In a bid to help agricultural exporters in Africa weather the Covid-19 crisis, the International Islamic Trade Finance Corporation (ITFC) has agreed to provide US$200mn to the African Export-Import Bank (Afreximbank).

The syndicated murabaha agreement is aiming to help thousands of farmers in Africa by financing the export of soft commodities such as raw cashew nuts, cocoa, sesame seeds and maize from Sub-Saharan Africa.

Agricultural workers in 11 countries stand to benefit, with a spokesperson for ITFC telling GTR it will provide critical support in Uganda, Mozambique, Malawi, Tanzania, Ghana, Côte d’Ivoire, Benin, Togo, Nigeria, Burkina Faso and Kenya.

The spokesperson was unable to disclose the names of the partner financial institutions involved in the deal.

Speaking about the agreement, ITFC’s CEO Hani Salem Sonbol says: “The financing of agricultural exports during these extremely challenging economic conditions will provide a lifeline to exporters affected by the impact that Covid-19 has had on the price of commodities.”

According to the monthly food price index put out by the Food and Agriculture Organization of the United Nations (FAO), food prices rebounded in June.

But prior to this, the FAO Index – which tracks international prices of the most commonly-traded food commodities – fell for the fourth consecutive month in May.

With supply appearing “strong” and demand weak in the face of economic contractions caused by Covid-19, the FAO noted that the index averaged 162.5 points in May, which was 1.9% below the previous month and its lowest reading since December 2018.

ITFC’s Sonbol adds that “hundreds of millions of people in Africa rely on agriculture for employment and many countries’ food security rests on the smooth and affordable import and export of foodstuffs”.

Food security was an issue in Africa even before Covid-19 struck, with consulting firm McKinsey noting in a recent report that around 650 to 670 million people in Africa, roughly half of the continent’s population, were already facing food insecurity.

According to McKinsey, Covid-19 has created “significant demand-side pressure that may worsen food insecurity on the continent owing to loss of incomes and potential food price increases caused by localised supply shocks and depreciating currencies”.

Afreximbank has previously announced support for African countries hit hard by the effects of coronavirus.

In March, it announced its US$3bn Pandemic Trade Impact Mitigation Facility (Patimfa) to help the bank’s member countries weather the economic and health impacts of Covid-19.

Meanwhile, after raising the equivalent of US$907.5mn with a dual-currency syndicated loan in May, Afreximbank said that some of the proceeds would be used to fund the implementation of Patimfa.