1. NOT AN OFFICIAL UNCTAD RECORD Together We Build a Better Future
SLAMIC
EVELOPMENT
ANK
Trade Fınancıng Programs
11TH  AFRICAN OIL AND GAS, TRADE AND FINANCE CONFERENCE & EXHIBITION
May 2007
Together We Build a Better Future

2. B. TRADE FINANCING PROGRAMS IDB TRADE FINANCING OPERATIONS
IDB Experience in oil & gas trade financing in Africa
A. INTRODUCTION ON IDB
B. TRADE FINANCING PROGRAMS
IDB TRADE FINANCING OPERATIONS
BADEA EXPORT FINANCING SCHEME
C . ITFC : NEW TRADE FINANCE ENTITY
Islamic Development Bank
Together We Build a Better Future

3. ISLAMIC DEVELOPMENT BANK Together We Build A Better Future
A. INTRODUCTION
Established in 1975
56 members countries
Authorized capital
ID 15 billion
(US$20.54 billion)
Subscribed Capital
ID8.1 billion
(US$11.10 billion)
Shareholders fund
ID4.62 billion
(US$5.78 billion)

4. ISLAMIC DEVELOPMENT BANK
56 MEMBER COUNTRIES
Africa
Middle East,
Asia (including Central Asia)
Europe (Albania) and
South America (Suriname)

5. Trade Finance & Promotion Department Milestones
1397H
Launch of ITFO and starting of trade finance in IsDB
1408H
Launch of EFS
1415H
Launch of TC&PP program
1416H
Establishing TF&PD to manage ITFO, EFS and TC&PP
1977
1987
1994
1995
Islamic Development Bank
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6. IDB BOG established ITFC
Trade Finance & Promotion Department
Milestones
1419H
TF&PD started to manage BADEA Export Financing Scheme
1420H Starting Syndication & 2SMF
1426H
IDB BOG established ITFC
2005
IDB BOG Established
ITFC
1999
1998
Islamic Development Bank
Together We Build a Better Future

7. Islamic Development Bank
SALIENT FEATURES OF IDB TRADE FINANCING
Essentially deferred credits.
Maturity depends on type of goods and type of financing product :
Usually a maximum 12 months roll over facilities
PROFIT MARGIN
Based on the relevant currency LIBOR for the relevant period plus a spread.
Spread reflects risks elements
“Mark to market”
IDB, being an MDB, normally charges some basis points below market rates.
FUNDING
Ordinary Capital Resources of IDB (OCR)
Funds raised under Syndication /Co-financing
Islamic Development Bank
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8. COUNTRY COVERAGE CUSTOMER BASE Government State Owned Companies
Private Companies
Algeria
Bahrain
Bangladesh
Benin
Burkina Faso
Chad
Cote D’Ivoire
Egypt
Indonesia
Iran
Jordan
Lebanon
Libya
Kuwait
Kazakhstan
Malaysia
Mali
Morocco
Mozambique
Niger
Pakistan
Saudi Arabia
Senegal
Sudan
Togo
Tunisia
Turkey
UAE

9. CUMULATIVE FINANCING 1977 - 2006
GROSS APPROVALS
CUMULATIVE FINANCING
US$ Million
$ Million

10. Import Trade Financing
IMPORT TRADE FINANCING BY YEAR
Import Trade Financing
US$ Million
US$ Million
Islamic Development Bank
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11. OIL & GAS FINANCING BY YEAR
GROSS APPROVALS
OIL & GAS FINANCING BY YEAR
(IDB Total & Africa)
US$ Million
$ Million

12. Total Africa & Sub Saharan Africa
OIL & GAS FINANCING BY YEAR
BADEA
Total Africa & Sub Saharan Africa
US$ Million
$ Million

13. IMPORTANCE OF THE TRADE FINANCE TO IDB
IDB Strategic Framework emphasized trade as a vehicle to improve cooperation and enhance economic development of member countries
Trade constitutes 61% of total Bank’s operational approvals since 1397H (1977)
Intra trade financing represents 76% of total approvals
Islamic Development Bank
Together We Build a Better Future

14. BENEFITS OF THE TRADE FINANCE
Adding Value to L/Cs of MC Banks
Use of Irrevocable Commitment to Reimburse (ICR); adding value to L/Cs of MC banks (exporter’s bank (negotiating bank) can claim reimbursement from IDB paying (agent) bank.
Reduction in Transactional Costs
ICR is like L/C confirmation and mitigates against risks of non-payment by issuing banks. Eliminates need for additional L/C confirmation of L/Cs
Islamic Development Bank
Together We Build a Better Future

15. Islamic Development Bank Together We Build a Better Future
BENEFITS OF THE TRADE FINANCE
Irrevocable Commitment to Reimburse (ICR)
issued to exporter’s bank at no cost
No other charges such as commitment fees etc.
IDB do not perform L/C issuance, advising and negotiating roles;
Do not deprive other commercial banks of their business
IDB not only add value to L/Cs but save transaction costs.
Islamic Development Bank
Together We Build a Better Future

16. BENEFITS OF THE TRADE FINANCE
Development of correspondent banking
Facilitates growth of correspondent banking in MCs.
Anchor role of ICR issuance; Agent Banks’ role as paying/reimbursing banks;
importers’ / exporters’ banks (All are MC Banks).
IDB has more banks on list of acceptable banks for guarantee and L/C issuance
Good market knowledge of IDB
Enable MC banks to leverage on IDB’s knowledge edge.
Indirectly facilitates growth of trade and investment links among MCs.
Islamic Development Bank
Together We Build a Better Future

17. Islamic Development Bank Together We Build a Better Future
OTHER BENEFITS
Trade Syndications:
Leveraging on IDB present Triple A status
Successful in raising funds for trade financing; sometimes
Oversubscription in syndications for “below investment” grades MCs
Recently completed deals:
US$ Mn for Bangladesh
US $ Mn for Gov. of Senegal;
US $ 200 Mn for SAMIR, Morocco;
Islamic Development Bank
Together We Build a Better Future

18. INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (ITFC)
Objectives
To promote intra trade among IDB MCs
To be a catalyst for mobilization of funds for trade finance in MCs
To complement IDB’s Group Strategic Plan on enhancing economic cooperation among MCs
Features
IDB is the major shareholder
International charter with commercial orientation
Trade financing and promotion role
Islamic Development Bank
Together We Build a Better Future

19. INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (ITFC)
Approved at the 30th Annual Meeting of IDB Board of Governors (BOG) June 2005 Putrajaya, Malaysia
Capital:
Authorized : US$ 3.00 billion
Paid up : US$ 500 million
Establishment:
1st General Assembly held on 24th February 2007.
Operations expected to start by the middle of the year.
Location:
Headquarters : Jeddah, Saudi Arabia
1st Branch : Dubai, United Arab Emirates
Islamic Development Bank
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20. Membership INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (ITFC)
IDB has the majority shares (59%)
26 Members of IDB ratified
8 Banks ratified
Islamic Development Bank
Together We Build a Better Future

21. CONTACTS Trade Finance & Promotion Department Islamic Development Bank
P.O. Box 5925, Jeddah 21432
Kingdom of Saudi Arabia
Tel. No. : (9662) /14/29
Fax No.: (9662)
Website: