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I D BSLAMIC EVELOPMENT ANK

Trade Fınancıng Programs

Together We Build a Better Future

11TH  AFRICAN OIL AND GAS, TRADE AND FINANCE CONFERENCE &

EXHIBITION

23 -25 May 2007

NOT AN OFFICIAL UNCTAD RECORD

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Islamic Development BankTogether We Build a Better Future

A. INTRODUCTION ON IDBA. INTRODUCTION ON IDB

B. TRADE FINANCING PROGRAMS B. TRADE FINANCING PROGRAMS

• IDB TRADE FINANCING IDB TRADE FINANCING

OPERATIONSOPERATIONS• BADEA EXPORT FINANCING BADEA EXPORT FINANCING

SCHEMESCHEME

C . ITFC : NEW TRADE FINANCE C . ITFC : NEW TRADE FINANCE

ENTITYENTITY

IDB Experience in oil & gas trade financing in AfricaIDB Experience in oil & gas trade financing in Africa

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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)

ISLAMIC DEVELOPMENT BANKTogether We Build A Better Future

A. INTRODUCTION

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ISLAMIC DEVELOPMENT BANK

56 MEMBER COUNTRIES

Africa Middle East, Asia (including Central Asia) Europe (Albania) and South America (Suriname)

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Islamic Development BankTogether We Build a Better Future

Trade Finance & Promotion DepartmentTrade Finance & Promotion Department

MilestonesMilestones

1977

1987

1994

1995

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Islamic Development BankTogether We Build a Better Future

Trade Finance & Promotion DepartmentTrade Finance & Promotion Department

MilestonesMilestones

2005

IDB BOG Establishe

d

ITFC

1999

1998

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Islamic Development BankTogether 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

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Algeria Bahrain Bangladesh Benin Burkina Faso Chad Cote D’Ivoire Egypt Indonesia Iran Jordan Lebanon Libya Kuwait

Government State Owned Companies Private Companies

Kazakhstan Malaysia Mali Morocco Mozambique Niger Pakistan Saudi Arabia Senegal Sudan Togo Tunisia Turkey UAE

COUNTRY COVERAGE CUSTOMER BASE

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GROSS APPROVALSCUMULATIVE FINANCING 1977 - 2006

$ Million

26,933.0

12,271.0

2,767.0124.0

Total TradeFinance

Oil & GasFinancing

Africa oilFinancing

BADEA oilFinancing

US$ Million

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1654.5

727

1808.0

726

2260.0

995

1341.2

725

2527.0

1539

2002 2003 2004 2005 2006

Import Trade Financing

US$ Million

US$ Million

IMPORT TRADE FINANCING BY YEAR

Islamic Development BankTogether We Build a Better Future

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GROSS APPROVALS

$ Million

727.0

84

726.0

79.45

995.0

110

725

175

1539

279

2002 2003 2004 2005 2006

OIL & GAS FINANCING BY YEAR

(IDB Total & Africa)US$ Million

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BADEA

$ Million 84.0

19

79.0

27

110.0

15

175

75

279

74

2002 2003 2004 2005 2006

OIL & GAS FINANCING BY YEAR

Total Africa & Sub Saharan Africa US$ Million

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Islamic Development BankTogether We Build a Better Future

IMPORTANCE OF THE TRADE FINANCE TO IDBIMPORTANCE 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

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Islamic Development BankTogether 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

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Islamic Development BankTogether 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.

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Islamic Development BankTogether 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.

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Islamic Development BankTogether We Build a Better Future

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;

OTHER BENEFITS

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Islamic Development BankTogether We Build a Better Future

INTERNATIONAL ISLAMIC TRADE FINANCE INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (ITFC)CORPORATION (ITFC)

ObjectivesObjectives• To promote intra trade among IDB MCsTo promote intra trade among IDB MCs• To be a catalyst for mobilization of funds for trade finance in To be a catalyst for mobilization of funds for trade finance in

MCsMCs• To complement IDB’s Group Strategic Plan on enhancing To complement IDB’s Group Strategic Plan on enhancing

economic cooperation among MCseconomic cooperation among MCs

FeaturesFeatures• IDB is the major shareholderIDB is the major shareholder • International charter with commercial orientationInternational charter with commercial orientation• Trade financing and promotion roleTrade financing and promotion role

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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 BankTogether We Build a Better Future

INTERNATIONAL ISLAMIC TRADE FINANCE INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (ITFC)CORPORATION (ITFC)

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Membership

IDB has the majority shares (59%)

26 Members of IDB ratified

8 Banks ratified

Islamic Development BankTogether We Build a Better Future

INTERNATIONAL ISLAMIC TRADE FINANCE INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (ITFC)CORPORATION (ITFC)

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Trade Finance & Promotion DepartmentIslamic Development BankP.O. Box 5925, Jeddah 21432Kingdom of Saudi Arabia

Tel. No. : (9662) 646- 7013/14/29Fax No.: (9662) 637- 1064Website: http://www.isdb.org

CONTACTS