trade finance support where and when it is needed most during the COVID-19 pandemic and beyond.”
The LC Confirmation product is structured to allow exporters to gain assurance from a multilateral financial institution to secure payment, thus mitigating the credit and country risks of the LC Issuing Banks.
ITFC, in collaboration with the African Export-Import Bank (Afreximbank) and the Arab Bank for Economic Development in Africa (BADEA), launched in November 2020 a US$1.5-billion Collaborative COVID-19 Pandemic Response Facility (COPREFA) to support African economies with rapid financial assistance to reduce the impact of COVID-19.
COPREFA will be accessed by eligible central banks, commercial banks and businesses to finance the import of medical supplies, as well as agricultural equipment and fertilizers essential for addressing the pressing food production deficit. The facility is also designed to support African economies to overcome a myriad of challenges, including commodity price shocks, a significant drop in tourism, and disruption to supply chains and export manufacturing.