The International Islamic Trade Finance Corporation (ITFC) has signed six trade finance and development agreements worth over US$1.1bn as it seeks to enhance south-south trade.
The pacts were signed at the 44th Islamic Development Bank annual meeting in Marrakech earlier this month. Through the deals, the ITFC will provide state and private sector financing as well as capacity building programmes for export and SME development initiatives, targeting high-growth industries including agricultural commodities, energy commodities such as crude oil, agricultural inputs, medical supplies, construction materials, metals and livestock.
The largest of the agreements was signed with the African Export-Import Bank (Afreximbank). The Arab-Africa Trade Finance and Promotion Programme (AATFPP), worth US$500mn, will include financing facilities, integrated trade solutions to support SMEs, joint capacity building programmes, market access support and technical co-operation to boost trade between African and Arab nations.
The second-largest deal, a framework agreement with Mali, will be implemented for a total financing amount of up to US$300mn, and will see the ITFC mobilise financing from international and regional financial institutions for imports of energy products, agricultural inputs and foodstuff, and exports of agricultural commodities. The deal also includes SME finance through local banks, as well as the implementation of capacity-building programmes.
Also in Africa, a US$80mn, five-year framework agreement with Niger, which aims to boost trade links with other Organisation of Islamic Cooperation (OIC) countries, will involve export finance for agricultural and livestock commodities, as well as funds for a new food security programme and a new operation with the Nigerien national power company for the import of electricity and petroleum products.
In Central Asia, a new three-year framework agreement worth US$150mn for the Kyrgyz Republic will be split across local financial providers to fund the private sector, and the national government to fund strategic commodities. The deal also contemplates capacity-building programmes, with the objective of enhancing free trade and co-operation between the OIC and the Kyrgyz Republic.
Finally, the ITFC is also launching a new programme in South America, with a three-year deal in Suriname. Under the terms of this agreement, the multilateral financier will mobilise up to US$75mn in SME finance, export finance and lines of credit for local banks, as well as a murabaha agreement to boost the import of essential goods.