International Islamic Trade Finance Corporation moves to Support Trade Finance in Struggling Senegal
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With Senegals economy rocked by the impact of coronavirus, the International Islamic Trade Finance Corporation (ITFC) has inked a murabaha financing deal with a domestic bank.
The Islamic Development Bank (IsDB) Group member has agreed to provide €8mn in financing to Banque Islamique du Sénégal (BIS) to support the bank’s trade finance operations in Senegal’s private sector.
In a statement, ITFC says the financing is aiming to gear capital towards private companies in “this period of economic crisis resulting from the Covid-19 pandemic.
It is also intended to serve the ITFCs mandate of boosting trade between the members of the Organisation of Islamic Cooperation (OIC).
With 57 member states spread across four continents, Senegal has been a member of the OIC since its founding in 1969.
ITFC CEO, Hani Salem Sonbol, adds: This murabaha is a necessary intervention during extraordinarily difficult global conditions and will support BIS and the governments efforts to safeguard the availability of much-needed commodities for the people of Senegal.
According to the ITFC, the financing has already enabled local private companies to procure urgent food staples, and support national response efforts to ensure food security.
Senegals economy has been hard hit in recent months by the dual blow of a sharp economic global economic downturn and domestic containment measures.
Since March, stringent government measures to quell the spread of the virus have seen the enforcement of a dusk-to-dawn curfew, a ban on inter-regional travel, and a closing off of the borders to all but essential goods.
In the past week, however, after protests against the lockdown flared up in the country, the government has announced these restrictions will be eased.
Nevertheless, the African Development Bank (AfDB) says it has revised its real GDP growth projections for Senegal down from 6.8% to less than 3% for 2020, having also extended financial support to Senegal recently.
Towards the end of May, the AfDB provided an €88mn loan to help support the Senegalese government’s Covid-19 relief programme and address the health, social and economic impacts of the crisis.
The Senegalese state’s resilience package – worth up to 7% of its GDP – includes money for the economy, with CFAFr100bn in direct support going towards hard hit sectors such as tourism and transport.
Cash will also be used to secure supplies and distribution for key foodstuffs, medicine and energy products.
Meanwhile the programme will provide food aid to 1 million of the poorest households, while also helping improve the health systems ability to treat and control Covid-19.
Much like the global economy, African countries are expected to feel the economic impact of Covid-19 this year, with the World Bank forecasting in April that the continent is facing the prospect of its first recession in 25 years.