Home Business International Islamic Trade Finance Corporation partners Afrexim to support Trade Facilitation Programme

International Islamic Trade Finance Corporation partners Afrexim to support Trade Facilitation Programme

by Business News Report

African Export-Import Bank (Afreximbank) has announced a collaboration with the International Islamic Trade Finance Corporation (ITFC) in a risk participation facility designed to enhance Afreximbank’s ability to promote and support trade finance activities in Africa. Under the arrangement, Afreximbank will act as a confirming bank or trade confirmation guarantor on behalf of the approved African Financial Institutions and provide these services in favour of Beneficiary or International Banks. ITFC will act as the issuer of irrevocable reimbursement undertakings to cover up to 50% of Afreximbank’s risk exposure on the African Financial Institutions.

Undertaken as part of the Afreximbank’s Trade Facilitation Programme (AfTRAF), the arrangement will be used to increase intra and extra-African trade and support the export and import of vital goods and services to Africa. This arrangement will further support the Bank’s capacity to stimulate African trade as it continues to withstand the pressures of the ongoing Ukraine-Russia crisis. The facility will allow Afreximbank to mitigate risk exposures associated with certain African financial institutions, or to leverage the Bank’s risk appetite to generate increased business from certain African financial institutions. In addition, the risk participation limit will aid the Bank in originating and distributing unfunded short-term letters of credit confirmation risks to acceptable parties, whilst retaining part of the returns.

Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, commented “this risk participation arrangement will significantly augment Afreximbank’s capabilities in trade finance and create room for deeper support to African countries. It aligns with Afreximbank’s strategy of promoting intra and extra-African trade, achieving African’s industrialisation and closing the trade finance gap in the continent. This partnership demonstrates the long-standing relationships between our two institutions and advances the objectives of the Arab-Africa Trade Bridges (AATB) of which Afreximbank and ITFC are shore partners in.”

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