The International Islamic Trade Finance Corporation (ITFC), a member of the Islamic Development Bank (IsDB) Group, has this week announced a $1.5 billion agreement with the Government of Burkina Faso to provide SMEs with financial aid.
The Framework Agreement is part of several major initiatives that were announced during a special event sponsored by the ITFC at the 5th edition of the Rebranding Africa Forum (RAF) being held in Burkina Faso from the 5th to the 6th of October, 2018.
The high-level event was attended by several African Heads of States as well as Ministers and dignitaries from the Middle East and Africa (MEA) region, including President of Burkina Faso, Roch Marc Christian Kaboré, the President of Niger, Mahamadou Issoufou, President of Ghana, Nana Addo Dankwa Akufo-Addo, and Minister of Economy, Finance and Development of Burkina Faso, Hadizatou Rosine Coulibaly Sori, amongst others.
The first announcement was for a $1.5 Billion Framework Agreement between the Government of Burkina Faso and ITFC. As part of the agreement, ITFC will contribute to mobilizing financial resources to finance the export of agricultural commodities such as cotton and the import of agricultural inputs and foodstuff, as well as energy commodities such as crude oil and refined petroleum products.
It will also finance the extension of lines of financing to local banks to support local SMEs and the implementation of capacity building programs for the strategic sectors of the national economy.
Since 2008, ITFC has provided more than $40.2 billion of trade financing to Organisation of Islamic Cooperation (OIC) Member Countries, making the Corporation the leading provider of trade solutions for the nations’ needs.
With a mission of being a catalyst for trade development among OIC Member Countries and beyond, the Corporation helps entities in Member Countries gain better access to trade finance and provides them with the necessary trade-related capacity building tools, which would enable them to successfully compete in the global market.
Speaking during the occasion, Eng. Hani Salem Sonbol, ITFC Chief Executive Officer, noted that Burkina Faso is ITFC’s top beneficiary in Sub-Saharan Africa.
“We have since forged a solid relationship with the Government to create an exemplary portfolio of operations that we can replicate in other countries. Our financing will no doubt go a long way in complementing the IsDB Group support for the country covering many sectors necessary for the country’s national development. The unique nature of our intervention remains as the integrated approach we adopt entails both trade financing and trade capacity development,” he continued.
The second announcement was the launch of the West Africa SMEs Program aimed at improving access to trade finance for SMEs in eight West African countries.
The Program has been designed to bridge the substantial trade finance gap at the SME level within the region by providing financing lines, capacity building and advisory services to partner banks and SMEs in the West African Economic and Monetary Union (WAEMU) nations, namely Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.
A pilot project will be implemented in Burkina Faso followed by Senegal.
Leading West African lender, Coris Bank International (CBI SA), has been selected by ITFC as the pilot bank to implement the West Africa SME Program.
The program will consist of the deployment of assistance to CBI SA to adapt and modernize its tools and its lending processes to further increase access to credit for SMEs. The program will also support SMES through capacity development with the aim to increase their bankability.
“The program was designed to support the West African SME sector by creating integration between business development and trade finance. 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,” explained Eng. Sonbol.
“We are confident that the program will help enhance the utilization of trade finance instruments placed at West African banks for SMEs,” he said.