Canada’s EDC, IDB plan Islamic financing facility

DUBAI — Export Development Canada (EDC) is talking with the Islamic Development Bank (IDB) to create a Shariah-compliant financing facility, as it opens a permanent office in the UAE, Canada’s biggest export market in the Gulf region.

By Jose Franco

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Published: Thu 17 Apr 2008, 10:59 AM

Last updated: Sun 5 Apr 2015, 11:40 AM

This is part of its strategy to partner with the Gulf’s local banks in providing Islamic solutions to buyers of Canadian products and participate in Islamic bonds issued by companies doing business with Canadian suppliers.

“It is critical that we work with banks that have their own Shariah board,” said Eric Siegel, president and CEO of EDC, the export credit agency that helps Canadian investors expand their business overseas.

He announced yesterday the opening of the EDC office in Abu Dhabi, to be headed by Jean-Francois Croft, showing the importance that Canada places on the UAE, whose imports from Canada surged 440 per cent to Dh4 million ($1.1 million) in 2007 from 2001.

Croft, who is EDC’s chief representative to the Gulf Co-operation Council and Yemen, stressed the importance of engaging Islamic financing in the Gulf countries, whose total exports to Canada surged 108 per cent to Dh7 ($1.9 billion) last year from Dh3.4 billion ($920.3 million) in 2001.

He said that EDC is looking for a 15-per cent growth this year through partnerships with corporations and financial institutions in the Gulf. He added that his office would educate Canadian companies on the requirements of Islamic financing.

In 2006 EDC signed an agreement with IDB, a Jeddah-based multilateral development financing institution, paving the way for the creation of a joint banking solutions consistent with the Islamic law of Shariah.

The agency had its first encounter with Islamic financing two years ago when it supported SNC-Lavalin, a global engineering and construction group, in its participation in the Dolphin energy project in the UAE and Qatar.

Siegel said that EDC took a “sub-participation” of Dh91.8 million ($25 million) in the Islamic tranche, aside from being the lead arranger for the deal by providing Dh459.1 million ($125 million) on the conventional tranche.

“EDC recognises that we have certain limitations in what we can do as we do not have our own Shariah board,” he added. “As such, our strategy will be to partner wit local banks in the region that can provide Islamic solutions in support of Canadian procurements.”

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