An independent organisation, ITFC, will monitor market trends and work to attain the Islamic Development Bank's objectives through the launching of specialised funds.
The IDB Board of Governors had earlier announced plans to launch the ITFC at its 31st Annual Meeting held in Kuwait in May 2006.
"The inception of the International Islamic Trade Finance Corporation complements an initiative announced by Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz, during the Islamic Summit held in October 2003, and is in line with the suggestion of the UAE during the 29th Annual Meeting of the Board of Governors of Islamic Development Bank held in Teheran in September 2004. It is aimed at boosting the economic development of Member Countries by enhancing regional trade," said Dr. Ahmed Mohammed Ali, President of the IDB Group.
"This initiative will work to alleviate economic burdens and combating poverty in the Least Developed Member Countries. ITFC will provide more resources to the Islamic Development Bank to finance exports and investments and secure necessary guarantees that will facilitate greater trade exchange regionally," he added
The main objective of the International Islamic Trade Finance Corporation is to increase the modest intra-trade volume among member countries of the Organisation of Islamic Conference (OIC). ITFC will strive to develop and finance trading in accordance with the principle and provisions of Islamic law, thus complementing the activities of the Islamic Development Bank.
Its activities will include developing and financing inter-regional trade, streamlining the development effect of trade financing operations and upgrading the capabilities of the member countries in the field of exports.
The Poverty Reduction Fund (PRF) of the IDB has received contributions from 21 member countries including Saudi Arabia and Kuwait which have pledged $1 billion and $300 million respectively.
The fund is scheduled to commence operations immediately after adopting its regulations at the 32nd Annual Meeting of the Board of Governors to be held in Dakar, Senegal, in May. The Fund is envisaged to take the form of a Waqf, thus ensuring appropriate use of the seed capital of $10 billion.
The fund was established in line with the mandate given to the IDB within the framework of the Ten-Year Programme of Action adopted at the 3rd Extraordinary Summit of the OIC held in the holy city of Makkah in December 2005.
The objectives of the fund are: (i) Reducing poverty; (ii) eliminating illiteracy; (iii) eradicating major communicable diseases such as malaria, tuberculosis and Aids; and (iv) building the human and productive capacities particularly in the least developed OIC countries.
So far, through its concessional financing aimed at some of the poorest member countries, IDB has financed various projects amounting to $4.2 billion, half of which was for pro-poor activities. The bank's financing has given priority to meeting basic needs, including employment opportunities, providing market outlets especially for the rural poor, improving basic rural and pre-urban infrastructure such as the supply of drinking water and electric power, and expanding education and health facilities.It has established a series of development programmes for women and implemented a range of training and capacity-building programmes for women to promote their participation in the process of economic and human development, and poverty reduction.
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