Trade Finance Facility

Trade Finance 2016

OFID’s Trade Finance Facility (TFF) targets transactions to facilitate import and export activities and to address working capital requirements in developing countries. The general principles guiding the Facility include developmental impact, South-South cooperation and additionality. TFF operations are available to governments, private entities, commercial banks, regional DFIs and any other institution active in an OFID partner country. OFID products include import-, export- and pre-export financing, warehouse receipt financing, working capital financing and unfunded risk participation. Instruments include conventional loans as well as Islamic financing facilities.

Despite the stabilization of commodity prices, global trade growth in 2016 recorded its weakest performance since the 2008 global financial crisis, reflecting tempered demand from developed economies and still-contracting imports from major commodity exporters, combined with heightened uncertainty regarding global trade policies and continued currency fluctuations. OFID continued to support its existing partner countries during these uncertain times, while also expanding its footprint to two new countries.

Activities in 2016

In terms of actual commitments, OFID approved an aggregate US$294.4m through the TFF in 2016. The lion’s share (US$264.4m) was drawn from an existing global trade participation scheme with the International Islamic Trade Finance Corporation and included a maiden TFF operation in Djibouti. These funds facilitated the import of petroleum products and agriculture inputs by beneficiary countries as well as exports of strategic commodities, among other things. The remaining US$30m was channeled via financial intermediaries to support the import and export funding needs of SMEs in Armenia and Costa Rica, the latter a second country new to the TFF in 2016.