Murabaha financing agreement delivers critical support for thousands of farmers exporting food commodities across the continent as COVID-19 impacts global food commodity prices
The International Islamic Trade Finance Corporation (ITFC), member of the Islamic Development Bank (IsDB) Group, signed a US$200 million syndicated Murabaha financing agreement with the African Export-Import Bank (Afreximbank), a multilateral financial institution established by African governments and institutional investors. The facility seeks to help African countries address some of the economic impacts of the COVID-19 pandemic. This syndication is supported by number of partners and financial institutions who allocated resources to the agriculture sector in African.
The agreement, which is indicative of ITFC’s ongoing commitment to and trust in Africa, will finance the export of soft commodities, such as raw cashew nuts, cocoa, sesame seeds and maize. The financing will provide critical support for the agriculture sector (the continent’s largest employer and a key driver of SME development) of 11 countries in sub-Saharan Africa.
Commenting on the Murabaha financing agreement, Eng. Hani Salem Sonbol, ITFC CEO, said: “The financing of agricultural exports during these extremely challenging economic conditions will provide a lifeline to exporters affected by the impact that COVID-19 has had on the price of commodities. Hundreds of millions of people in Africa rely on agriculture for employment and many countries’ food security rests on the smooth and affordable import and export of foodstuffs. We thank our financial partners for joining ITFC in this syndication, particularly for their unabated support in this turbulent time, to allocate resources for Africa. This new partnership with Afreximbank will go some way to supporting businesses and ordinary people as we navigate the coronavirus pandemic.”
The Africa region has been a priority for ITFC since its inception in 2008, mandated to answer to the developmental and economic requirements of the member countries in the continent. For this reason, ITFC disbursed US$2.38 billion in Africa in 2019 alone, taking the total since 2008 to US$15.6 billion, helping OIC member countries in the region to achieve sustained economic growth, job creation and value creation in the key export sectors of agriculture, energy and manufacturing.
It is worth mentioning that ITFC first partnered with Afreximbank in 2017 with the signing of a US$100 million agreement with the aim of facilitating and financing exports amongst African countries and between Africa and the rest of the world. Afreximbank is also a key partner in the Arab Africa Trade Bridges (AATB) Program initiated by ITFC, a program with a mandate of enhancing economic integration between the Africa and Arab regions and strengthening SME export development across key sectors.