The International Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank (IsDB) has announced its major trade initiative for Africa. The agenda was disclosed during a sponsored event at what was the fifth edition of the Rebranding Africa Forum (RAF) which was held in Burkina Faso from 5th to 6th October 2018.
Several African Heads of States graced the event, Ministers and dignitaries from the Middle East and Africa (MEA) region including the President of Burkina Faso, Roch Marc Kabore, the President of Niger, Mahamadou Issoufou, the President of Ghana, Nana Addo Dankwa Akufo-Addo and the Minister of Economy, Finance and Development of Burkina Faso, Hadizatou Rosine Coulibaly amongst others.
The first initiative to be announced was for a USD 1.5 Bn Framework Agreement between the government of Burkina Faso and ITFC. The agreement involves the ITF contributing to the mobilization of financial resources to finance the export of agricultural commodities like cotton and the import of agro-inputs and foodstuff, including energy commodities like crude oil and refined petroleum products. The ITFC will as well shoulder the finance that would be channeled into the extension of lines of financing to local banks in order for them to support SMEs at the local level. It will also see to the implementation of capacity building programs for the strategic sectors of the national economy.
Hani Salem Sonbol, ITFC Chief Executive Officer, while speaking at the event said that Burkina Faso stands as ITFC’s top beneficiary in Sub-Saharan Africa. According to him, ITFC has formed a formidable relationship with the government to create an exemplary portfolio of operations which can be replicated in other countries. ITFC’s financing is believed to go a long way in complementing the IsDB Group support for Burkina Faso, covering several sectors necessary for national development. Sonbol said that the unique nature of the intervention is an integrated adopted integrated approach which entails both trade financing and trade capacity development.
The second announced agenda concerned the launch of the West Africa SMEs Program, tailored to improve access to trade finance for SME in eight West African countries. The program has been engineered to bride the significant trade finance gap at the SME level within West Africa, which would be actualized through the delivery of financing lines, provision of capacity building and advisory services to partner banks and SMEs in the West African Economic Monetary Union (WAEMU) nations – Benin Republic, Cote d’Ivoire, Burkina Faso, Guinea-Bissau, Niger, Togo, Senegal and Mali. A pilot project will be implemented in Burkina Faso, which would be followed by Senegal.
Targeting to become the reference bank for SMEs and SMIs in Africa, along with a strong presence in seven WAEMU nations, Coris Bank International (CBI SA) was selected by the ITFC as the pilot bank saddled with the responsibility to implement the West Africa SME Program. The initiative will comprise the deployment of assistance to CBI SA to adapt and modernize its tools as well as its lending process in order to further increase access to credit for SMEs. The scheme is also going to assist SMEs by means of capacity development with the aim to increase their overall bankability.
Sonbol says the program was designed to assist the West African SME sector by creating integration between business development and trade fiancé. As the spinal cord of the region’s emerging economy, these small businesses require scaled-up access to finance now more than before, and Islamic trade finance has a significant role to play. He expressed ITFC’s confidence that the program will bolster the enhancement of the utilization of trade finance instruments paces at West African banks for SMEs.
Additionally to CBI SA, key partners in the implementation of the program include SMEs support institutions, as well as various content providers for modules, tools, and implementation agencies. Since ITFC’s inception in 2008, the body has provided more than USD 40.2 Bn of trade financing to OIC Member Countries, which makes it a leading provider of trade solutions for the needs of OIC Member countries.