IslamicFinance.de

Pakistan is unlikely to fully benefit from $4.5bn financing package it secured about two and years ago from International Islamic Trade Finance Corporation (ITFC). Pakistan and the ITFC on Monday signed about $400 million worth of two facilities to finance oil and liquefied natural gas (LNG) imports by December this year. Another $100m facility is expected to be arranged by December. This is part of a $4.5bn package Pakistan and ITFC had signed in April 2018 to cover oil and LNG imports over a period of three years. Last year, however, the facility could not go beyond $1.05bn owing to limitations of the partner banks of the ITFC.

At the moment there are six Islamic banks operating in Turkey, with Kuveyt Turk, Turkiye Finans and Albaraka Turk holding around three quarters of their market share. Harun Çelik, the Islamic Trade Finance Corporation’s (ITFC) regional head for Turkey, says that agriculture is one of the sectors where Islamic banks have big growth potential. Out of almost Tl120bn (US$18.5bn) of agricultural finance in Turkey, the six Islamic banks are only getting 1% of that. That’s where he sees growth potential. Perhaps the greatest nascent opportunity lies with small-to-medium enterprises (SMEs). One useful emerging tool for SMEs could be factoring. A form of supply chain finance, factoring typically involves a supplier selling its invoices to a third party at a discount. For the supplier it means quicker access to working capital, while the third party makes its profit once the invoices are paid.