NOT AN OFFICIAL UNCTAD RECORD Together We Build a Better Future SLAMIC EVELOPMENT ANK Trade Fınancıng Programs 11TH  AFRICAN OIL AND GAS, TRADE AND FINANCE CONFERENCE & EXHIBITION 23 -25 May 2007 Together We Build a Better Future

B. TRADE FINANCING PROGRAMS IDB TRADE FINANCING OPERATIONS IDB Experience in oil & gas trade financing in Africa A. INTRODUCTION ON IDB B. TRADE FINANCING PROGRAMS IDB TRADE FINANCING OPERATIONS BADEA EXPORT FINANCING SCHEME C . ITFC : NEW TRADE FINANCE ENTITY Islamic Development Bank Together We Build a Better Future

ISLAMIC DEVELOPMENT BANK Together We Build A Better Future A. INTRODUCTION 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 BANK 56 MEMBER COUNTRIES Africa Middle East, Asia (including Central Asia) Europe (Albania) and South America (Suriname)

Trade Finance & Promotion Department Milestones 1397H Launch of ITFO and starting of trade finance in IsDB 1408H Launch of EFS 1415H Launch of TC&PP program 1416H Establishing TF&PD to manage ITFO, EFS and TC&PP 1977 1987 1994 1995 Islamic Development Bank Together We Build a Better Future

IDB BOG established ITFC Trade Finance & Promotion Department Milestones 1419H TF&PD started to manage BADEA Export Financing Scheme 1420H Starting Syndication & 2SMF 1426H IDB BOG established ITFC 2005 IDB BOG Established ITFC 1999 1998 Islamic Development Bank Together We Build a Better Future

Islamic Development Bank 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 Islamic Development Bank Together We Build a Better Future

COUNTRY COVERAGE CUSTOMER BASE Government State Owned Companies Private Companies Algeria Bahrain Bangladesh Benin Burkina Faso Chad Cote D’Ivoire Egypt Indonesia Iran Jordan Lebanon Libya Kuwait Kazakhstan Malaysia Mali Morocco Mozambique Niger Pakistan Saudi Arabia Senegal Sudan Togo Tunisia Turkey UAE

CUMULATIVE FINANCING 1977 - 2006 GROSS APPROVALS CUMULATIVE FINANCING 1977 - 2006 US$ Million $ Million

Import Trade Financing IMPORT TRADE FINANCING BY YEAR Import Trade Financing US$ Million US$ Million Islamic Development Bank Together We Build a Better Future

OIL & GAS FINANCING BY YEAR GROSS APPROVALS OIL & GAS FINANCING BY YEAR (IDB Total & Africa) US$ Million $ Million

Total Africa & Sub Saharan Africa OIL & GAS FINANCING BY YEAR BADEA Total Africa & Sub Saharan Africa US$ Million $ Million

IMPORTANCE 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 Islamic Development Bank Together 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 Islamic Development Bank Together We Build a Better Future

Islamic Development Bank Together 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. Islamic Development Bank Together 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. Islamic Development Bank Together We Build a Better Future

Islamic Development Bank Together We Build a Better Future OTHER BENEFITS 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; Islamic Development Bank Together We Build a Better Future

INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (ITFC) Objectives To promote intra trade among IDB MCs To be a catalyst for mobilization of funds for trade finance in MCs To complement IDB’s Group Strategic Plan on enhancing economic cooperation among MCs Features IDB is the major shareholder International charter with commercial orientation Trade financing and promotion role Islamic Development Bank Together We Build a Better Future

INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (ITFC) 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 Bank Together We Build a Better Future

Membership INTERNATIONAL ISLAMIC TRADE FINANCE CORPORATION (ITFC) IDB has the majority shares (59%) 26 Members of IDB ratified 8 Banks ratified Islamic Development Bank Together We Build a Better Future

CONTACTS Trade Finance & Promotion Department Islamic Development Bank P.O. Box 5925, Jeddah 21432 Kingdom of Saudi Arabia Tel. No. : (9662) 646- 7013/14/29 Fax No.: (9662) 637- 1064 Website: http://www.isdb.org