The International Islamic Trade Finance Corporation (ITFC), an autonomous entity within the IDB Group, has been announced as the winner of the prestigious Trade Finance “Deal of the Year” Award 2008 from Euromoney; for its €23 million (SR109.8 million) financing transaction for the cotton sector in the Cote d'lvoire. The ITFC deal was selected for the award as it demonstrates a number of significant innovations compared to standard pre-export finance, as well as being Shariah-compliant and of great social and economic importance. “This award crowns our first year of operations and we are especially honored since it represents international recognition of the successful application of Islamic financial principles to a deal that exemplifies the purpose of ITFC, which is to enhance the economic welfare of our member countries through trade which will in turn accelerate their economic and social development thus improving people's lives”, said Dr. Waleed Al Wohaib, CEO of ITFC. He said “this Murabaha deal is a landmark achievement for our trade finance operations, not only did the funds help revive Cote d'lvoire's strategic cotton sector, a major cash crop covering 60 percent of the total cultivated land in Cote d'lvoire which provides livelihood directly and indirectly to 3.5 million people. It also helped stabilize the sector and set in motion new growth opportunities”. The uniqueness of the deal lies not only in the application of Islamic financial principles to fund and manage the risks pertaining to the cotton cycle in Cote d'Ivoire, but also in the use of a collateral management system, to ensure that funds are properly applied for the purchase and distribution of inputs as and when needed. The ITFC provided the facility to Compagnie Ivoirienne pour le Développement des Textiles (CIDT) for the purchase of agricultural inputs to be distributed to local farmers on credit and the ITFC is reimbursed through the sales proceeds from the cotton ultimately exported by the borrowers. The deal was structured on Murabaha basis with ITFC as the Mudarib (managing trustee) of funds provided by all participants. It provided funds for the working capital requirements of CIDT and Yebe Wognon. Both entities have networks that reach most of Côte d'Ivoire's cotton farmers and provide support to local farmers by allowing prompt payment, in terms of cash purchase in lieu of credit, for the harvested seed cotton sold back to CIDT. CIDT is majority government owned, and operates four cotton ginneries. Some 72,000 farmers depend on it as their main supplier of inputs.
