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Afreximbank, ITFC Sign US$250 Million Sharia’ah Financing deal

Murabaha is an Islamic financing structure that works as a sales contract, fixing the price of goods or items as required by a customer, inclusive of a pre-agreed profit margin.

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By Monica Muema

African Export-Import Bank (Afreximbank) has announced a partnership deal with the International Islamic Trade Finance Corporation (ITFC) to raise a US$250 million Murabaha Financing facility to support the lender’s Ukraine Crisis Adjustment Trade Financing Programme for Africa (UKAFPA).

The Facility will expand the Bank’s capacity to assist its clients in mutual member countries of both the ITFC and Afreximbank with the procurement of eligible goods, especially key commodities experiencing price inflation.

Afreximbank’s UKAFPA intervention was devised to mitigate the economic challenges created by the conflict in Ukraine, especially the emerging food crisis.

“The Murabaha facility is the latest in a long standing successful collaborative efforts undertaken with ITFC. I am delighted that both our institutions are determined to promote trade between Africa and the Arab world and thereby create a sustainable economic exchange between constituent members of the Global South. The facility will be pivotal to Afreximbank’s UKAFPA programme that seeks to protect African States from rapidly rising commodity prices and economic disruption arising from the on-going war in Ukraine,” said Prof. Benedict Oramah, President of Afreximbank.

“ITFC is extremely pleased to sign the term sheet with Afreximbank, a long-standing strategic partner of ours.  This signing demonstrates the enormous potential of how Islamic finance can play an important role in addressing the twin challenges facing the global economy, which are emanating from the fallout of the pandemic and the current geopolitical situation.

The Agreement will help mitigate the economic impact of these challenges while contributing to the economic development of Global South countries through the advancement of trade,” said Hani Salem Sonbol, Chief Executive Officer of ITFC.

The ITFC Facility not only strengthens Afreximbank’s ability to intervene to support member states with crucial commodities procurement, but also promotes the Bank’s South-South trade strategy, deepening economic ties between Africa and Arab states.

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