Operations
OFID moves into trade finance. Article published in the Oct. 2009 issue of Trade Finance Magazine.
Trade Finance Facility
Trade is a cornerstone of economic development, its benefits visible in the growth patterns of countries like China and Brazil, which have found profitable markets for their exports. The importance of trade expansion to poverty reduction is clearly acknowledged in the Millennium Development Goals, with MDG8 stating that an “open, rules based, predictable and non discriminatory trading system” can act as a powerful engine for economic growth and development.
International trade is not, however, a fit-all solution nor an absolute recipe for growth and development. Openness to the world market needs to be accompanied or preceded by appropriate domestic measures in the fields of investment, education and social welfare.
OFID’s Trade Finance Facility (TFF) was established to broaden the means available to OFID to alleviate poverty and promote economic development. As an integral part of OFID’s programs, the TFF is seen as a distinct, additional assistance window for supporting eligible developing countries in their efforts to achieve growth and prosperity. The Facility seeks out transactions that are developmentally, environmentally and socially sound, applying credit principles in line with standard practices and setting reasonable market-based return targets.
In principle, all low and middle-income developing countries are eligible for TFF support. TFF financing is available to governments, private entities, commercial banks, regional development finance institutions and any other institution active in an OFID partner country. The TFF aims at supporting beneficiaries to facilitate their import and export activities and to address their working capital requirements by means of various funded and unfunded financing instruments. OFID cooperates closely with other development finance institutions and commercial banks, complementing the role of these strategic partners. Since inception, OFID’s TFF has supported over 930 transactions, generating incremental trade in excess of $2 billion across 64 countries worldwide.
Related documents
Trade Finance Facility in 2010
Trade Finance Facility in 2009
Trade Finance Facility in 2008