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NOT AN OFFICIAL UNCTAD RECORD. I. D. B. EVELOPMENT. ANK. SLAMIC. Trade F ı nanc ı ng Programs. 11TH  AFRICAN OIL AND GAS, TRADE AND FINANCE CONFERENCE & EXHIBITION 23 -25 May 2007. Together We Build a Better Future. IDB Experience in oil & gas trade financing in Africa.

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Slamic

NOT AN OFFICIAL UNCTAD RECORD

I

D

B

EVELOPMENT

ANK

SLAMIC

Trade Fınancıng Programs

11TH  AFRICAN OIL AND GAS, TRADE AND FINANCECONFERENCE & EXHIBITION

23 -25 May 2007

Together We Build a Better Future


Slamic

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


Islamic development bank together we build a better future

ISLAMIC DEVELOPMENT BANKTogether We Build A Better Future

A. INTRODUCTION

  • 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)

  • Established in 1975

  • 56 members countries


Islamic development bank

ISLAMIC DEVELOPMENT BANK

56 MEMBER COUNTRIES

Africa

Middle East,

Asia (including Central Asia)

Europe (Albania) and

South America (Suriname)


Slamic

1977

1994

1987

1995

Trade Finance & Promotion Department

Milestones

Islamic Development Bank

Together We Build a Better Future


Slamic

2005

IDB BOG Established

ITFC

1998

1999

Trade Finance & Promotion Department

Milestones

Islamic Development Bank

Together We Build a Better Future


Slamic

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

Together We Build a Better Future


Slamic

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


Gross approvals

GROSS APPROVALS

CUMULATIVE FINANCING 1977 - 2006

US$ Million

$ Million


Slamic

IMPORT TRADE FINANCING BY YEAR

Import Trade Financing

US$ Million

US$ Million

Islamic Development Bank

Together We Build a Better Future


Gross approvals1

GROSS APPROVALS

OIL & GAS FINANCING BY YEAR

(IDB Total & Africa)

US$ Million

$ Million


Slamic

OIL & GAS FINANCING BY YEAR

BADEA

Total Africa & Sub Saharan Africa

US$ Million

$ Million


Slamic

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


Slamic

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


Slamic

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


Slamic

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 DevelopmentBank

Together We Build a Better Future


Slamic

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$ 375 Mn for Bangladesh

US $ 34 Mn for Gov. of Senegal;

US $ 200 Mn for SAMIR, Morocco;

Islamic Development Bank

Together We Build a Better Future


Slamic

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


Slamic

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

Together We Build a Better Future


Slamic

INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (ITFC)

  • Membership

    • IDB has the majority shares (59%)

    • 26 Members of IDB ratified

    • 8 Banks ratified

Islamic Development Bank

Together We Build a Better Future


Contacts

CONTACTS

Trade Finance & Promotion Department

Islamic Development Bank

P.O. Box 5925, Jeddah 21432

Kingdom of Saudi Arabia

Tel. No. : (9662) 646- 7013/14/29

Fax No.: (9662) 637- 1064

Website: http://www.isdb.org


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