The International Islamic Trade Finance Corporation (ITFC) has launched a number of initiatives in West Africa, including a new SME programme, to improve access to trade finance in eight countries.
The idea is to utilise Islamic finance – financial products that comply with sharia law – to help bridge the substantial trade finance gap for SMEs in the region.
The newly launched West Africa SME programme will provide partner banks and SMEs with financing lines, capacity building and advisory services. It will cover nations in the West African Economic and Monetary Union, namely Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.
ITFC, a member of the Islamic Development Bank Group, will first implement pilot projects in Burkina Faso, followed by Senegal, having selected Coris Bank International (CBI) as the pilot bank. Through the programme, the organisation will assist CBI to adapt and modernise its tools and lending processes to further increase access to credit for SMEs. It will also support SMEs through capacity development with the aim to increase their bankability.
Hani Salem Sonbol, ITFC’s CEO, says the programme is “designed to support the West African SME sector by creating integration between business development and trade finance”.
He adds: “As the backbone of the region’s emerging economy, these SMEs require improved access to finance now more than ever, and Islamic trade finance has a significant role to play. We are confident that the programme will help enhance the utilisation of trade finance instruments placed at West African banks for SMEs.”
In addition to CBI, ITFC says it will work closely with SME support institutions, content providers for modules and tools, and implementing agencies on the programme.
The new initiative was announced during the Rebranding Africa Forum in Burkina Faso in early October, attended by a range of African heads of states and ministers.
Also announced at the event was a US$1.5bn framework agreement between the government of Burkina Faso and ITFC. Under this deal, ITFC will help finance the export of agricultural commodities, such as cotton, and the import of agricultural inputs and foodstuff, as well as commodities such as crude oil and refined petroleum products. It will also extend financing lines to local banks to support SMEs.
Burkina Faso is ITFC’s top beneficiary in Sub-Saharan Africa, according to Sonbol. “Our financing will no doubt go a long way in complementing the Islamic Development Bank Islamic Development Bank Group’s support for the country, covering many sectors necessary for the country’s national development,” he says.