Tashkent witnessed agreements signed between the Ministries of the Republic of Uzbekistan and the International Islamic Trade Finance Corporation (ITFC) for a total amount of $715mn.
The meeting of the Arab Coordination Group is being held in Tashkent on March 4 and 5, in connection with this, a delegation of the International Islamic Trade and Finance Corporation (ITFC) headed by Chief Executive Officer Eng. Hani Salem Sonbol is staying here. As part of the visit, meetings are planned with representatives of ministries and departments of Uzbekistan, as well as international organizations and Uzbek banks.
Opening Ceremony
Members of the delegation took part in the opening meeting of the Arab Coordination Group and discussed issues of strengthening cooperation between the Republic of Uzbekistan and ITFC/ICD, as well as potential opportunities for cooperation in trade financing, trade development, and syndication transactions. The agenda included a discussion of the Trade Connect Central Asia+ program, aimed at unlocking the potential of the private sector for cross-border trade and promoting the development of trade between member countries of the Organization of Islamic Cooperation (OIC) in the Central Asian region and Azerbaijan.
Goals of the Visit
One of the main goals of the visit is the signing of a number of agreements with the ministries of Uzbekistan on the allocation of financial resources from the ITFC. In particular, ITFC and the Ministry of Investment, Industry and Trade of the Republic of Uzbekistan, signed a framework agreement on cooperation for the period 2024-2026 for $600mn. It defines the following areas of cooperation:
1. Trade finance
• Finance the importation of essential commodities and any other commodities/products;
• Finance agricultural/food security needs of the country under Sovereign/sovereign guaranteed arrangements;
• Extend financing to State-owned enterprises with or without sovereign guarantee;
• Provide line of financing to local banks and other financial institutions to support the trade financing needs of private sector clients, with a particular focus on small and medium enterprises, as well as to support the trade financing needs of entities operating in pharmaceutical, food and agriculture, textile, and manufacturing sectors;
2. Trade and Business development
• Jointly organize the launching of the Trade Connect Central Asia+ (TCCA+) Program, during the Tashkent International Investment Forum 2024, with the support and high patronage from the Government of Uzbekistan.
• Provide Paid advisory services mainly in the following areas: developing the Islamic financing capacity for banks and financial institutions, risk and compliance for banks and financial institutions climate change mitigation, Small and Medium Enterprises development.
• Collaborate for the organization of the Tashkent International Investment Forum 2024
Ministry of Economy and Finance and ITFC
In addition, the Ministry of Economy and Finance of the Republic of Uzbekistan and ITFC signed an agreement on Islamic trade finance Murabaha for $100mn within the framework of the project “Supporting Food Security and Agriculture”. These funds will be used to optimize food products through the purchase of locally produced agricultural products (wheat and related products) during the harvest season, their storage in warehouses and periodic release/sale as necessary to ensure an uninterrupted supply of wheat, essential food products for population of Uzbekistan during the year. Using reserves acquired through this mechanism, the government was able to stabilize rising wheat prices by supplying goods to the local market and thereby ensuring price stability and affordability for the population.
Previous Results
The previous similar facility helped the Government to pay close to 6,700 farmers (employing 133,660 people, including 40,000 women) from all regions of the country for wheat during the harvest season, while also providing access to a steady food supply to the general populace.
Commenting on the signings, Eng. Hani Salem Sonbol, CEO of ITFC said: “The agreements signed today strengthen our collaboration with Uzbekistan and are a testimony of our commitment to socio-economic development in Uzbekistan and the Central Asia region at large. We believe the projects and programs that will benefit from the approved financing will positively contribute to national economic growth. We are pleased to be covering key sectors such as food security and the private sector which align with our focus on contributing to the achievement of the Sustainable Development Goals especially SDG 2 (Zero Hunger) and SDG 8 (Decent Work & Economic Growth)."
About the ITFC
The International Islamic Trade Finance Corporation (ITFC) is a member of the Islamic Development Bank (IsDB) Group. It was established with the primary objective of advancing trade among OIC member countries, which would ultimately contribute to the overarching goal of improving the socioeconomic conditions of people across the world.
Previous Contributions
Commencing operations in January 2008, ITFC has provided $75bn of financing to OIC member countries, making it the leading provider of trade solutions for these member countries’ needs. With a mission to become a catalyst for trade development for OIC member countries and beyond, the Corporation helps entities in member countries gain better access to trade finance and provides them with the necessary trade-related capacity-building tools, which would enable them to successfully compete in the global market.
ITFC began its activities in Uzbekistan in 2018 with a pilot financing line for one bank. In 2019, ITFC signed a Framework Agreement worth $500mn for a period of 4 years. Government funds were used to purchase raw materials for the production of cotton and wheat (2019-2020), as well as wheat (2022).
In addition, opportunities provided to local banks help meet the import and pre-export trade financing needs of small and medium-sized businesses. Through a range of financial facilities provided to banks, ITFC also supports women's entrepreneurship. In total, the financial resources allocated by ITFC for the public and private sectors of the country as of January 1, 2024 amount to $773mn.
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