The International Islamic Trade Finance Corporation (ITFC) has signed a sharia-compliant revolving trade finance facility with Mizuho Bank, marking the first time it has partnered with a Japanese bank.

The US$100mn murabaha agreement, struck with Mizuho’s subsidiary in Malaysia, will help ITFC extend support to Organisation of Islamic Cooperation (OIC) member countries under its Covid-19 response plan, with funding being targeted at both the public and private sectors.

ITFC, a member of the Islamic Development Bank (IsDB) Group, was launched in 2008 with the objective of boosting trade among the 57 member nations of the OIC, which includes Malaysia.

Speaking about the facility, ITFC’s CEO Hani Salem Sonbol says: “This is an important milestone in ITFC’s international presence and its strategy of extending partnerships globally with banks both inside and outside of the OIC.”

“Such relationships will help significantly to enhance trade and improve livelihoods across our member countries,” he adds.

Mizuho Malaysia’s CEO, Shojiro Mizoguchi, says: “We believe this is a just a beginning to more collaborations with ITFC in the near future.”

International law firm Trowers & Hamlins advised Mizuho Bank Malaysia on the deal, through a team lead by partner Elias Moubarak.

The move follows ITFC signing a joint statement in July – alongside the World Trade Organization (WTO) and five other multilateral development banks – promising to address shortages in trade finance, so that financial market stresses arising from the Covid-19 crisis do not prevent otherwise viable trade transactions.

The statement noted that many developing countries, who were already experiencing significant trade finance gaps before the Covid-19 crisis hit, face even tighter access to trade credit.

“A further decline in trade finance supply would, in the short term, make it harder for imports of food and medical equipment to reach economies where they are urgently needed. In the medium-term, it would impede the ability of trade to help drive economic recovery,” the statement reads.

In a bid to help exporters and importers in its member countries weather the effects of Covid-19, ITFC has signed two separate agreements in Africa in recent months.

In one deal, ITFC agreed to provide US$200mn to the African Export-Import Bank (Afreximbank) 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 the continent.

Meanwhile in June, ITFC agreed to provide €8mn in financing to Banque Islamique du Sénégal. According to the ITFC, the deal has enabled private companies in Senegal to “procure urgent food staples, and support national response efforts to ensure food security”.