The International Islamic Trade Financing Corporation (ITFC) has provided EUR35 million (US$37.75 million) in two lines of financing to Comoros: EUR25 million (US$26.97 million) is dedicated to supporting the import of energy products while EUR10 million (US$10.79 million) is allocated to the import of food products.
The Union of Comoros has had many recent economic setbacks, with the Kenneth cyclone in 2019 and the COVID-19 pandemic impacting economic stability significantly. According to World Bank data, Comoros saw a -0.3% GDP growth in 2020 arguably due to the impact of COVID-19 on the service- and tourism-heavy economy. While the country is recovering economically with a GDP growth of 2.4% in 2021, it is far from out of the woods. It is one of the poorest countries in the world. Further contributing to the nation’s economic hardship is the stark decline in remittance from Comorans abroad, a consequence of the global economic impact of the COVID-19 pandemic.
The World Bank reported that nearly one-fourth of the population is extremely poor and unable to buy enough food to meet daily nutritional requirements. Thus, food and nutrition security is arguably the most important pressing sustainable development goal (SDG) to achieve in the country. With oil sanctions on Russia, the country is also facing higher energy needs. The lines of financing from the ITFC address the twin challenges by facilitating trade among OIC member nations.
Figure 1: The ITFC’s financing mechanism
The ITFC’s 2008 annual report details the corporation’s financing mechanism. This mechanism sees the ITFC forwarding lines of credit to the benefactors on a Murabahah cost-plus basis to purchase “strategic commodities”, the development of which is one of the ITFC’s five business lines. In an ITFC report, the development of strategic commodities is defined as developing the trade, capacities and competitiveness of products in which OIC member countries have a comparative advantage in.
“ITFC is working with OIC member countries and partners to provide solutions that directly impact the lives of communities, including increasing access to energy and improving food security. We are pleased to see that these impacts are central to the new financing for Comoros. Equally important is that the agreements also enhance intra-OIC trade and are aligned with the UN SDGs. At ITFC, we are committed to increasing the impact of trade and we shall keep working together with our partners to achieve our collective goals,” said Hani Salem Sonbol, CEO of the ITFC.