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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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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


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 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

56 MEMBER COUNTRIES

Africa

Middle East,

Asia (including Central Asia)

Europe (Albania) and

South America (Suriname)


1977

1994

1987

1995

Trade Finance & Promotion Department

Milestones

Islamic Development Bank

Together We Build a Better Future


2005

IDB BOG Established

ITFC

1998

1999

Trade Finance & Promotion Department

Milestones

Islamic Development Bank

Together We Build a Better Future


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


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

CUMULATIVE FINANCING 1977 - 2006

US$ Million

$ Million


IMPORT TRADE FINANCING BY YEAR

Import Trade Financing

US$ Million

US$ Million

Islamic Development Bank

Together We Build a Better Future


GROSS APPROVALS

OIL & GAS FINANCING BY YEAR

(IDB Total & Africa)

US$ Million

$ Million


OIL & GAS FINANCING BY YEAR

BADEA

Total Africa & Sub Saharan Africa

US$ Million

$ Million


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


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


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


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


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


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


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


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

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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