The Islamic Development Bank (IDB) has signed a Mudaraba agreement with the newly-formed International Islamic Trade Finance Corporation (ITFC).

The move is aimed at establishing a $1-billion fund, by which the ITFC will act as Mudareb (manager) of the fund on behalf of the IDB, the fund provider, the bank said in a statement.

The purpose of the fund is to support the ITFC’s trade finance operations and further develop intra-trade among member countries of the Organisation of the Islamic Conference (OIC), it added.

“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,” said IDB Group chairman Dr Ahmed Mohamed Ali.

“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,” said ITFC chief executive officer Dr Waleed Al Wohaib.

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. – TradeArabia News Service