IDB Signs Billion Dollar Mudaraba Agreement With ITFC International Islamic Trade Finance Corporation
Agreement with newly-formed entity facilitates development of intra-trade among OIC member countries
The Islamic Development Bank (IDB) has signed a Mudaraba agreement with the newly-formed International Islamic Trade Finance Corporation (ITFC) to establish a US$ one billion fund, by which the ITFC will act as Mudareb (manager) of the fund on behalf of the IDB, the fund provider.
The purpose of the billion dollar fund is to support the ITFC’s trade finance operations and further develop intra-trade among member countries of the Organization of the Islamic Conference (OIC).
Signing the agreement, Dr. Ahmed Mohamed Ali, Chairman of the IDB Group, said “The International Islamic Trade Finance Corporation has been formed to take over all the trade business formerly undertaken by various windows in the IDB Group, thus consolidating all of the bank’s trade finance activities under a single umbrella, eliminating overlap and improving service delivery.”
Co-signing, Dr. Waleed Al Wohaib, CEO of ITFC said “Our status as an autonomous entity gives us the capacity to rapidly respond to changes in the business environment and significantly enhances our capability to meet dynamic market needs.” He went on to say “ITFC is a market-driven operation that conducts business according to world-class standards in the promotion of IDB developmental objectives through the various specialized funds that will be made available.”
The ITFC has the objective of becoming a leader in the development and diversification of financing instruments and products for trade financing that are compatible with the principles of Shariah.
Trade financing is intended to stimulate the development of investment opportunities conducive to the flow of private and public capital, direct and foreign investments in the OIC member countries, thus enhancing their export capabilities.
The over-arching purpose of the IDB and the ITFC is for wealthy Islamic countries to assist in the economic development of their less-wealthy brother nations in order to create prosperity and raise the standards of living and education for fellow Muslims in OIC member states.
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