Ankara, Turkey – The Islamic Development Bank (IsDB) and Turk Eximbank have signed a Murabaha Facility Agreement under the guarantee of Turkey's Ministry of Treasury and Finance in the amount of USD 100 million to be utilized for the financing needs of exporting Small and Medium-Sized Enterprises (SMEs) and Middle Capitalization Companies (MidCaps).
The Murabaha Facility has a total tenor of ten years, which demonstrates IsDB’s commitment to support sustainable development of Turkey.
The new Facility is built upon the success of the USD 270 million line of financing which had been previously extended by IsDB to Turkish firms via Turk Eximbank.
In the previous intervention, 57 firms, 18 of which are SMEs, benefitted from the financing and 39 firms recorded a rise in their workforce.
In 2017, total increase in workforce of those firms was 1,039 or 3% compared to 2016. The total amount of goods that are exported by these firms increased by USD 1.2 billion or around 100% in 2017 compared to the previous year.
Similar to the previous one, the new Murabaha Facility will i) increase the export capacity of the recipient companies, and ii) sustain or create at least 1,000 jobs.
Overall, the facility will play a significant role to alleviate the economic impact of the COVID-19 pandemic on the manufacturing sector by providing long-term funding to companies to finance their capital expenditures, which would not normally have access to those funding due to pricing or lack of appetite in the market.
Moreover, the Murabaha Facility is largely aligned with the development strategies of the Republic of Turkey as well as those of the IsDB Group while taking youth and women empowerment aspects into consideration.
As per the Turkish legislation, Turk Eximbank is mandated to support exports and usually finances more than half of the total export credits in the country.
It is under the full ownership of the Ministry of Treasury and Finance which injects capital into the bank as needed and thereby is of strategic importance to the Turkish Government.
Facilities similar to the one rendered to Turk Eximbank specifically targeting promotion of exports and/or SMEs tend to have a great potential to create development impact for many of IsDB Group Member Countries considering the replicability and local expertise aspects as its remarkable return on investment in the Turkish economy continues to generate positive yields as an outstanding example of public-private cooperation.