The International Islamic Trade Finance Corporation (ITFC) has penned a US$250mn framework agreement with the Gambia’s government, as it works to bolster support for key exports and imports and help the West African nation overcome the negative economic effects of the Covid-19 pandemic.

As part of the five-year deal, the Islamic Development Bank Group member will provide the country with up to US$50mn on an annual basis.

Funding is expected to back imports of essential agricultural inputs such as fertiliser, or, in other instances, facilitate pre-export financing for cash crops such as groundnuts and cashew nuts, which the ITFC says in a release are the “main agricultural produce in a sector that is a major employer of the country’s workforce”.

According to UN Comtrade data for 2019, fruit and nuts were the Gambia’s fourth main export group worth roughly US$1.6mn in trade value.

When GTR covered a similar deal involving the ITFC from November 2018, it was estimated at the time that the groundnut sector was the second-largest source of revenue for the country, impacting the living conditions of 70% of the rural population as well as sub-sectors such as transport, warehousing and banking.

That particular agreement saw the ITFC act as a mandated lead arranger, lead arranger and bookrunner, combining Islamic structures to bring pe-export and import financing to the Gambia’s groundnut sector.

The ITFC says the latest financing will work to enable imports of key commodities such as refined petroleum, which are crucial to electricity generation in the country.

Other sectors expected to benefit from the agreement include healthcare, through the import of medicines and health equipment, as well as the private sector, with the ITFC noting in a statement that it will boost support to local SMEs by providing financing to local financial institutions.

“The five-year framework agreement will make way for further cooperation with the government of the Gambia across key economic sectors whilst fostering greater collaboration with the country’s budding private sector to drive SME growth,” says ITFC’s CEO, Hani Salem Sonbol.

He adds: “In addition to crucial import-export financing, the agreement also has provisions to help develop the country into a stronger trading nation through enhanced capacity development and knowledge transfer programmes.”

ITFC’s financing comes as the small West African country grapples with the fallout from the Covid-19 pandemic.

Having grown at 6.1% in 2019 and 7.2% in 2018, a March report from the World Bank says that the Gambia’s economy is expected to have stagnated in 2020 due to trade disruption and a fall in tourism as a result of global virus containment measures.