Islamic finance boosts intra-African trade
A number of financing agreements, totalling over US$250mn, have been raised in support of the African Export-Import Bank (Afreximbank) in recent weeks.
The International Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank Group, has provided a US$100mn and a €50mn facility, both of which will be used to support trade transactions involving ITFC member countries that are also Afreximbank participating member countries.
These nations include: Benin, Burkina Faso, Cameroon, Chad, Côte d’Ivoire, Djibouti, Egypt, Gabon, Gambia, Guinea-Bissau, Guinea, Mali, Mauritania, Morocco, Mozambique, Niger, Nigeria, Senegal, Sierra Leone, Sudan, Tunisia and Uganda.
A spokesperson for Afreximbank tells GTR that the structure of the deal involves ITFC providing the facility to support trade transactions being originated by the private sector enterprise in its member’s countries. Afreximbank will act as the agent of ITFC and provide guarantees to ITFC to cover payment default by the companies.
The agreements were signed by Hani Salem Sonbol, the CEO of ITFC, and Amr Kamel, Afreximbank executive vice-president of business development and corporate banking, in a ceremony held during the Afro-Arab Trade Finance Forum, which organised under the Arab Africa Trade Bridges Programme. The programme was launched in February 2017 to enhance trade relations, develop the business sector and promote economic co-operation between the two regions.
Afreximbank has also recently been awarded a US$100mn facility from the Islamic Corporation for the Development of the Private sector (ICD). It will be used by the African bank to provide sharia-compliant financing to small and medium-sized enterprises (SMEs) in its member countries in Africa.
“This facility will give a boost to our effort to implement our current strategy, which prioritises intra-African trade, intra-African investments and export manufacturing of the labour-intensive type,” says Kamel at Afreximbank. “It will also promote our knowledge in Islamic finance and provide us with additional manoeuvring capacity in terms of product offerings to our clients.”
He adds: “This collaboration will contribute to the objective of fostering sustainable economic growth in the member countries of our two institutions, leading to job creations, contribution to export and Islamic finance development, among others.”
An Afreximbank spokesperson tells GTR about the bank’s involvement in Arab institutions to date: “Afreximbank has established strategic partnerships with other Arab states institution like the Arab Bank for Economic Development in Africa (BADEA) and the Islamic Development Bank. The partnerships have culminated in several milestones achieved. They have also deepened our knowledge in Islamic finance as well as provided an alternative funding base to support our developmental mandate in Africa.”take me back